The number of years that you take to fully pay off your mortgage (not the same as your mortgage term). Amortization periods are often 15, 20, or 25 years long.
The estimate of the value of the property offered as security for
a mortgage loan. This appraisal is done for mortgage lending purposes
and may be less than the purchase price of the property.
CMHC - Canada Mortgage and Housing Corporation
Canada Mortgage and Housing Corporation (CMHC) is home to Canadians. In everything they do, CMHC helps Canadians live in safe, secure homes. As the Government of Canada's national housing agency, CMHC plays a major role in Canada's housing industry.
CMHC develops new ways to finance home purchases. They encourage innovation in housing design and technology. CMHC’s mortgage loan insurance helps Canadians realize their dream of owning a home.
CMHC assistance helps low-income and older Canadians, people with disabilities and Aboriginals live in decent, affordable homes. They create jobs for Canadians with products and services that help the housing industry export its knowledge and skills to other countries.
CMHC's leading-edge research improves the quality and affordability of housing. To help Canadians benefit from their housing expertise and make informed decisions, CMHC has become Canada's largest publisher of housing information. They also have Canada's most comprehensive selection of information about homes and housing.
Closed and Open Mortgages
A closed mortgage agreement does not provide for payout prior to
maturity. A lender may permit payout under certain circumstances
but will levy a penalty charge for doing so if such exceeds certain
limits, if any, specified in the mortgage (i.e. 20% prepayment provision).
An open mortgage allows prepayment / repayment at any time without
The date on which the sale of the property becomes final and the
new owner takes possession.
A mortgage loan which does not exceed 80% of the lesser of the appraised
value or the purchase price of the property. A mortgage that exceeds
that limit must be insured under the practices of most major financial
Debt Service Ratios
The Gross Debt Service Ratio (GDSR) is the percentage of gross annual
income required to cover payments associated with housing (mortgage
principal and interest, taxes, secondary financing, heating, and
50% of condominium fees, if any). The GDSR should not exceed 32%
of the gross annual income.
The Total Debt Service Ratio (TDSR) is the percentage of gross annual
income required to cover payments associated with housing (GDSR)
and all other debts and obligations, such as payments on a car loan.
The TDSR ratio should not exceed 40% of gross income. For self-employed
/ commission sales applicants, net income is used for GDSR and TDSR
The amount of money (usually in the form of cash) put forward by
the purchaser. It represents the difference between the purchase
price and the amount of the mortgage loan.
Equity is the difference if positive between the price for which
a property could be sold and the total debts registered against
Fixed Rate and Adjustable Rate Mortgages
A fixed rate mortgage is one for which the rate of interest is fixed
for a specific period of time (the term).
An Adjustable Rate Mortgage is one for which the rate of interest
changes as CIBC Prime Rate changes, usually not more than
once a month.
High Ratio Mortgage
A mortgage loan which exceeds 80% of the lesser of the appraised
value or purchase price of the property. This mortgage must be insured
and borrowers must pay an application fee and the insurance premium
(which may be added to the mortgage) to the insurer.
Interest Adjustment Date
A date, usually up to one month before monthly mortgage payments begin,
when interest on monies advanced before that date is calculated
and must be paid by the borrower.
Loan to Value Ratio
The ratio of the loan to the appraised value or purchase price of
the property, whichever is less, expressed as a percentage.
The last day of the term of the mortgage agreement. The mortgage
agreement must then be renewed or the mortgage balance paid in full.
Offer to Purchase
A formal, legal agreement which offers a certain price for a specified
real property. The offer may be firm (no conditions attached) or
conditional (certain conditions must be fulfilled).
Principal, Interest, and taxes.
A fee charged by the lender when the borrower pays off all or a
portion of a mortgage more quickly than provided for in the mortgage
Porting a mortgage means taking your current mortgage, with its rates
and terms and moving it to another property.
To arrange a new mortgage for an increased amount. The old mortgage(s)
is paid off (discharged) from the proceeds of the new loan. This
type of loan is also referred to as equity take out.
To extend a mortgage agreement with the same lender for another
term. The length of the term and the conditions (such as the rate
of interest) may be changed.
The length of time which a mortgage agreement covers. Payments made
may not fully repay the outstanding principal by the end of the
term, because the amortization period may be longer.