Plain-language definitions of the terms you'll meet buying, selling, and investing in Ontario real estate.
10 terms
The Agreement of Purchase and Sale (APS) is the binding contract between buyer and seller in an Ontario real estate deal — in resale transactions, almost always OREA Form 100 (freehold) or Form 101 (condo). Once both parties sign and the deposit is delivered, it controls everything: price, deposit, conditions, what's included, the closing date, and what happens if someone doesn't perform.
Read definitionAn assignment sale is selling your rights under a purchase agreement — almost always a pre-construction condo or home — to a new buyer before final closing. The assignor exits before taking title; the assignee steps into the contract. Builder consent is usually required, fees apply, and the tax treatment (HST on the assignment, income vs. capital gains) surprises more assignors than any other part.
Read definitionCap rate is a property's net operating income (NOI) divided by its price — the unlevered annual yield of a rental property before mortgage costs. GTA residential cap rates typically sit in the low single digits (roughly 3–5%, higher further from the core), and the honest calculation of NOI — with real vacancy, maintenance, and management numbers — matters far more than the headline percentage.
Read definitionClosing costs are the cash expenses due on top of your down payment when a purchase completes — land transfer tax, legal fees, title insurance, adjustments, and more. In the GTA, budget roughly 1.5%–4% of the purchase price (the top of that range inside Toronto, where municipal land transfer tax applies). They cannot be added to your mortgage.
Read definitionCMHC insurance (mortgage default insurance) is mandatory in Canada when your down payment is under 20%. It protects the lender — not you — if you default, and its premium (roughly 2.8%–4% of the mortgage) is usually added to your mortgage balance. In exchange, insured borrowers get access to the lowest advertised rates and can buy with as little as 5% down.
Read definitionA conditional offer includes escape hatches — financing, inspection, status certificate — that must be satisfied or waived before the deal binds; if a condition fails, the buyer walks away with the deposit. A firm offer has no conditions: it binds on acceptance. Firm offers win competitive GTA situations, but they transfer all the risk to the buyer.
Read definitionOntario's land transfer tax (LTT) is a provincial tax buyers pay on closing, calculated on a sliding scale against the purchase price. Buy inside the City of Toronto and a second, municipal land transfer tax applies on top — roughly doubling the bill. First-time buyers can claim rebates of up to $4,000 (Ontario) and $4,475 (Toronto).
Read definitionA mortgage pre-approval is a lender's written, conditional commitment stating how much it will lend you, at what rate, based on verified income, credit, and down payment. In the GTA, serious buyers get pre-approved before their first showing — it sets your real ceiling under the federal stress test and usually holds your rate for 90 to 130 days.
Read definitionThe mortgage stress test is a federal qualification rule requiring Canadian borrowers to prove they could afford their mortgage at the higher of their contract rate plus 2% or the minimum qualifying rate — not just at the rate they'll actually pay. It applies to insured and uninsured mortgages alike and typically reduces a buyer's maximum purchase price by roughly 15–20%.
Read definitionA status certificate is the condominium corporation's disclosure package for a specific unit — budget, reserve fund, arrears, special assessments, insurance, lawsuits, and the declaration and rules. Ontario's Condominium Act caps its fee at $100, requires delivery within 10 days of the request, and (via the standard APS condition) your lawyer reviews it before your purchase firms up.
Read definitionJahan offers free, no-obligation consultations for buyers, sellers, and investors across Hamilton, Halton, and Niagara.
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