Real Estate Glossary: D
June 7, 2007 by Montreal Real Estate Blog
Filed under Real Estate Glossary
Deposit
A sum of money that accompanies a promise to purchase an immovable. The deposit must be placed in a trust account and will be deducted from the balance payable at the signing of the act of sale, or it will be returned to the proposer if the sale does not go through.
Description sheet
Document on which a real estate broker or agent has presented the features (construction year, taxes, measurements, etc.) of an immovable covered by a real estate brokerage contract.
Depreciation
The decrease in value of something because it is now worth less than when you bought it.
Down payment
Personal contribution of the buyer to the financing of an immovable. Cash portion deducted from the selling price, which determines the amount of financing required to complete the purchase.
Note: If the deposit for the purchase of the immovable is less than 20% of the purchase price, the loan must be insured by the Canadian Mortgage and Housing Corporation (CMHC), Genworth, AIG United Guaranty or PMI.
Recently law around the minimum down payment required to purchase a home changed from 25% down to 20%..!
Hello Paolo!
My article needed a little update. Thanks for picking up on that missed detailed :)
Loans in the US have always required more than 20% down to avoid mortgage insurance premium.
I am wondering if borrowing and underwriting standards have generally been more stringent in Canada?
Sometimes I fantasize about moving from Minnesota to Toronto. The more I read Canadian real estate blogs, the more I realize that practicing real estate in Canada might be quite different.
Dear readers,
The 20% down payment to avoid mortgage insurance is just a general law.
This allows lenders in Canada to lend up to 80% of the property market value; however, keep in mind, it does not mean that automatically any borrower or any property can qualify for mortgage financing without mortgage insurance.
YES, you read correctly… Type and location of the property you are about to buy has an impact on the fact that you have to pay mortgage insurance or not.