The Canadian mortgage glossary.

A bank or monoline that prices its lowest rates and tightest underwriting against borrowers who fit prime credit, income, and property criteria. The big banks (RBC, TD, Scotia, BMO, CIBC, NB) and major monolines (MCAP, First National, MERIX) are A lenders.

Umbrella term for any non-bank financing — B lenders, monolines with relaxed criteria, private lenders. Used when your file doesn't fit prime A-lender boxes.

The total length of time it would take to pay your mortgage off completely if the rate and payments stayed the same. In Canada, insured mortgages (under 20% down) are capped at 25 years, or 30 years for first-time buyers and buyers of new builds; with 20% or more down, the lender sets the maximum (commonly 30 years). A longer amortization lowers the payment but raises lifetime interest.

An independent valuation of the property used by the lender to confirm the purchase price is reasonable and to determine maximum loan-to-value. Most files require a full appraisal; some refinances accept a desktop or automated valuation.

An alternative ("alt-A") lender that prices higher than A lenders but flexes on credit history, income documentation, property condition, or self-employed earnings. Examples include the alternative-lending programs of Equitable Bank and Home Trust.

OSFI's Residential Mortgage Underwriting Practices and Procedures guideline for federally regulated lenders (banks and federally regulated trust and loan companies). Its 2018 revision added the minimum qualifying rate (stress test) for uninsured mortgages, and it caps non-amortizing HELOC credit at 65% of the property value.

A single rate that combines your existing mortgage rate with the lender's current rate on new money (or on a new term), weighted by the amounts involved. Lenders offer it when you add funds mid-term or port to a bigger mortgage, so you avoid a full prepayment penalty.

Short-term loan that lets you close on a new home before the sale of your existing one funds. Priced at prime + premium, secured against both properties, typically up to 90-120 days.

A mortgage that limits how much extra you can prepay each year and charges a penalty if you break the term early. Almost all standard Canadian mortgages are closed because the rates are materially lower than open.

The one-time costs you pay on or before the closing date, on top of your down payment: land transfer tax, legal fees and disbursements, title insurance, adjustments (such as property tax the seller prepaid), the home inspection and, on some files, an appraisal. A common planning range is 1.5% to 4% of the purchase price.

Canada Mortgage and Housing Corporation, the federal Crown corporation that provides mortgage default insurance (required when you put less than 20% down with a federally regulated lender) and runs national housing programs. The core eligibility rules for government-backed insured mortgages are set federally; CMHC publishes its own underwriting criteria on top.

A creditworthy individual (often a parent) who agrees to be equally liable for the mortgage so the primary applicant qualifies. The co-signer's income is added to the application; their credit is fully exposed.

A mortgage registered against your property for more than the actual loan amount, letting you increase the limit later without re-registering. Common at TD and Scotia. Makes inter-lender switches harder mid-term.

A mortgage that funds the build of a new home in stages (draws), tied to inspection milestones. Converts to a standard mortgage on completion. Higher rates during the construction phase.

A formal arrangement under the Bankruptcy and Insolvency Act to repay creditors a portion of what you owe. Active proposals route mortgages to B and private lenders; A lenders typically require 24 months of clean post-proposal credit.

A mortgage with at least 20% down. No mortgage default insurance required. Pricing is typically higher than insured because the lender carries more of the credit risk.

A specialty alternative-lending program that lets homeowners refinance to clear CRA arrears. Most A lenders refuse files with open CRA debt; private and B lenders bridge until the debt is cleared.

A 300–900 score from Equifax or TransUnion summarizing your credit history. Roughly 680+ opens the widest range of A-lender options; CMHC-insured mortgages need at least one borrower at 600 or higher; lower scores usually route to alternative (B) lenders.

The percentage of your gross income that goes to housing (GDS) or to housing plus all other monthly debt payments (TDS). On insured mortgages, CMHC caps GDS at 39% and TDS at 44%; the ratios are calculated at the stress-test qualifying rate.

The cash you put toward the purchase. Minimums: 5% on the first $500K and 10% on the portion from $500K to $1.5M; at $1.5M or more, 20%. Below 20% requires CMHC, Sagen, or Canada Guaranty insurance.

The difference between your home's current value and your remaining mortgage balance. Equity is what you can borrow against (HELOC, refinance) or what you keep when you sell.

The First Home Savings Account, a registered account available since April 2023 to first-time home buyers. Contributions are tax-deductible (like an RRSP) and a qualifying withdrawal to buy a first home is tax-free (like a TFSA). Participation room is $8,000 a year, with a $40,000 lifetime limit.

Your interest rate is locked for the entire term — typically 1 to 10 years, with 5-year fixed being the Canadian default. Predictable payments, but breaking early triggers IRD penalties.

Ontario's mortgage broker regulator. Replaced FSCO in 2019. All Ontario brokerages, agents, and brokers operate under FSRA licensing. Mortgage Squad Advisors is FSRA-licensed #13737.

Gross Debt Service ratio: your monthly housing costs (mortgage principal and interest, property tax, heating, and 50% of condo fees) divided by your gross monthly income. CMHC caps GDS at 39% on insured mortgages; uninsured and alternative lenders set their own limits.

A revolving line of credit secured against your home, typically up to 65% LTV stand-alone or 80% combined with a mortgage. Variable rate (prime + spread), interest-only minimums, redraw any time.

A mortgage with less than 20% down — requires default insurance from CMHC, Sagen, or Canada Guaranty. At CMHC the premium is 2.80% to 4.00% of the loan in the high-ratio range (up to 4.50% with a non-traditional down payment) and is usually added to the principal.

A professional review of the property's structural, mechanical, and safety condition. Not legally required but strongly recommended on every resale purchase. Typical cost: $400-$700.

A mortgage with 20%+ down where the lender pays the insurance premium themselves (you don't see it). Lenders do this because insured loans are cheaper to securitize, so they pass some of the saving on as a lower rate.

A mortgage on a non-owner-occupied rental property. Minimum 20% down (35% on 5+ unit commercial). Rental income partially offsets debt service; lenders cap how much rent can be used.

Interest Rate Differential: a prepayment penalty on closed fixed-rate mortgages that approximates the interest the lender loses when you break early. It's roughly your balance × (your rate − a comparison rate for the time left in your term) × the years remaining. On a fixed mortgage you usually pay the greater of the IRD or three months' interest.

A tax paid by the buyer when land changes hands. In Ontario it's charged on a marginal scale from 0.5% to 2.5% of the price; homes in the City of Toronto also pay a municipal land transfer tax (MLTT) with the same brackets up to $2 million and higher rates on luxury tiers.

Loan-to-value ratio: your mortgage balance divided by the property's value (the lower of purchase price or appraised value on a purchase). 80% LTV means 20% equity. Insured purchases can go up to 95% LTV on homes of $500,000 or less; above that, the 10% down-payment tier lowers the maximum.

A lender that only does mortgages — no chequing, savings, or banking. Often offers the sharpest A-lender pricing (MCAP, First National, RFA, MERIX, Strive, CMLS). Service is through brokers only.

Principal + interest payable each month. Canadian fixed-rate mortgages are normally quoted with semi-annual compounding. Most lenders let you switch to accelerated bi-weekly or weekly payments to pay the mortgage off sooner.

A licensed professional who shops your mortgage across multiple lenders to find the best fit. Paid by the lender on funding (not by you). Regulated provincially — FSRA in Ontario.

Insurance the lender takes out (you pay the premium) when your down payment is under 20%. Provided by CMHC, Sagen, or Canada Guaranty. Protects the lender if you default — you do not get insurance proceeds.

A mortgage you can repay in full at any time without penalty. Rates are materially higher than closed (often 1%+ more). Used by people planning to sell or refinance within 6-12 months.

Moving your existing mortgage to a new property without breaking the term — avoids the prepayment penalty. Most A lenders allow porting within a 30-90-day window of selling.

An Ontario lender's right to sell a property to recover an unpaid mortgage without going through formal foreclosure. Faster than US-style foreclosure. Specialty advisors can negotiate workouts.

A lender's conditional, written estimate of the maximum mortgage you can get and the rate it will hold for you while you shop. Rate guarantees run about 60 to 130 days depending on the lender. It is not a final approval: the property, appraisal and updated documents still have to be approved.

The charge for paying off or breaking a closed mortgage before the end of its term (or prepaying more than your privileges allow). Closed variable: usually three months' interest. Closed fixed: usually the greater of three months' interest or the interest rate differential (IRD). Your contract sets the exact formula.

The % of your original principal you can pay down each year without penalty, plus any allowed payment increase. Typical: 10/10, 15/15, 20/20. Better privileges = faster mortgage-free.

The benchmark rate each Canadian bank sets for pricing variable-rate mortgages, HELOCs and lines of credit. The big banks' prime normally moves in step with the Bank of Canada's policy rate. As of the Bank's September 2, 2026 decision, the policy rate is 2.25% and big-bank prime is 4.45%.

The amount you actually borrowed. Each payment is split between principal (which reduces your balance) and interest. Early years are mostly interest; late years are mostly principal.

A mortgage funded by individuals or private investment funds rather than banks. Used when banks decline — bad credit, irregular income, short timeline, property condition. Rates 7-12%+; usually short-term.

A program letting you borrow against the after-renovation value of the property at the time of purchase. Up to ~$40K of renos can be rolled in. Funds released by the lender after inspection confirms work is done.

The stress-test rate you must qualify at: the greater of your contract rate plus 2% or 5.25%. Doesn't change what you actually pay — only whether you qualify.

A lender's promise to honour a specific rate for a set period while you shop or wait to close, commonly 90 to 120 days (FCAC notes 60 to 130 days, depending on the lender). If rates rise, you keep the held rate; if they fall, many lenders will give you the lower rate.

Replacing your existing mortgage with a new one — usually to access equity, drop your rate, consolidate debt, or extend amortization. Triggers a prepayment penalty if done mid-term.

When your term ends, you sign a new mortgage agreement for the remaining balance: same property, new rate and term, with your current lender or a new one. Federally regulated lenders must send a renewal statement at least 21 days before the term ends.

A loan for homeowners 55+ that lets you access up to 55% of your home's appraised value, tax-free, with no monthly payments required. Interest accrues; the loan is repaid when the home is sold or the last borrower dies.

A federal program letting first-time buyers withdraw up to $60,000 from their RRSP toward a down payment without paying tax — provided the funds are repaid to the RRSP over 15 years.

A loan secured against your home behind your existing mortgage. Rates are higher because the second lender is paid only after the first in a default. Typically used for short-term cash needs.

The Canadian convention for fixed-rate mortgages: the quoted annual rate compounds twice a year rather than monthly. At the same quoted rate, semi-annual compounding costs slightly less than monthly compounding, so a Canadian rate isn't directly comparable to a U.S. monthly-compounded one.

The check that you could still afford your mortgage at a higher "qualifying rate": the greater of your contract rate + 2% or 5.25%. OSFI sets it for uninsured mortgages at federally regulated lenders, and the federal government applies the same test to insured mortgages. It limits how much you can borrow, not what you pay.

Total Debt Service ratio: your monthly housing costs (mortgage principal and interest, property tax, heating, 50% of condo fees) plus all other monthly debt payments, divided by gross monthly income. CMHC caps TDS at 44% on insured mortgages.

The length of your current rate and contract — typically 1 to 10 years. Distinct from amortization (total payoff length). 5-year fixed is the Canadian default.

A one-time insurance policy, usually bought through your lawyer at closing, that protects the owner and/or lender against covered losses from problems with the property's title: for example title fraud, undisclosed liens or work orders, survey issues or encroachments. In Ontario the premium is typically a few hundred dollars on a residential purchase.

The lender's review of your application — credit, income verification, asset confirmation, property appraisal — leading to formal approval and a mortgage commitment.

A mortgage with 20%+ down where the lender keeps the credit risk on their balance sheet (no insurance). Pricing is typically slightly higher than insured.

A mortgage where your rate floats with the lender's prime rate (set off the Bank of Canada overnight rate). Payments either change with rate moves (adjustable) or stay fixed with more/less going to principal (variable).

When the seller acts as the lender, financing some or all of the purchase price in exchange for a registered mortgage. Common in commercial deals and in residential when bank financing is partial.