62 terms
A
- Accelerated Payment
- A payment schedule (accelerated bi-weekly or weekly) that squeezes in the equivalent of one extra monthly payment per year, shortening your amortization and cutting total interest without a big change to each payment.
- Amortization
- The total length of time it will take to pay off your mortgage completely, assuming your rate and payment stay the same. Common amortization periods in Canada are 25 or 30 years.
- Amortization Schedule
- A breakdown, payment by payment, of how much of each mortgage payment goes to interest versus principal over the life of the loan. Early on, more goes to interest; over time, more goes to principal.
- Appraisal
- A professional estimate of a property's market value, often required by a lender before approving a mortgage to confirm the home is worth what you are paying or borrowing against. Team Levine often covers the appraisal cost.
B
- Blend and Extend
- A way to change your mortgage rate without paying a full break penalty: the lender blends your current rate with today's market rate into a new rate and extends your term. It can lower your rate mid-term while avoiding a large penalty.
- Bridge Loan
- A short-term loan that covers the gap when you need the proceeds from selling your current home to close on your new one, but the sale closes after your purchase.
C
- Cash-Back Mortgage
- A mortgage where the lender gives you a lump sum of cash (a percentage of the mortgage) at closing, usually in exchange for a higher interest rate. The cash can help with closing costs, but you typically repay it if you break the mortgage early.
- Closed Mortgage
- A mortgage with restrictions on prepaying, renegotiating, or paying off the loan before the end of the term, beyond a set annual prepayment privilege. Closed mortgages typically offer lower rates than open ones.
- Closing Costs
- The one-time costs due when your purchase closes, on top of your down payment, such as the welcome (land transfer) tax, notary fees, and title insurance. A common rule of thumb is to budget around 1.5% to 3% of the purchase price.
- CMHC
- The Canada Mortgage and Housing Corporation, a federal Crown corporation that insures high-ratio mortgages (down payments under 20%) on homes priced under $1.5 million, protecting the lender if a borrower defaults.
- Co-Borrower
- A person who applies for and shares the mortgage with you, with their income and credit counted alongside yours and their name on the property. Unlike a co-signer, a co-borrower is usually an owner-occupant.
- Co-Signer
- A person who signs the mortgage and guarantees the debt to help a borrower qualify, without necessarily being on the property title. Their income and credit can strengthen the application, and they share legal responsibility for repayment.
- Collateral Charge
- A way of registering a mortgage that lets you re-borrow against your home later without a full refinance, but can make it harder or costlier to switch lenders at renewal. Knowing how your mortgage is registered matters when you shop around.
- Conventional Mortgage
- A mortgage with a down payment of 20% or more of the purchase price. Conventional mortgages don't require mortgage default insurance, regardless of the home price.
D
- Debt Consolidation
- Rolling higher-interest debts (like credit cards) into your mortgage or a single lower-rate loan to reduce your overall interest and simplify payments. Refinancing to consolidate can free up monthly cash flow.
- Debt Service Ratio (GDS/TDS)
- A general term for the two ratios, GDS and TDS, lenders use to measure how much of your income would go toward housing and debt payments. For most A-lenders, the standard caps are 39% GDS and 44% TDS for borrowers with good credit.
- Default Insurance
- Mortgage insurance (provided by CMHC or a private insurer) that protects the lender if the borrower stops making payments. It's required on any mortgage with a down payment under 20%, and the premium is usually added to the mortgage balance. In Quebec, a provincial tax of 9% applies to the insurance premium and is paid in cash at closing, it cannot be rolled into the mortgage.
- Discharge
- The legal process of removing the lender's charge (security interest) from your property's title once the mortgage is fully repaid. In Quebec, a notary handles the discharge and a fee applies, typically $200 to $500, which must be factored in when calculating the true cost of switching lenders at renewal.
- Down Payment
- The portion of the purchase price you pay upfront, in cash, rather than borrowing. The minimum is 5% on the first $500,000 of the price and 10% on the portion up to the $1.5 million insurable cap; 20% or more avoids mortgage default insurance entirely.
E
- Equity
- The portion of your home you actually own, the current market value minus what you still owe on your mortgage. Equity grows as you pay down your principal and as your property appreciates in value.
- Equity Take-Out
- Borrowing against the equity you have built in your home, through a refinance or a HELOC, to access cash for renovations, investments, or other needs while keeping the home.
F
- Financing Condition
- A clause in a purchase offer that makes the deal conditional on you securing mortgage approval by a set date. It protects you from being locked into buying if financing falls through.
- Fixed Rate
- An interest rate that stays the same for the entire mortgage term, so your payment amount doesn't change even if market rates move. It offers predictability in exchange for typically less flexibility than a variable rate.
G
- GDS (Gross Debt Service Ratio)
- The percentage of your gross monthly income needed to cover housing costs, mortgage payment, property tax, heating, and half of any condo fees. Most A-lenders cap GDS at 39% for borrowers with good credit (680+), and at 35% for borrowers with lower credit scores.
- Gift Letter
- A signed letter confirming that money for your down payment is a genuine gift from a family member, not a loan. Lenders require it so they know the funds do not add to your debt.
H
- HELOC (Home Equity Line of Credit)
- A revolving line of credit secured against your home's equity, available up to a set limit, typically up to 65% of your property's appraised value minus any outstanding mortgage balance. Unlike a mortgage, you borrow only what you need and pay interest only on what you use. The rate is variable, tied to prime, and a minimum 20% equity position is required.
- High-Ratio Mortgage
- A mortgage where the down payment is less than 20% of the purchase price, meaning the loan covers more than 80% of the home's value. High-ratio mortgages require mortgage default insurance.
- Home Buyers' Plan (HBP)
- A federal program that lets eligible first-time buyers withdraw funds from their RRSP, tax-free, to put toward a home purchase, as long as the amount is repaid to the RRSP over a set number of years afterward.
I
- Insurable Mortgage
- A mortgage with 20% or more down that still meets default-insurance rules (such as under $1.5M, a 25-year amortization, and owner-occupied), so the lender can insure it in the background and pass you a lower rate. It sits between insured and uninsured.
- Insured Mortgage
- A mortgage protected by default insurance, required whenever the down payment is under 20% on a home priced under $1.5 million. The premium is based on the down payment size and is usually added to the mortgage principal.
- IRD (Interest Rate Differential)
- The penalty a lender charges for breaking a fixed-rate mortgage before the end of its term. Calculated as the difference between your contract rate and the lender's current posted rate for the remaining term, applied to your outstanding balance for each remaining month. IRD penalties can be substantial, often several months' worth of mortgage payments, and vary significantly by lender.
L
- Land Transfer Tax
- A one-time tax paid to the province (and, in Montreal, also the city) when a property changes ownership, calculated on a sliding scale based on the purchase price. In Quebec it's often called the "welcome tax," and there is no provincial first-time-buyer rebate on it.
- Lender
- The financial institution, a bank, credit union, trust company, or monoline lender, that provides the mortgage funds. A mortgage broker like Team Levine shops your application across many lenders to find the best fit.
- Loan-to-Value (LTV)
- The size of your mortgage compared to the value of the property, shown as a percentage. A $400,000 mortgage on a $500,000 home is an 80% LTV. Above 80% LTV, mortgage default insurance is generally required.
M
- Maturity Date
- The date your current mortgage term ends. At maturity you must renew with your lender, switch to a new lender, or pay off the remaining balance in full.
- Monoline Lender
- A lender that specializes only in mortgages and works through brokers rather than branches. Monolines often offer sharper rates and fairer penalty terms, and are a big reason a broker can beat the banks.
- Mortgage Broker
- A licensed professional who shops multiple lenders on your behalf to find the best mortgage, rather than offering only one bank's products. A broker's service is typically free to you because the lender pays them.
- Mortgage Commitment
- A formal letter from the lender confirming the exact terms, amount, rate, and conditions, they're prepared to lend for a specific property, issued once your purchase offer and the underwriting are finalized.
- Mortgage Term
- The length of time your current rate and conditions apply, commonly 1 to 5 years, within the much longer overall amortization period. At the end of the term, you renew or switch lenders.
N
- NOA (Notice of Assessment)
- The summary the Canada Revenue Agency sends after processing your tax return, confirming your reported income and any amounts owing. Lenders commonly request your most recent NOA to verify income, especially for self-employed applicants.
- Notary
- In Quebec, the legal professional who handles the closing of a property purchase, verifies title, registers the mortgage, and disburses funds. Their fee is part of your closing costs.
O
- OAC (On Approved Credit)
- A disclaimer meaning an advertised rate or offer is only available to applicants who pass the lender's credit and income approval, it's not guaranteed to every applicant.
- Open Mortgage
- A mortgage that can be paid off, in part or in full, at any time without penalty. Open mortgages offer maximum flexibility but typically carry a higher interest rate than closed mortgages.
P
- Portability
- A mortgage feature that lets you transfer your existing rate and terms to a new property when you move, avoiding a prepayment penalty on the amount being carried over. Most closed fixed-rate mortgages in Canada are portable, subject to lender approval and a defined transfer window.
- Posted Rate
- The advertised rate a lender publishes publicly for a given term, before any discount is applied. Posted rates matter because lenders use them, not your actual contract rate, to calculate the Interest Rate Differential (IRD) penalty when you break a fixed-rate mortgage, which can make the penalty significantly larger than expected.
- Pre-Approval
- An estimate from a lender of how much you could borrow and at what rate, based on a review of your income, debts, and credit before you've found a specific property. It's a strong starting point but isn't a guarantee of final financing.
- Prepayment Penalty
- A charge a lender applies if you break or pay off a closed mortgage early. On fixed rates it is usually the greater of three months' interest or the interest rate differential (IRD); on variables it is typically three months' interest.
- Prepayment Privilege
- The portion of your mortgage balance you're allowed to pay down each year, beyond your regular payments, without triggering a penalty, commonly 10–20% of the original principal annually on a closed mortgage.
- Prime Rate
- The benchmark interest rate set by major Canadian banks, closely tracking the Bank of Canada's overnight rate. Variable-rate mortgages and HELOCs are typically priced as prime plus or minus a fixed spread, so when the Bank of Canada moves its rate, your variable-rate payment often follows.
- Principal
- The amount you originally borrowed (or currently still owe), not including interest. Each payment you make is split between principal, which reduces your balance, and interest, which is the lender's charge for the loan.
- Purchase Plus Improvements
- A mortgage program that lets you borrow extra to renovate a home right after buying it, based on the property's improved value, so the upgrades are financed at your low mortgage rate instead of a credit card.
R
- Rate Hold
- A lender's guarantee to honour a specific interest rate for a set period, commonly 90 to 120 days, even if posted rates rise before you close, protecting you while you shop for a home or finalize your renewal.
- Refinance
- Replacing your existing mortgage with a new one, often to access home equity, consolidate debt, or change your rate or terms before your current term ends. Refinancing before maturity may involve a prepayment penalty.
- Renewal
- Signing a new term with your existing lender once your current term reaches its maturity date, at a new rate reflecting current market conditions. You're free to shop other lenders at renewal instead of accepting the default offer.
- Reverse Mortgage
- A loan for homeowners (usually 55+) that lets you borrow against your home equity without monthly payments; the balance is repaid when you sell or leave the home. It can provide retirement income but reduces the equity you keep.
S
- Second Mortgage
- An additional loan secured against your home on top of your first mortgage. It ranks behind the first mortgage if the home is sold, so it usually carries a higher rate. It can be a way to access equity without breaking your first mortgage.
- Stress Test
- A federal qualifying rule requiring borrowers to prove they could afford their payments at a higher "qualifying rate" than their actual contract rate, to ensure they can absorb future rate increases.
T
- TDS (Total Debt Service Ratio)
- The percentage of your gross monthly income needed to cover housing costs plus all other debt payments, such as car loans and credit cards. Most lenders cap TDS at 44%.
- Title Insurance
- A one-time-premium insurance policy that protects you and your lender against problems with the property's legal title, such as fraud, survey errors, or undisclosed liens, that a title search might miss.
- Trigger Rate
- On a variable-rate mortgage with fixed payments, the interest rate at which your payment no longer covers the interest owing. If rates rise past it, your lender may increase your payment or ask you to act. It is a key risk to understand with fixed-payment variables.
U
- Uninsured Mortgage
- A mortgage that does not qualify for mortgage default insurance, for example on a home over $1.5M, a 30-year amortization with 20%+ down, or a rental. Uninsured mortgages usually carry slightly higher rates than insured ones.
V
- Variable Rate
- An interest rate that moves with the lender's prime rate over your term, so your interest cost (and sometimes your payment) can rise or fall during the term. It often starts lower than a fixed rate but carries more uncertainty.