Canadian mortgage terms, in plain English.

The total period over which a mortgage is scheduled to be paid off in full through regular payments. Standard Canadian amortization options are 25 or 30 years. Insured mortgages (less than 20 percent down) are capped at 25 years.

The length of time a specific mortgage contract and rate are in effect, typically 1 to 10 years in Canada. At term maturity the mortgage renews, either with the same lender or by switching to a new one. A term is separate from amortization.

The outstanding balance of a mortgage, separate from interest. Each regular payment is split between principal (reducing the balance) and interest (cost of borrowing).

The cost of borrowing, expressed as an annual rate and charged on the outstanding principal balance. Canadian fixed-rate mortgages compound semi-annually; variable rates compound monthly.

The ratio of mortgage balance to property value, expressed as a percentage. A $800,000 mortgage on a $1,000,000 home is 80 percent LTV. LTV determines whether a mortgage is insured, insurable, or conventional, and affects rate tier.

The portion of a property purchase paid up front, not financed by the mortgage. Minimum 5 percent on the first $500,000, 10 percent on the portion between $500,000 and $1.5 million, and 20 percent on any portion above $1.5 million.

A mortgage with less than 20 percent down payment (LTV above 80 percent). High-ratio mortgages must be insured through CMHC, Sagen, or Canada Guaranty, with the insurance premium added to the mortgage principal.

A mortgage with 20 percent or more down payment (LTV of 80 percent or below). Low-ratio mortgages do not require insurance but may be insurable at the lender's option.

A revolving line of credit secured against home equity. Allows borrowing up to 65 percent of property value (or 80 percent combined with any mortgage balance). Interest-only minimum payment, rate typically prime plus a margin.

A mortgage registered as a collateral charge, which allows the lender to re-advance funds without a new mortgage registration. Makes it harder (and more expensive) to switch lenders at renewal.

A traditional mortgage registration for a specific amount. Unlike a collateral mortgage, it can be assigned from lender to lender at renewal without requiring a new registration, making lender switching cheaper.

A table showing each scheduled payment over the full amortization, broken into principal and interest. Early payments are mostly interest; later payments are mostly principal.

A payment frequency where the monthly payment is halved and paid every two weeks, resulting in 26 half-payments per year (equivalent to 13 full months). Reduces amortization by roughly 3 to 4 years on a standard 25-year mortgage.

A mortgage with 20 percent or more down, under $1 million purchase price, owner-occupied, and amortization 25 years or less. Qualifies for bulk insurance purchased by the lender (not the borrower), often receiving the best rates.

A mortgage with 20 percent or more down that is not insured or insurable. Includes rentals, mortgages over $1M, amortizations over 25 years, and properties outside insurability criteria. Typically carries a small rate premium over insured and insurable rates.

A mortgage where the interest rate is locked for the duration of the term. Payment amount stays the same throughout. Most Canadian mortgages are 5-year fixed.

A mortgage where the interest rate fluctuates with the lender's prime rate. In Canada, most variable mortgages keep the payment static and adjust how much goes to principal versus interest. True variables adjust the payment itself.

A variable-rate mortgage where the payment amount itself adjusts with rate changes, unlike the more common Canadian variable that keeps payments static.

The reference rate Canadian banks use for variable-rate lending, set independently by each bank but closely tracking the Bank of Canada overnight rate.

The higher-of-two rate used to test whether a borrower can afford a mortgage under the Canadian stress test. Equal to the contract rate plus 2 percent, or 5.25 percent, whichever is higher.

A mortgage that can be paid off or refinanced at any time without penalty. Rates are materially higher than closed mortgages. Used mainly for short-term bridge situations.

A mortgage with fixed terms and prepayment penalties if paid off, refinanced, or transferred before term maturity. The vast majority of Canadian mortgages are closed.

Short-term financing (typically days to 90 days) that covers the gap between buying a new property and closing the sale of an existing one. Rates are prime plus a margin.

The percentage of gross annual income required to cover housing costs (mortgage payment, property tax, heating, and 50 percent of condo fees). Typical Canadian limit is 35-39 percent.

The percentage of gross annual income required to cover housing costs plus all other monthly debt payments (credit cards, car loans, lines of credit, student debt). Typical Canadian limit is 42-44 percent.

The OSFI B-20 requirement that Canadian borrowers qualify at the higher of contract rate plus 2 percent or 5.25 percent. Applies to all federally regulated lenders including all major banks.

A preliminary lender assessment that confirms the maximum mortgage a borrower qualifies for and typically locks in a rate for 90 to 120 days. Not binding, but lets buyers shop with a concrete budget.

A commitment from a lender to offer a specific rate for a set period (typically 90 to 120 days) while the borrower shops for a property.

A mortgage on a non-owner-occupied investment property. Requires 20 percent minimum down payment, higher rate premium (typically 10-25 basis points above owner-occupied), and different debt-servicing treatment.

Crown corporation that provides mortgage default insurance for high-ratio mortgages. The original and largest mortgage insurer in Canada. Premiums range from 2.80 percent to 4.00 percent of the mortgage amount depending on LTV.

Private Canadian mortgage default insurer (formerly Genworth Canada). Operates alongside CMHC and Canada Guaranty. Premium rates are broadly equivalent across the three insurers.

Private Canadian mortgage default insurer, the third of three insurers alongside CMHC and Sagen. Operates independently but follows similar premium structures.

Insurance required on high-ratio mortgages (less than 20 percent down) that protects the lender if the borrower defaults. Premium is paid by the borrower, typically added to the mortgage principal rather than paid up front.

One-time insurance purchased at closing that protects against title defects, fraud, and survey issues. Typically $300 to $500 in Canada. Required by most lenders.

Provincial tax paid at closing on most Canadian property purchases. Ontario, British Columbia, Manitoba, Quebec, New Brunswick, and Nova Scotia charge LTT. Toronto is the only Canadian city with a municipal LTT on top of the provincial one.

Municipal tax charged by the City of Toronto in addition to Ontario provincial LTT. On a $1.65M home the combined (provincial + municipal) LTT is approximately $56,000 before first-time buyer rebates.

Fees paid at mortgage closing beyond the down payment: land transfer tax, legal fees, title insurance, property tax adjustments, and miscellaneous charges. Typically 1.5 to 4 percent of purchase price depending on province.

Specialty mortgage program offered by major Canadian banks (Scotia, RBC, TD, CIBC, National Bank) that qualifies physicians using projected attending income, signed training contracts, alternative income documentation, and structured student debt treatment.

Qualification method used by physician mortgage programs where the lender uses post-training attending income rather than current resident stipend, based on signed contracts and specialty career averages. Lets residents and fellows qualify at attending-level prices.

High-limit unsecured line of credit offered by Scotia, RBC, TD, CIBC, and National Bank to Canadian physicians. Limits range from $150,000 to $350,000 at prime-linked rates. PLOCs carry no amortization and accrue interest only on the drawn balance.

Corporate structure permitted for licensed professionals including physicians, dentists, lawyers, and accountants. Used for tax-efficient income retention. Affects mortgage qualification because personal T4 income typically understates true earning capacity by 40-60 percent.

Mortgage qualification method that uses corporate revenue, dividend history, and retained earnings alongside personal T4 income. Available through physician-program and monoline lenders. Typically unlocks 50-80 percent more qualification capacity for incorporated physicians.

Mortgage structured for locum (fee-for-service) physicians using T4A income and invoice history. Available through specialty lenders. Documentation requirements are higher than salaried physician programs but rates are comparable.

Mortgage for a Canadian medical resident using projected attending income and signed residency contract. Typical structure is 5 to 10 percent down with student debt treated as structured rather than disqualifying.

Mortgage for a staff physician past residency and fellowship. Qualification uses full attending salary or corporate income depending on structure. Typical range $1.2M to $2.5M+ depending on specialty and corporate status.

The process of signing a new term on an existing mortgage at term maturity. Borrowers can renew with the same lender, switch to a new lender with zero penalty, or pay off the mortgage entirely.

Replacing an existing mortgage with a new one, typically to access equity, consolidate debt, or change terms. Involves breaking the current mortgage mid-term, which usually triggers a prepayment penalty.

A charge for paying off a closed mortgage before term maturity. For variable-rate mortgages, typically 3 months of interest. For fixed-rate, the greater of 3 months interest or the Interest Rate Differential (IRD).

A prepayment penalty calculation used by Canadian lenders on fixed-rate mortgages. Based on the difference between the contract rate and the lender's current posted rate for a comparable remaining term. IRD calculations vary significantly by lender.

Annual lump-sum prepayment limit (typically 10 to 20 percent of original principal) and payment increase allowance that can be exercised each year without triggering a penalty. Varies by lender.

A refinance option offered by lenders where the existing rate is blended with a current rate and the term is extended. Avoids IRD penalty but often results in a rate slightly worse than a clean switch.

A mortgage that can be transferred to a new property without breaking the term or triggering a penalty, subject to lender approval. Useful for buyers who may move mid-term.

A mortgage that a buyer can take over from the seller on the original terms, subject to lender approval. Rare in current market because existing mortgage rates are typically below current rates.

The legal release of a mortgage when it is paid off or transferred to a new lender. The lender removes its charge from title. Typically handled by a lawyer at a cost of $300 to $500.

Registered account introduced in 2023 allowing first-time buyers to save up to $8,000 per year (lifetime max $40,000) with tax-deductible contributions and tax-free withdrawals for a home purchase.

Program allowing first-time buyers to withdraw up to $60,000 from an RRSP for a home purchase tax-free. Must be repaid to the RRSP over 15 years beginning in year 2 after withdrawal.

Provincial (and in Toronto's case, municipal) rebate of up to $4,475 each on land transfer tax for first-time buyers. Ontario buyers in Toronto can receive both rebates totalling up to $8,950.

A Canadian tax strategy that converts non-deductible mortgage interest into tax-deductible investment loan interest over time by reborrowing principal paid down and investing it. Requires a readvanceable mortgage.

Ontario regulator for mortgage agents and brokerages. Issues Mortgage Agent Level 1, Level 2, and Mortgage Broker licenses. Successor to the Financial Services Commission of Ontario (FSCO).

Federal regulator of Canadian banks, trust companies, and insurers. Issues the B-20 residential mortgage underwriting guideline that mandates the mortgage stress test.

OSFI guideline governing residential mortgage underwriting at federally regulated lenders. Sets the framework for the stress test, income verification, debt service ratios, and LTV limits.

Ontario mortgage license tier required to advise on private lending and complex mortgage structures. Higher qualification threshold than Level 1. Licensed through FSRA.

Prime mortgage lenders including the major Canadian banks and prime monoline lenders. Offer the lowest rates to borrowers with strong credit, verifiable income, and standard property types.

Alternative mortgage lenders who offer loans to borrowers outside prime qualification (self-employed with limited T4 history, bruised credit, unique properties). Rates are typically 1-3 percent higher than A-lenders.

Canadian mortgage lender that only offers mortgages, unlike banks which offer multiple products. Examples include MCAP, First National, RMG, CMLS, Strive, and Merix. Typically accessed only through mortgage brokers.

Individual investors or funds that lend on mortgages outside the A and B lender spaces. Used for unique situations, short-term bridge, or borrowers who cannot qualify elsewhere. Rates are meaningfully higher.

Member-owned financial institution. Provincially regulated (most are not subject to OSFI B-20 stress test, though many apply it voluntarily). Often offer competitive rates to members.