Mortgage Terms, in Plain English.
Mortgage paperwork is full of acronyms and jargon. This glossary translates the terms you're most likely to run into — amortization, GDS/TDS, porting, IRD, the stress test and more — into simple language, with links to deeper guides where a topic deserves one. It's general information for Vaughan and GTA borrowers, not advice.
Getting a mortgage
The building blocks — how a mortgage is structured and the steps to secure one.
The total length of time it would take to pay off your mortgage in full through regular payments — often 25 or 30 years. It's different from your term. A longer amortization lowers each payment but means more interest paid over time.
The length of your current mortgage contract with a lender — commonly one to five years. At the end of the term you renew, refinance, or pay the balance. Your rate and conditions are locked for the term, not for the whole amortization.
A preliminary review of your finances that gives an estimate of how much you may be able to borrow and can hold a rate for a set window. It is not a final approval or a commitment to lend — the lender still verifies documents and the property before any firm decision. Learn more about pre-approval →
The portion of a home's purchase price you pay upfront from your own resources. The size of your down payment affects your loan-to-value ratio and whether default insurance is required. More on down payments →
A conditional approval means a lender is willing to proceed subject to conditions being met — such as verifying income, the down payment, and an acceptable property. Final (or unconditional) approval comes once all conditions are satisfied. Meeting conditions is required before funding; approval always rests with the lender.
The lender's process of assessing risk — reviewing your income, credit, down payment and the property to decide whether, and on what terms, to lend. See how underwriting works →
Rates & payments
How interest is set and what it means for your monthly payment.
A benchmark lending rate set by each lender, influenced by the Bank of Canada's policy rate. Variable-rate mortgages and lines of credit are usually priced as prime plus or minus a set amount, so their cost moves when prime changes. Bank of Canada rates →
A fixed rate stays the same for the whole term, so your payment is predictable. A variable rate moves with the lender's prime rate, so payments or the interest portion can change over the term. Which suits you depends on your budget and comfort with change.
A federal qualifying rule that has lenders confirm you could still afford payments at a rate higher than your contract rate. It affects how much you may qualify to borrow. The exact benchmark is set by regulators and can change over time. How qualifying works →
A charge that may apply if you break or pay out a fixed-rate mortgage early. The Interest Rate Differential (IRD) is one common method of calculating this penalty; another is a set number of months of interest. The amount depends on your lender, rate and remaining term.
Qualifying & credit
The ratios and lender categories that shape how much you can borrow and where.
The mortgage amount expressed as a percentage of the property's value or purchase price. A larger down payment means a lower LTV. Lenders use LTV to gauge risk, and it determines whether default insurance applies.
A ratio comparing your housing costs — mortgage payment, property taxes, heating and applicable condo fees — to your gross income. Lenders use it to assess affordability. More on GDS & TDS →
A ratio comparing all your monthly debt obligations — housing costs plus other loans and credit payments — to your gross income. Together with GDS it forms the core of debt-service testing. More on GDS & TDS →
The umbrella term for GDS and TDS. These ratios help a lender judge whether your income comfortably supports the debt you're carrying, alongside credit and other factors. See debt servicing →
A lender that specializes in mortgages and typically works through mortgage brokers rather than retail branches. Monolines can offer competitive options; availability through GNE Mortgages varies and is subject to lender approval.
A shorthand for lender categories. "A" lenders (banks and many monolines) serve borrowers who fit standard guidelines; "B" lenders serve those needing more flexibility; private lenders address situations mainstream lenders can't, usually at higher cost. Compare lending options →
Managing your mortgage
Terms that come up when you renew, refinance, move or borrow against your home.
What happens at the end of a term when you agree to a new term with your current lender or move to another. It's a natural point to review your rate and options. About renewals →
Replacing your existing mortgage with a new one — often to access equity, change terms, or consolidate debt. Refinancing may involve costs and re-qualifying. About refinancing →
Moving an existing mortgage — often its rate and terms — from one property to another when you sell and buy. Whether porting is available, and any conditions, depends on your lender and product.
A Home Equity Line of Credit — a revolving credit facility secured against your home's equity, letting you borrow, repay and re-borrow up to a limit. Learn about HELOCs →
Mortgage default insurance that may be required when the down payment is below a set threshold. It protects the lender if payments stop; the premium is typically paid by the borrower. CMHC is one of the providers of this insurance. More on CMHC insurance →
Costs & closing
The expenses and safeguards that come into play as a purchase completes.
An independent estimate of a property's market value, which a lender may require to confirm the security for a mortgage. About appraisals →
A policy that protects against certain title-related risks, such as survey issues or fraud affecting ownership. It's commonly arranged at closing. About title insurance →
The one-time expenses that come due when a purchase completes — such as legal fees, title insurance, appraisal and land transfer tax. Budgeting for these alongside your down payment avoids surprises. See closing costs →
A tax payable when property changes ownership, calculated on the purchase price. Rates and any rebates vary by province and municipality. About land transfer tax →
Related pages
Learning Centre
Browse plain-English guides across every stage of the mortgage process.
Calculators
Estimate payments, affordability and costs with easy-to-use tools.
Mortgage Qualification
How the stress test and debt-service ratios shape what you can borrow.
Underwriting
What lenders review behind the scenes before making a decision.
Still have a term you're unsure about?
Ask Paul — he'll explain it in plain language.