Agreement of Purchase and Sale

What happens when you sign an Agreement of Purchase and Sale.

1. It is a binding contract detailing the rights and obligations of the parties to the agreement.
2. If either party fails to complete their obligations, the innocent party can ask for certain remedies.
3. Remedies could be a request for money, forfeiture of the deposit or specific performance – the completion of the contract as agreed.
4. Another remedy is to put the parties in a pre -contract position. This remedy is available if the contract should not have been entered in the first place because of duress, fraud or misrepresentation.
5. May include pre – conditions before the agreement will be valid -such as a satisfactory home inspection, financing, review of the status certificate, or the sale of current home.
6. Conditions are good ways to protect yourself as the purchaser if circumstances change.

Please confirm the terms and your needs with your real estate professional.

Mortgage Terms

Acceleration clause – the requirement to pay the mortgage in full if there is non-payment of mortgage, property taxes, common expenses, property insurance.

Amortization period – the amount of years that the mortgage has been calculated for you to pay back.
Here is a website to the Canada mortgage calculator: http://www.canadamortgage.com/calculators/amortization.cgi

Collateral Mortgage – a mortgage that is a loan agreement and the security of the loan is the mortgage against a property. Often is 125% of the value of the property. The borrower will be able to return to the same lender and borrow more money for the property. This may allow the lender to use the equity in the property to pay outstanding debts with the same lender such as a credit card balance or car loan. With a collateral mortgage, if the original lender will not lend any further funds, it may difficult to go to another lender as there is no room on the property to register a second mortgage.

Closed mortgage – a mortgage agreement that can not be pre-paid, negotiated or re-financed earlier than the length of time agreed to.

Conventional mortgage – a loan agreement with terms such as interest, term, amortization period which is secured against property to to the amount borrowed. Usually is first in line to be paid once the property is sold.

Fixed rate mortgage – the interest rate is set and is part of the agreement. Pre-payment is allowed according to the terms of the agreement which can be a percentage of the mortgage, or at a particular time. A good idea if interest rates are rising.

High-ratio mortgage – the borrower has put less than 20% of the property’s purchase price as a down payment. This type of mortgage will usually require mortgage protection insurance.

Interest Rate – is the amount calculated on your mortgage that will be in addition to the amount borrowed.

Interest adjustment date – date
Low ratio mortgage – the borrower has put at least 20% of the property’s purchase price as a down payment and will not require mortgage protection insurance.

Principal amount – the amount borrowed

Second mortgage – a second loan which is secured against property and is second place after the original mortgage.

Security – attaching a loan against something that can be seized and sold in order for the debt to be repaid. This can be property, a car, tractor etc.

Term – length of time you will be paying the mortgage.

Variable rate mortgage – the interest rate will change at specified intervals if the market interest rates rise or fall.

**Signing a mortgage is a legally binding agreement. Make sure that you understand all of the rights and obligations of your mortgage(s) with the lender and that is the same as your understanding or what you requested.