Mortgage Glossary
Mortgage glossary
Plain-language definitions for the terms that come up most often when financing a home.
- Amortization
- The total length of time it takes to pay off your mortgage in full through regular payments — typically 25 to 30 years in Canada.
- Appraisal
- A professional’s independent estimate of what a property is actually worth, usually required by your lender before closing.
- Balloon payment
- A large lump-sum payment due at the end of a loan term.
- Bridge loan
- A short-term loan that covers the gap when your new home closes before your current one sells.
- Closing costs
- The fees due on closing day beyond the purchase price — legal fees, land transfer tax, title insurance and adjustments.
- Conventional mortgage
- A mortgage with at least 20% down, which means no mortgage default insurance is required.
- Debt-to-income ratio (DTI)
- How much of your gross income goes toward debt payments each month — a key number lenders use to size your approval.
- Down payment
- The portion of the purchase price you pay upfront in cash — the rest is financed by your mortgage.
- Equity
- The difference between what your home is worth and what you still owe on it.
- Fixed-rate mortgage
- A mortgage where your interest rate is locked in for the full term, so your payment doesn’t change.
- Foreclosure
- A legal process where a lender takes possession of a property due to missed mortgage payments.
- Insurable mortgage
- A mortgage with a down payment of 20% or more that meets certain criteria, allowing the lender to insure it.
- Insured mortgage
- A mortgage with less than 20% down, which requires mortgage default insurance.
- Interest rate
- The cost of borrowing, expressed as a percentage of the loan — the biggest factor in your monthly payment.
- Loan-to-value ratio (LTV)
- Your mortgage amount as a percentage of the property’s appraised value.
- Mortgage insurance
- Insurance that protects the lender in case of borrower default, often required for low-down-payment loans.
- Pre-approval
- A lender’s conditional confirmation of how much you can borrow, based on your income and credit — the real first step before you shop.
- Uninsured mortgage
- A mortgage with a down payment of at least 20% that doesn’t require mortgage default insurance, often used for properties over $1 million or rental properties.
- Variable-rate mortgage
- A mortgage where the interest rate moves with the lender’s prime rate, so your payment can change over the term.
Have a term that’s not here? Ask me directly — or run your own numbers on the mortgage calculator.