A

Accelerated Bi-Weekly Payments
Making half your monthly mortgage payment every two weeks, resulting in one extra monthly payment per year and faster mortgage payoff.

Adjustable-Rate Mortgage (ARM)
Similar to a variable-rate mortgage, but the payment amount changes when the interest rate changes.

Amortization
The total time required to fully repay your mortgage, assuming all payments are made on time.  Most commonly 25 or 30 years in Canada.

Appraisal
A professional estimate of a property’s current market value.

Appreciation
An increase in a property’s value over time.

Assignment Sale
When a buyer sells their purchase contract to another buyer before closing (common with pre-construction condos).

B

Blended Rate
A rate that combines your current mortgage rate with a new rate when refinancing mid-term.

BOC (Bank of Canada)
Canada’s central bank, which influences interest rates and economic policy.

Bridge Financing (Bridge Loan)
Short-term financing used when you buy a new home before selling your current one.

C

Cash-Out Refinance
Refinancing your mortgage to access equity in cash.

Closed Mortgage
A mortgage that cannot typically be paid off or renegotiated before the end of the term without penalty.  It usually offers a lower interest rate than an open mortgage.

Closing Date
The date when the sale is finalized and ownership transfers to the buyer.

Collateral Charge Mortgage
A mortgage registered for more than the actual loan amount, allowing easier access to future borrowing but sometimes harder to switch lenders.

CMHC (Mortgage Default Insurance)
Insurance required when the down payment is less than 20%.  It protects the lender, not the borrower.

Conventional Mortgage
A mortgage where the loan is 80% or less of the property value (minimum 20% down payment).  Default insurance is not usually required.

Construction Mortgage
Financing for building a new home, usually funded in stages (draws).

Credit Score
A number that reflects your credit history and helps lenders assess borrowing risk.

D

Debt Consolidation
Using mortgage refinancing to combine higher-interest debts into one lower-rate payment.

Deposit
Money submitted with an offer to purchase to show good faith.  It forms part of the down payment.

Default
Failure to make mortgage payments or meet the terms of your mortgage agreement.

Default Insurance
Insurance that protects the lender if a borrower defaults on their mortgage (required for high-ratio mortgages).

Down Payment
The upfront portion of the purchase price paid by the buyer.  Minimum 5% in Canada, depending on purchase price.

E

Equity
The portion of your home you own.  Calculated as your home’s value minus your remaining mortgage balance.

F

Fixed-Rate Mortgage
A mortgage with an interest rate that stays the same for the entire term.

G

Gross Debt Service (GDS) Ratio
The percentage of your gross monthly income used for housing costs (mortgage principal & interest, property taxes, heating, and 50% of condo fees if applicable).
Typically must be within 35–39% to qualify, depending on the lender.

H

HELOC (Home Equity Line of Credit)
A revolving line of credit secured against your home’s equity.

High-Ratio Mortgage
A mortgage with less than 20% down (over 80% loan-to-value).  Mortgage default insurance is required.

Home Inspection
A professional evaluation of a property’s structural, mechanical, and electrical systems.

I

Insurable Mortgage
A mortgage with 20% or more down that meets insurer guidelines and may receive lower rates.

Interest Rate
The cost of borrowing money, expressed as a percentage.

Interest Adjustment Date (IAD)
The date when mortgage interest calculations officially begin.

IRD (Interest Rate Differential)
A calculation used by lenders to determine the cost of breaking a fixed-rate mortgage early.  It reflects the difference between your current mortgage rate and the lender’s current rate for the remaining term.

L

Land Transfer Tax
A provincial (and sometimes municipal) tax paid by the buyer upon closing, based on the purchase price.

Loan-to-Value (LTV)
The ratio of the mortgage amount compared to the property’s value.

M

Maturity Date
The final day of your mortgage term.  The mortgage must be paid off, renewed, or renegotiated at this time.

Mortgage
A loan used to purchase or refinance a property.

Mortgage Life Insurance
Insurance that pays off the remaining mortgage balance if the borrower passes away.

Mortgage Term
The length of time your mortgage rate, lender, and conditions are in effect (commonly 1–5 years).

Mortgagor / Mortgagee
The mortgagor is the borrower, and the mortgagee is the lender.

O

Open Mortgage
A mortgage that can be paid off at any time without penalty.  Open mortgages typically have higher interest rates.

P

Payment Schedule
How often mortgage payments are made — monthly, bi-weekly, accelerated bi-weekly, or weekly.

PITH
Principal & Interest, Property Taxes, and Heating — the main housing costs used for qualification.

Portability
An option allowing you to transfer your mortgage to a new property, often without penalty.

Power of Sale
A legal process that allows a lender to sell a property if the borrower defaults on their mortgage.

Pre-Approval
A lender’s written confirmation of how much you may qualify to borrow, often with a rate hold.

Prepayment Penalty
A fee charged if you pay more toward your mortgage than your agreement allows.

Prepayment Privileges
Options allowing you to make extra payments toward your mortgage principal without penalty (within limits set by the lender).

Prime Rate
A benchmark interest rate used by lenders to set variable mortgage rates.

Principal
The original amount borrowed, not including interest.

Property Taxes
Municipal taxes based on the assessed value of your home.  Some lenders collect these as part of your mortgage payment.

Protected (Capped) Variable Mortgage
A variable-rate mortgage with a maximum interest rate limit set by the lender.

R

Rate Hold
A lender’s guarantee to hold a specific interest rate for a set period (often 90–120 days).

Refinance (Refinancing)
Replacing your existing mortgage with a new one to access equity, consolidate debt, or change terms.  May involve penalties if done mid-term.

Renewal
When your mortgage term ends, you can renew with your current lender or switch lenders.

S

Second Mortgage
An additional loan secured against your property, behind the first mortgage in priority.

Stress Test
A federal requirement that borrowers qualify at a higher interest rate to ensure they can afford potential future rate increases.

Switch / Transfer
Moving your mortgage from one lender to another, usually at renewal, without increasing the loan amount.

T

Title Insurance
Insurance that protects against losses related to property title issues, such as liens or legal defects.

Total Debt Service (TDS) Ratio
The percentage of your gross monthly income used for housing costs plus all other debts (car loans, credit cards, personal loans, etc.).
Typically must be within 42–44% to qualify.

V

Variable Interest Rate Mortgage
A mortgage with an interest rate that fluctuates with market conditions. Payments may stay the same, but the portion going toward principal and interest can change.

Vendor
The seller of a property.

Vendor Take-Back Mortgage
A mortgage where the seller provides financing to the buyer instead of a traditional lender.