Home Terms Main Page

This site contains comprehensive definitions for a wide range of terms that cover topics such as home, mortgage, insurance, homebuyer, real estate, property, buy home, home insurance, financing, home financing, home buyer, first time homebuyer, homes, homebuying, credit, condo...

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Cash Surrender Value

This is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications.

Co-insurance

In medical insurance, the insured person and the insurer sometimes share the cost of services under a policy in a specified ratio, for example 80% by the insurer and 20% by the insured. By this means, the cost of coverage to the insured is reduced.

Probate

Letters probate represent judicial certification of the validity of a Will and judicial confirmation ofthe authority of the personal representative who is to administer the Will. Essentially, probate fees are a tax on a person's estate and except for the provinces of Quebec and Alberta, there is no limit to this tax.

Vanishing Premium

This term relates to participating whole life insurance and the use of the dividend to reduce or completely eliminate the need for future premiums. In the 1980's life insurance company's profits from investment were exceedingly high compared to historical experience. It became common for a salesperson to show new prospective clients how quickly his or her insurance company's dividends would cover the future cost of future premiums. In some cases more emphasis was put on the value of future dividends than on the fact that future dividends were not guaranteed and could only be projected based on current earnings. Many life insurance buyers have since learned that the dividends they expected in the 80's no longer exist in the 90's and they are continuing to dig into their pockets to pay insurance premiums.

Bond

Fixed interest security issued by a corporation or government, having a specific maturity date.

Canada Pension Plan (CPP)

A plan that provides retirement and long term disability income benefits to residents of Canadian provinces (excluding Quebec).

Mortgage (Credit Insurance)

An agreement between a creditor and a borrower, where the creditor has loaned an amount to the borrower for purposes of purchasing a loan secured by a home.

Canada Mortgage and Housing Corporation (CMHC)

The National Housing Act (NHA) authorized Canada Mortgage and Housing Corporation (CMHC) to operate a Mortgage Insurance Fund which protects NHA Approved Lenders from losses resulting from borrower default.

Conventional Mortgage

A mortgage that does not exceed 80% of the purchase price of the home. Mortgages that exceed this limit must be insured against default, and are referred to as high-ratio mortgages (see below).

Open Mortgage

A mortgage which can be prepaid at any time, without penalty.

Home warranty

Like any other warranty, this guarantees the property against failure of mechanical systems, such as plumbing, electrical, heating and installed appliances.

Balloon

A loan that has a series of monthly payments with the remaining balance due in a large lump sum payment at the end.

Barrel Vault

A vaulted ceiling of semi-circular shape, creating a dome-like appearance.

Electrical Rough

Work performed by the Electrical Contractor after the plumber and heating contractor are complete with their phase of work. Normally all electrical wires, and outlet, switch, and fixture boxes are installed (before insulation).

Joist

Part of the framing that provides the structure for a floor. In most homes, floor joists are made of 2x8s or larger lumber set on edge and spaced 16 inches apart, from center to center.