With an adjustable rate mortgage, the interest rate changes when the prime rate changes. If the interest rate goes up or down, so does the payment amount. The original amortization is maintained.

A legal agreement between the buyer and a seller of a property. The offer may be firm, meaning there are no conditions attached, or it may be conditional, which means specified conditions must be met before the deal closes.

Typically expressed in years or months, amortization is the length of time it takes to pay off the mortgage balance in full, if all payments are made on time and the terms of the mortgage stay the same. You can pay down your mortgage faster by reducing your amortization period and making higher mortgage payments. Amortization period differs from mortgage term, which is the length of the contract with your lender. When a term ends, you can either pay off your mortgage or renew it if your lender offers a renewal.

The individual(s) applying for mortgage financing.

A valuation of real estate conducted by a real estate appraiser, who is specifically trained to estimate the market value of real estate and is licensed to do so.

A property’s value as determined at a specified time. A real estate appraiser determines the appraised value during the mortgage origination process.

When a homeowner sells a mortgaged property, the mortgage may be assumed by the purchaser. Certain conditions, established by Home Trust, may apply.

A Bank, is an institution that deals in money and its substitutes and provides other money-related services. In its role as a financial intermediary, a bank accepts deposits and makes loans. For example, Canada’s Big 5: Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia & Canadian Imperial Bank of Commerce.

A Bridge Loan is an interim financing option used in the short-term until a long-term financing solution is in place. If a homeowner sells a property and plans to use the proceeds to purchase a new one, bridge financing may be used if the closing date for the newly purchased property occurs before the closing date for the sold property.

Canada Mortgage and Housing Corporation (CMHC) provides mortgage default insurance for high-ratio mortgages. A mortgage is high ratio when your down payment is less than 20% of the property value. This insurance is mandatory for federally regulated lenders, like banks. CMHC is a Crown corporation and a leading authority on the Canadian housing market.

With a cash-back mortgage, you get the mortgage principal and a percentage of the mortgage amount in cash. The interest rates on these mortgages are higher than on some other mortgages. You may want a cash-back mortgage if you need money for expenses such as new furniture or repaying loans to cover closing costs.

A charge, or mortgage, is security interest registered on title to secure a loan. A collateral charge allows a borrower to use their home as security for one or more loans, including mortgages or lines of credit.

A closed mortgage cannot be prepaid during the mortgage term by any amount greater than the allowable prepayment charge. Any prepayment in excess of the prepayment charges will be subject to a penalty for breaking the terms of the mortgage contract.

Closing costs are expenses you pay to close a property purchase and sale. As the buyer, your closing costs include land transfer tax, legal fees and any costs the lawyer pays on your behalf, such as title insurance, survey costs, courier charges, among others. The seller’s closing costs include real estate commission (if applicable), legal fees and any costs their lawyer pays on the seller’s behalf.

On the closing date, you pay the balance of the home purchase price to the seller, and the seller transfers title or ownership of the property to you.

A co-borrower is any additional named borrower whose income and credit history are used to qualify for the loan. All co-borrowers/co-applicants have the obligation to repay the loan.

A charge, or mortgage, is the document registered on title to secure a loan. A collateral charge may secure more than one loan or line of credit.

In a commercial mortgage, the mortgaged property is an income-producing commercial building rather than a residence. Commercial mortgages are usually much larger than residential mortgages. Lenders secure these loans with mortgages registered on title against multi-unit residential buildings, retail plazas, shopping centres, office and industrial buildings. Lenders review the commercial property’s appraised value and monthly income generation to determine how much the owner, often a business or corporation, may be approved for.

A conditional offer is an offer to buy a property only if certain conditions are met. For example, an offer could be conditional on the property passing a home inspection, or on the buyer selling their current home by a certain date.

A convertible mortgage is a type of short-term mortgage that can be converted to a longer-term mortgage without paying a prepayment charge. If you have a convertible mortgage, you might choose to convert it to a longer-term mortgage when interest rates fall.

A conventional mortgage is a mortgage that isn’t insured by CMHC or another mortgage default insurer. This essentially is a mortgage loan for 80% or less of the property’s market value. (Also can be referred to as a Low-Ratio Mortgage)

A construction mortgage is a mortgage that finances the construction of a new home or other building on a property.

A convertible mortgage is a type of short-term mortgage that can be converted to a longer-term mortgage without paying a prepayment charge. If you have a convertible mortgage, you might choose to convert it to a longer-term mortgage when interest rates fall.

A credit report is a record of your credit history. Data includes current and past financial debts, up to 7 years, and a record of debt payment. A lender uses a credit report, among other details, to decide whether to accept or deny your mortgage application. Lenders get credit reports from credit bureaus, like Equifax and TransUnion.

In Canada, a Credit Union is a financial cooperative owned and operated by its members. It offers similar services to traditional banks, such as savings accounts, loans, mortgages, and other financial products. However, unlike banks, which are owned by shareholders seeking profits, credit unions are owned by their members, who have voting rights and share in the institution’s profits through dividends or lower fees. They often focus on serving specific communities or groups and may offer competitive rates and personalized service due to their cooperative structure.

Creditor insurance is an insurance product that pays a financial benefit in the amount of your regular mortgage payment (or a portion of your regular mortgage payment) in the event of death, critical illness, disability or job loss.

Taking out a new loan to pay off other debts. Multiple debts are combined into a single, larger debt, usually with more favourable terms.

A measurement of your ability to repay a mortgage by calculating whether debt exceeds a specified percentage of your income. Lenders and mortgage insurers use two debt-service ratios as part of the process to determine if you qualify for a mortgage: gross debt service ratio (GDS) and total debt service ratio (TDS) (see definitions below).

A deed is a legal document written and signed by the seller. It transfers property ownership from the seller to the buyer.

A mortgage is in default when the borrower breaches an obligation of the mortgage

Insurance that protects lenders if a borrower defaults on their mortgage. If the mortgage lender is a Federally Regulated Financial Institution, then default insurance is mandatory in Canada when a down payment is less than 20% of the purchase price. Default insurance premiums are paid by the borrower at the beginning of their mortgage. Insurance premiums may be capitalized to the mortgage.

A measurement of your ability to repay a mortgage by calculating whether debt exceeds a specified percentage of your income. Lenders and mortgage insurers use two debt-service ratios as part of the process to determine if you qualify for a mortgage: gross debt service ratio (GDS) and total debt service ratio (TDS) (see definitions below).

A deposit is the amount of money you give a seller when you submit a signed agreement of purchase and sale to buy a property. The deposit is written into the agreement of purchase and sale. When the sale closes, the deposit goes towards part of the total purchase price.

In certain cases, the principal amount of a mortgage may increase; for example, due to adding deferred interest to the mortgage principal after the trigger rate is reached on a variable rate mortgage. If the principal amount of your mortgage exceeds the Designated Amount, the lender will require you to take steps to reduce the principal amount of the mortgage. The Designated Amount is set out in your mortgage disclosure documents, and at CIBC is usually 105% of the principal amount at origination or renewal.

A document that outlines the costs of paying out (i.e., discharging) an existing mortgage. The discharge statement usually includes the balance, discharge fee, interest since the last payment, per diem and penalties.

A down payment is the amount of money, including deposit, you put towards the purchase price of a property. Minimum down payments vary from 5% to 20%, depending on location. If your down payment is less than 20% of the property value, your mortgage is high-ratio and you need to buy mortgage default insurance.

A finance company is a type of financial institution that specializes in providing loans and credit to individuals and businesses. Unlike banks and credit unions, finance companies typically do not accept deposits from the public but instead raise funds through other means such as borrowing from banks, issuing bonds, or utilizing equity financing. They offer various types of loans including personal loans, auto loans, commercial loans, and equipment financing. Finance companies often cater to borrowers who may have difficulty obtaining financing from traditional banks due to credit issues or other reasons.

A Financial Institution is typically described as an establishment that completes and facilitates monetary transactions, such as loans, mortgages, and deposits. Financial institutions are a place where consumers can effectively manage earnings and develop financial footing. In Canada, Financial Institutions are regulated by the Office of the Superintendent of Financial Institutions (OSFI) and are governed by the Bank Act.

A firm offer is an unconditional offer to buy a property. Often, sellers prefer firm offers because the home sale is more likely to go through without major holdups.

The First Home Savings Account is a registered plan that’s designed to help you save for your first home, tax-free. Your qualifying contributions will be tax-deductible, like a registered retirement savings plan (RRSP). Your qualifying withdrawals will be non-taxable, like a tax-free savings account (TFSA).

If you default on your mortgage payments, your lender takes a legal action called foreclosure. Your lender takes over your property under a legal process called power of sale. You receive notice and have the chance to bring the mortgage back into good standing. If not, the lender can sell your property to recover money you owe them, including principal, interest, legal fees and charges.

If you have a fixed-rate mortgage, your interest rate and monthly payments stay the same for the entire mortgage term. If mortgage interest rates go up during the term, you’re protected because your rate stays the same.

The gross debt service ratio (GDSR) is the ratio or proportion of a borrower’s housing-related debt to their income. Lenders take GDSR into account when considering whether to approve a mortgage application. It is basically a portion of a borrower’s gross household income used for monthly payments of principal, interest, taxes, heating, municipal utilities, and condo or common fees.

The total income, including salary, hourly wages, commissions, and any other income, before taxes and deductions, of every borrower/applicant listed on the mortgage.

A person who promises to pay a borrower’s debt if the borrower defaults on their loan obligation. Guarantors pledge their own assets as collateral against the loan(s).

A high-ratio mortgage has a principal greater than 80% of the property value. If you have a high-ratio mortgage, you need mortgage default insurance because this is a high-risk loan. If you default on the mortgage, the insurance pays the lender for certain losses.

An amount withheld by the lender during construction or renovation of a house to ensure the construction or renovation is completed in an acceptable manner.

The federal HBA may provide a non-refundable tax credit for first-time home buyers. The federal tax credit rate is 15%, so claiming the $5,000 HBA could lower your income tax by $750. You can generally claim the HBA if you or your spouse or common-law partner acquired a qualifying home, provided you didn’t live in a home that either of you owned in the year the home was acquired or the prior 4 years.

The Home Buyers’ Plan (HBP) is a Canadian government program. It lets eligible individuals1 withdraw up to $35,000 each from their Registered Retirement Savings Plan (RRSP) to buy, build or maintain a qualifying home. You don’t have to pay income tax on the funds as long as you repay the full amount you withdraw from your RRSP over the next 15 years. If the full $35,000 is withdrawn, the minimum annual repayment is just $2,333. Conditions apply.

Eligible individuals are:

• First-time home buyers and their spouse or partner; or
• Those living separately and apart from a spouse or common-law partner for at least 90 days and started living separately and apart in the preceding 4 years as a result of a relationship breakdown.

Your home equity is the value of your home, minus total outstanding debt — such as mortgages and liens — registered against title to the property. Calculate as follows:

Property value – total debt secured by the property = home equity
Example: If your property is worth $500,000 and the mortgage is $400,000, your home equity is $100,000 ($500,000 – $400,000 = $100,000).

Your home equity increases as the debt secured by the property decreases.

A secured form of credit that uses the borrower’s home as a guarantee that they will pay back a loan. HELOCs are revolving credit, which means that users can borrow money, pay it back, and borrow it again, up to the available credit limit.

Buyers, sellers, owners or anyone who needs independent information about a property can hire a Registered Home Inspector (RHI) to do a home inspection.
The inspection confirms a home’s condition, identifies needed repairs and helps you decide whether to buy a property. Lenders may ask for a home inspection report when you apply for a mortgage.

An insured mortgage is a loan that requires mortgage default insurance (CMHC insurance), due to the lower level of equity the borrower holds in their home. A mortgage must be insured if the buyer makes a down payment less than 20% when purchasing their home.

Interest is the money you pay to your lender for using the funds you borrow. Interest is charged from the day you get the money. That day is known as the funding date.

The interest adjustment amount is a one-time interest expense. You pay it when you get mortgage funds before the interest adjustment date (IAD) shown on your mortgage document. You may also pay an interest adjustment amount if you change your mortgage payment date or mortgage payment frequency during the mortgage term.

Many borrowers set their mortgage payments to monthly on the first of the month. If you buy a home on another day, your lender calculates interest from your closing day to the nearest first day of the month. As the borrower, you pay the interest adjustment amount.

Example: If you buy a home on March 15 but mortgage payments are on the first of the month, the IAD is April 1. You pay interest only — the interest adjustment amount — for the time between March 15 to April 1. Your first regular mortgage payment is one month after the IAD; in this case, May 1.

The day your lender starts to calculate interest on the mortgage principal is the IAD. Normal interest is separate from the interest adjustment amount. You pay this interest according to your mortgage payment schedule.

The rate charged for the use of borrowed money, calculated as a percentage of the amount of the loan.

The interest rate differential (IRD) is a type of prepayment charge you may pay to your lender when you pay all or part of the mortgage before the term ends. For fixed-rate closed mortgages, prepayment charges are usually 3 months interest or the IRD, whichever is greater. Your mortgage document explains how the IRD is calculated.

Land transfer tax is a closing cost you pay the government on your closing date. The tax is calculated based on the property’s purchase price. Most provinces charge a provincial land transfer tax and some cities charge an additional municipal land transfer tax. Taxes vary by province and first-time home buyers are sometimes exempt from part of the cost. Find more details about land transfer tax on provincial and municipal websites.

Legal fees and disbursements are part of the closing costs. Buyers and sellers pay them to their lawyers or notaries to close a purchase, sale or mortgage transaction. These fees vary by province and are subject to GST or HST. You should review all fees and other costs associated with your legal services.

Sometimes referred to as Letter of Instruction. This letter gives instruction or guidance to the recipient, usually a solicitor, and must be signed by all mortgage holders.

A life insurance company provides financial protection to individuals by offering policies that pay out benefits to beneficiaries upon the insured’s death or in other specified circumstances, in exchange for premium payments.

For many years, life insurance companies were Canada’s most important source of Canada’s mortgage financing. Their large size and significant assets allowed for economies of scale in the administration of mortgage portfolios. In addition, because of the long term nature of their liabilities (the money they would eventually pay out to holders of insurance policies) and their annual net inflow of funds from premiums, they were traditionally not very concerned with liquidity (the ability to convert assets quickly and efficiently to cash). This enabled the insurance companies to seek out higher interest rates on mortgages.

Listed Financial Institution includes a person that is a bank, an investment dealer, a trust company, an insurance company, a credit union, an investment plan, a tax discounter, or a person whose principal business is lending money.

A ratio (expressed as a percentage) representing the mortgage loan amount relative to the assessed market value of the subject property. It is one of the measurements used to assess the credit risk lenders will assume before approving a mortgage. The LTV may change during the term of the loan.

A mortgage loan of up to 80% of the property’s appraised value, with a down payment of 20% or more. A low ratio mortgage may also be referred to as a conventional mortgage.

The maturity date is when your mortgage term ends. This is when you either renew your mortgage for a new term, if your lender agrees, or pay it off completely.

A Mobile Mortgage Advisor is a mortgage expert who meets at a time and place that’s convenient for you to provide expertise and answer questions about mortgages.

A mortgage is a loan secured by a lien registered on title to your home or other real estate. You repay the loan according to specific terms that include interest rate, payment amount and timeline. These details are set out in the mortgage document. If you can’t repay the loan, your lender has the right to take possession of your property and sell it to collect any money you owe them.

A life insurance company provides financial protection to individuals by offering policies that pay out benefits to beneficiaries upon the insured’s death or in other specified circumstances, in exchange for premium payments.

With mortgage assumption, you take over, or assume, the seller’s mortgage on the purchased property. You accept full responsibility to pay the mortgage according to the existing mortgage terms. You need the lender’s approval before you can assume the seller’s mortgage.

As the buyer, mortgage assumption may be a good option for you if market interest rates are higher than the interest rate in the seller’s mortgage on the closing date.

Mortgage assumption may be a good option for the seller if they’re selling their home before the mortgage maturity date and not getting a mortgage on a new property. Mortgage assumption helps the seller avoid prepayment charges.

A mortgage broker works on your behalf and searches for the best mortgage deal among various lenders. When you accept a mortgage, the broker completes the application and applies for the loan on your behalf.

Mortgage critical illness insurance is optional creditor’s group insurance that can reduce or pay off your mortgage — up to a maximum benefit amount — if you’re diagnosed with cancer, acute heart attack or stroke.

Mortgage default insurance protects lenders when borrowers can’t repay their mortgage. You need this insurance if you have a high-ratio mortgage.
See Canada Mortgage and Housing Corporation (CMHC), high-ratio mortgage.

Mortgage disability insurance is optional creditor’s group insurance that can pay up to a maximum benefit amount toward your mortgage if you can no longer work due to a disability.

The process of a lender giving up the rights to a property once the mortgage has been repaid in full.

A MIC stands for Mortgage Investment Corporation. It is a type of investment vehicle in Canada that pools money from investors to lend it out as mortgages on real estate properties. MICs provide an alternative investment opportunity for individuals seeking exposure to the real estate market without directly owning property. Investors in a MIC typically receive returns in the form of dividends or interest income generated from the mortgage loans. MICs are often structured as corporations and are subject to regulatory requirements set by Canadian securities regulators.

Mortgage life insurance is optional creditor’s group insurance that can reduce or pay off your mortgage — up to a maximum benefit amount — in the event of your death.

Mortgage payments are the regular payments you make to repay your loan. Payments can be monthly, semi-monthly, biweekly or weekly. They include principal and interest. (Also called regular payment amount)

With mortgage pre-approval, you’re asked questions that closely match those of a full mortgage application. The lender does a credit check. The lender pre-approves you for a maximum amount and gives you a mortgage pre-approval certificate, which is subject to several conditions. This lets you know how much money your lender may lend you, but it doesn’t guarantee final approval.

Mortgage pre-qualification is a quick assessment process. The lender assesses your financial information, including debt, income and assets. You get an estimate on the mortgage amount you may be approved for. If you’re pre-qualified, your lender has only done a basic review of your finances. You must still provide documents and more financial details before getting pre-approved for a mortgage.

Mortgage principal is the amount of money you borrow from a lender. If a mortgage is for $250,000, then the mortgage principal is $250,000. You pay the principal, with interest, back to the lender over time through mortgage payments.

Mortgage life insurance is optional+ creditor’s group insurance that can reduce or pay off your mortgage — up to a maximum benefit amount — in the event of your death.

The period in which a mortgage agreement is in effect.

Lender of funds to a borrower for the purpose of purchasing real property and is typically a financial institution.

Borrower of funds from a lender for the purpose of purchasing real estate and is typically a home owner.

Multiple Listing Service (MLS) is a database of real estate listings where realtors advertise and search for properties for sale on behalf of clients.

Non-traditional and private lenders are alternative sources of financing for mortgages. Unlike traditional lenders such as banks and credit unions, non-traditional lenders may include online mortgage lenders, mortgage brokers, or private individuals or companies that provide loans outside of the conventional Financial System. These lenders may offer more flexible terms, alternative underwriting criteria, and unique loan products tailored to borrowers who may not qualify for traditional mortgage financing due to factors such as credit history, income sources, or property type.

You can prepay open mortgages, in part or in full, without a prepayment charge. Open mortgages usually have higher interest rates than closed mortgages. But open mortgages are also flexible. If rates start to increase, you can easily pay off an open mortgage and switch to a closed one.

Mortgage portability lets you move, or transfer, an existing mortgage to a new property. The mortgage term, outstanding balance and interest rate stay the same. Not all mortgages are portable, and the lender’s approval is required.

The posted rate is a lender’s standard advertised interest rate for a mortgage product. You may be able to negotiate with your lender for a lower interest rate.

A pre-approved mortgage certificate confirms you’re pre-approved by a lender to borrow a maximum amount at a guaranteed interest rate. The pre-approval certificate is subject to several conditions and expires after a limited time, usually up to 120 days. If the conditions are satisfied and your closing date is within that 120-day period, your guaranteed interest rate won’t change. With a mortgage pre-approval certificate, you can shop for your new home with confidence.

You reimburse the seller for any property taxes or utilities they paid before the closing date.

Example: If a property closes on June 1 and the seller paid taxes and utilities to June 30, you pay the seller those expenses from June 1 to June 30.

Your lawyer makes these adjustments on a document called the statement of adjustments.

An unscheduled payment on a mortgage that goes directly to the principal, reducing the amount of interest paid over the term of the mortgage. (Also referred to as a Lump Sum Payment)

A prepayment is when you pay off some or all of the mortgage before the term ends. You can pay off most open mortgages without paying a prepayment charge. When you prepay a closed mortgage, you usually pay a prepayment charge to your lender. But most closed mortgages let you make an annual prepayment of 10% to 20% without a charge.

The amount to be paid if the borrower repays more principal than allowed under defined prepayment privilege or pays off the mortgage before the end of the term.

The right to pay all or part of a debt prior to the maturity date, usually without the risk of incurring any penalties.

A lender’s interest rate, usually based on an interest rate set nightly by the Bank of Canada. Lenders usually base the interest charge for their adjustable rate mortgages on their prime rate, and it can change at any time.

Private lenders are individuals or entities that offer loans directly to borrowers, bypassing traditional banks or financial institutions. These lenders provide financing with tailored terms and conditions, often accommodating borrowers who may have difficulty obtaining loans through conventional means due to factors such as credit history, collateral, or the need for quick funding. Private lending arrangements can be used for various purposes, including real estate investments, business ventures, or personal loans.

There is no official body that regulates private lenders; however, they are required to use a licensed mortgage Broker/Agent or a lawyer when lending monye. This is regulated by the Mortgage Brokerages, Lenders and Administrators Act (MBLAA).

A Promise to Purchase is a contractual document where the buyer makes the seller a formal offer to purchase their property. The offer includes a proposed purchase price and certain terms and conditions for the transaction to take place.

During your mortgage term, you need property insurance on your home. The lender must be named on the policy. Property insurance covers the replacement cost of the home in case of fire, windstorms or other disasters. The lender needs proof of property insurance before releasing the mortgage funds.

A document that shows the legal boundaries and measurements of property, specifies the location of any buildings, and identifies restrictions and conditions that may apply to the property.

You pay property tax to your municipality for services like garbage collection, policing and fire protection. The property tax amount depends in part on your property’s value. You can add the tax to your regular mortgage payments. In this case, your lender pays your taxes to the municipality.

A qualifying rate is the rate a lender uses when determining whether you qualify for the mortgage you applied for. Your lender uses this rate to calculate your debt-service ratio — the ratio between your debt and income. This helps your lender determine if you can repay the mortgage.

A recourse mortgage lets your lender go after your property or other assets not used as mortgage collateral if you default on your mortgage.

Your lender can sell your property to recover the amount owing. If the sale price doesn’t pay off the amount owing, the lender can sue you for the shortfall.

Mortgage refinancing is a transaction that replaces an existing mortgage before it matures with a new one, on different mortgage terms. In some cases, prepayment charges apply. Refinancing is a financial tool you can use to consolidate debt and access the equity in your home to pay for other expenses. (Also called Renegotiating)

When a mortgage term ends, you may negotiate another term with your lender. If you don’t renew the mortgage, you must pay it off in full.

If you’re over age 55, a reverse mortgage lets you borrow up to 50% of your home’s value. You don’t make payments on a reverse mortgage. But interest grows on the mortgage debt until you sell the home or pass away.

If you already own a property with a mortgage, you may be able to take out a second mortgage. You may want additional funds to renovate or for personal reasons. A second mortgage is one way to take money out of a home’s growing equity. Second mortgages carry more risk than first mortgages.

The statement of adjustments is a document prepared by the seller’s lawyer. It states the purchase price, deposit amount and financial adjustments needed for prepaid taxes, utilities or condo fees. When these calculations are final, you know exactly how much to pay the seller on the closing date.

A survey is a property plan that identifies property boundaries, lot size and building position. It also shows if there are any overhanging structures or shared driveways that could impact property value. A professional land surveyor prepares the survey. Your lender may ask you for a current survey of the property during the mortgage application process.

A term is how long you commit to your mortgage rate, details and conditions with a lender. When a term ends, you pay off the mortgage or renew it for another term if your lender agrees. Terms range from 1 to 10 years, but 4- to 5-year terms are most common.

Title is the ownership you buy when you purchase property. Lenders require clear “title” to the property before they release mortgage funds. Any issues or concerns about the property’s title — fraud, survey errors, municipal work orders, zoning violations and encroachments — found through the lawyer’s title search must be resolved before closing. Mortgages are “registered against title” or “registered on title” to protect the lender’s financial interest in the property.

Title insurance protects buyers and lenders from defects on title discovered after closing. Title defects could include title fraud, survey errors, municipal work orders, zoning violations and encroachments. Consult with your lawyer about title insurance. If you buy title insurance, it’s added to your closing costs.

The total debt service ratio (TDSR) is the percentage of gross annual income required to cover all other debts and loans in addition to the cost of servicing the property and the mortgage (principal, interest, taxes, heat, and more). Its basically a debt service measurement that lenders use to determine the proportion of total income spent on housing and other expenses, such as property taxes, credit card balances, and other monthly debt payment obligations.

A traditional lender typically refers to a bank or financial institution that offers mortgage loans using standard underwriting criteria and traditional loan products. These lenders often have brick-and-mortar locations and follow traditional lending practices, such as requiring a down payment, verifying income and credit history, and offering fixed or adjustable-rate mortgages.

This can include: Banks, Trust Companies, Credit Unions, Life Insurance Companies, or Finance Companies (such as Mortgage Investment Corporations or MICs).

This applies to variable rate mortgages with a fixed payment amount that does not change when the interest rate changes; instead, the portion of each payment that is allocated to principal and interest changes. The trigger rate is the rate of interest at which the regular payment amount is not enough to cover the interest that accrued during the payment period, and there is no portion of the payment amount left over to pay down the principal. The trigger rate is set out in the mortgage disclosure documents.

Trust Companies are Financial Institutions which are also able to provide mortgages. While banks have full commercial lending powers, in order for a Trust Company to provide loans, it must have more than $25 million of regulatory capital, as well as approval of the Office of the Superintendent of Financial Institutions (OSFI).

A mortgage with a variable interest rate that changes over the term of the loan based on changes to the prime interest rate set by the Bank of Canada. With a variable rate mortgage, the payment amount remains the same, while the portion of the payment that goes toward principal and interest may change. If the interest rate increases, the amount applied to the principal will decrease. If the interest rate decreases, the amount applied to the principal will increase. This could result in an increase or decrease in the remaining amortization of the mortgage.