RESOURCES
Mortgage Glossary.
Plain-language definitions to help you understand your mortgage.
A
- Agreement of Purchase and Sale
- The contract setting out the terms and conditions of a property purchase.
- Amortization Period
- The estimated time needed to repay a mortgage in full through regular payments.
- Appraisal
- A professional assessment of a property’s value.
- Assets
- Things you own that have financial value.
- Assumption Agreement
- An arrangement for a buyer to take over an existing mortgage, subject to lender approval and its terms. Ask whether the original borrower is released from liability.
B
- Blended Payments
- Payments that include both principal and interest.
C
- Canada Mortgage and Housing Corporation (CMHC)
- A federal Crown corporation that provides housing programs and mortgage default insurance, among other services.
- Closed Mortgage
- A mortgage with limits on extra payments or early repayment. Going beyond those limits may trigger a penalty.
- Closing Date
- The date the property transaction is completed, as specified in the purchase agreement.
- Collateral
- Property or another asset pledged as security for a loan.
- Conventional Mortgage
- Generally, a mortgage representing no more than 80% of a home’s value or purchase price.
- Credit Scoring
- A numerical assessment of credit history used in lending decisions.
D
- Demand Loan
- A loan the lender can require to be repaid under the terms of the agreement.
- Deposit
- Money provided with a purchase offer and applied toward the purchase on completion. The contract governs what happens if the transaction does not close.
E
- Equity
- A property’s value minus the debts secured against it.
F
- First Mortgage
- The mortgage with first priority among registered mortgage charges, subject to applicable law.
- Fixed-Rate Mortgage
- A mortgage with an interest rate that stays unchanged for its term.
G
- Gross Debt Service Ratio (GDS)
- The share of gross income needed for housing costs, including mortgage payments, property taxes, heating and applicable condo fees. Lender limits vary.
- Guarantor
- Someone who agrees to cover a borrower’s debt if the borrower does not repay, under the guarantee’s terms.
H
- High-Ratio Mortgage
- A mortgage with a loan-to-value ratio above 80%. Mortgage default insurance is generally required for eligible home purchases.
- Home Equity Line of Credit (HELOC)
- Revolving credit secured by your home. Rates are usually variable; borrowing limits and repayment terms depend on the lender.
I
- Interest Adjustment Date (IAD)
- The date from which the lender’s regular interest calculation period begins. Interest for an initial partial period may be payable separately.
- Interest-Only Mortgage
- A mortgage whose scheduled payments cover interest without reducing principal during the interest-only period.
M
- Mortgage
- A loan secured against real estate, governed by an agreement between borrower and lender.
- Mortgagee
- The lender holding the mortgage.
- Mortgagor
- The borrower granting the mortgage.
O
- Open Mortgage
- A mortgage that permits repayment without a prepayment penalty, subject to its terms.
P
- P.I.T.
- Principal, interest and property taxes.
- Portable Mortgage
- A mortgage that may be transferred to another property, subject to lender approval and conditions.
- Prepayment Penalty
- A charge for repaying beyond the contract’s permitted amount or ending it early. The calculation depends on the mortgage agreement.
- Prime Rate
- A lender’s reference rate used to price some variable-rate mortgages and other credit products.
- Principal
- The borrowed amount still owed, excluding interest.
R
- Rate Commitment
- A lender’s promise to hold a rate for a specified period, subject to conditions.
- Refinance
- Replacing or changing mortgage financing, often to access equity or change terms. Fees, penalties and qualification requirements may apply.
- Renewal
- Agreeing to a new mortgage term when the current term ends and a balance remains.
S
- Second Mortgage
- A further mortgage secured against a property, generally behind the first mortgage in priority.
- Switch
- Moving an existing mortgage to another lender. Confirm eligibility and transfer costs.
T
- Term
- The period during which the mortgage contract’s agreed conditions apply; it differs from amortization.
- Total Debt Service Ratio (TDS)
- The share of gross income needed for housing costs and other debt payments. Lender and insurer limits vary.
V
- Variable-Rate Mortgage
- A mortgage whose rate can change, usually with the lender’s prime rate. Payment behaviour depends on the product.
- Vendor Take Back (VTB) Mortgage
- Mortgage financing provided by the property’s seller to the buyer.
Definitions are general; your mortgage contract and lender requirements determine the terms that apply.