Complete Canadian Mortgage Glossary
Understanding mortgage terminology empowers you to make better decisions.
A
Amortization
The total time period to pay off your mortgage with regular payments. Standard is 25 years.
Appraisal
Professional assessment of a property's market value.
Approval in Principle (Pre-Approval)
Conditional commitment from a lender indicating the mortgage amount you qualify for.
B
Blended Rate
When you blend your current mortgage rate with a new rate.
Bridge Financing
Short-term loan covering the gap between buying your new home and selling your current home.
Broker
Licensed professional who works with multiple lenders.
C
Closing Costs
Expenses beyond the purchase price: legal fees, land transfer tax, title insurance, etc.
CMHC
Canada Mortgage and Housing Corporation - provides mortgage default insurance.
Collateral Mortgage
A mortgage registered for more than the loan amount.
Conventional Mortgage
A mortgage with 20% or more down payment.
D
Debt Service Ratios
Calculations lenders use to determine affordability: GDS and TDS.
Down Payment
The portion of the purchase price paid upfront. Minimum 5% in Canada.
E
Equity
The portion of your property you own outright. Property value minus mortgage balance.
F
Fixed Rate Mortgage
Interest rate stays constant for the entire term.
G
GDS (Gross Debt Service Ratio)
Housing costs divided by gross income. Maximum usually 39%.
H
HELOC (Home Equity Line of Credit)
Revolving credit secured against your home equity.
L
Land Transfer Tax
Provincial tax paid when purchasing property.
P
Prime Rate
Base rate used by lenders for variable mortgages.
Principal
The amount borrowed, excluding interest.
R
Refinancing
Replacing your existing mortgage with a new one.
S
Stress Test
Qualification requirement ensuring you can afford higher rates.
T
TDS (Total Debt Service Ratio)
All debt payments divided by gross income. Maximum usually 44%.
Term
The length of your mortgage contract (e.g., 5 years).
V
Variable Rate Mortgage
Rate fluctuates with the prime rate.
Contact us if you have questions about any mortgage terms.
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