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 length of time over which your mortgage is fully paid off. Canadian conventional limits: 25 years for insured, up to 30 for uninsured (or 30 for first-time buyers on new construction). Longer amortization = lower payment but more 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 lender that prices slightly higher than A lenders but flexes on credit history, income documentation, property condition, or self-employed earnings. Equitable, Home Trust, CMLS, and Manulife Bank are common B lenders.

OSFI's underwriting guideline that governs federally regulated lenders. B-20 introduced the mortgage stress test and the dual qualifying rate, and shapes most of the rules you experience at any A lender.

When you increase your existing mortgage amount mid-term, the lender averages your current rate with today's posted rate, weighted by the balance and the new money. Used in refinances that avoid a full break.

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.

One-time costs payable on or before completion: land transfer tax, legal fees, title insurance, property insurance, adjustments (e.g. prepaid property taxes), and home inspection. Typical range: 1.5–4% of the purchase price.

The federal crown corporation that insures high-ratio mortgages (less than 20% down) and runs national housing programs. CMHC sets the rules that govern insured mortgages in Canada.

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. 680+ unlocks most A-lender rates. 600-680 typically routes to alt or B lenders.

The percentage of your gross income that goes to housing (GDS) or all monthly debt obligations (TDS). OSFI's stress test caps GDS at 39% and TDS at 44% on insured files.

The cash you put toward the purchase. Minimums: 5% on the first $500K, 10% on $500K–$1M, 20% above $1M. 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.

A registered account introduced in 2023. Contributions are tax-deductible (like an RRSP), withdrawals for a qualifying first home are tax-free (like a TFSA). $8,000/yr, $40,000 lifetime cap.

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.

Your housing costs (mortgage payment + property tax + heating + 50% of condo fees) as a percentage of gross income. Most lenders cap GDS at 39% on insured files, 44%+ at alt lenders.

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. Premium ranges from 2.8% to 4.0% of the loan and is 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.

The fixed-rate penalty calculated as the difference between your current rate and today's posted rate for the remaining term, applied to your balance. Almost always much higher than the 3-month interest alternative.

A provincial (and in Toronto, municipal) tax payable on every property purchase. Ontario rates range from 0.5% to 2.5% by price band. Toronto adds a matching municipal tax.

Your loan amount divided by the property value. 80% LTV = 20% down. Maximum LTV on insured purchases is 95% on first $500K, 90% above.

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, calculated using Canadian semi-annual compounding. Insured files can switch to bi-weekly accelerated payments to shave years off the mortgage.

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 written commitment from a lender estimating how much you can borrow at what rate, valid for 90-120 days. Subject to property appraisal and final underwriting on a real purchase.

The fee charged when you break or pay out a closed mortgage early. Variable-rate breaks: 3-month interest. Fixed-rate breaks: greater of 3-month interest or IRD — and IRD can be brutal.

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 each Canadian bank uses to price its variable-rate products. Each bank sets its own, but they all move within 0.05% of each other and only after the Bank of Canada moves its overnight rate.

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 commitment to honor today's rate for a specified period — typically 90 to 120 days. If rates drop, most lenders re-rate you to the new lower rate. If they rise, you keep your hold.

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 — same property, new rate, new term. About 60% of Canadians take the bank's first offer; brokers typically beat it by 30-60bps.

A loan for homeowners 55+ that lets you access up to 55% of your home's equity 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 standard for fixed-rate mortgages: interest is calculated on a semi-annual basis and applied to the daily balance. Makes Canadian rates look slightly higher than the US equivalent on a monthly-compounding basis.

The mandatory check that you'd still qualify if rates rose to a higher "qualifying rate." Set by OSFI as greater of your contract rate + 2% or 5.25%. Limits how much you can borrow.

All your monthly debt obligations (mortgage + property tax + heating + credit cards + loans + 50% condo fees) as a percentage of gross income. Most lenders cap TDS at 44% on insured files.

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 policy purchased at closing that protects the lender (and optionally you) against title fraud, encroachments, or undiscovered liens. Typical cost: $250-$500.

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.