Firm Offer

A firm offer is an offer to purchase a home without any conditions attached. If you need financing to complete the purchase of a home, do not opt for a Firm Offer until your mortgage financing is fully approved by your Lender.

First Home Savings Account

A savings account that is a registered plan that allows first-time homebuyers to contribute up to $8,00 per year, with a total limit of $40,000. When money is deposited in a FHSA you get the benefit of tax deductibility like an RRSP and amounts withdrawn for a house purchase are tax-free, like with a TFSA.

First Mortgage

This is the mortgage registered in first position on title against a property. Why does your position on a mortgage matter? Because, the first mortgage has priority over other claims in the event of a sale or default. This means it would be paid first ahead of the other claims.

First-Time Homebuyer Incentive

A shared home equity program with the Government of Canada that helps you with the down payment for a mortgage. The incentive can help you meet the minimum down payment requirements for a mortgage and/or reduce the size of the mortgage you need. The incentive offers up to:

• 5% or 10% for a FTHB’s purchase of a new build home;

• 5% for a FTHB’s purchase of an existing home; or

• 5% for a FTHB’s purchase of a new or existing mobile home.

By sharing the equity, the government will share in the upside or downside of the future property value, up to a maximum of 8% per year. The borrower will have to repay the incentive within 25 years or upon the sale of the home. The amount to be repaid is the amount of the incentive plus the rate of gain in value of the home, capped at 8% per year, or minus the rate of loss of value of the home, capped at 8% per year. The borrower can also repay the incentive at any time without penalty.

Fixed-Rate Mortgage

With a fixed-rate mortgage, your interest rate and monthly payments stay the same for the entire mortgage term. The downside of a fixed-rate mortgage? They tend to have higher interest rates than Variable-Rate or Adjustable-Rate Mortgages. However, there is a potential upside, if mortgage interest rates go up during the term, you're protected because your rate stays the same.

Typically, the longer the term of the mortgage, the higher the mortgage rate. For instance, a 5-year mortgage will typically have a higher interest rate than a 2-year mortgage.

Foreclosure

If you miss enough mortgage payments to be considered to have gone into Default, your Lender can take legal action called Foreclosure. Foreclosure is a lengthy legal process that involves the court system. In most jurisdictions, your Lender can take over your property under a legal process called Power of Sale that takes less time to complete. You will be notified by your lender, providing you the chance to bring the Mortgage back into good standing. If you are unable to do so, the Lender can sell your property to recover the money owing on your Mortgage, including principal, interest, legal fees and other charges.