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Lenders & Industry
An A lender is a bank, trust company, or other federally or provincially regulated mainstream lender that offers mortgages to borrowers who meet standard credit, income, and debt-ratio requirements at the lowest available rates.
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Mortgage Types & Features
An adjustable-rate mortgage (ARM) is a variable-rate mortgage where the payment amount itself rises or falls every time the lender’s prime rate changes, rather than staying fixed for the term.
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Regulation & Compliance
The AMF (Autorité des marchés financiers) is Quebec’s financial sector regulator, overseeing courtiers hypothécaires (mortgage brokers) under the province’s Act respecting the distribution of financial products and services.
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Rates, Terms & Payments
Amortization is the total length of time it will take to pay off a mortgage in full through regular payments, assuming the rate and payment stay unchanged. For insured mortgages, federal rules cap it at 25 years, extendable to 30 years only for eligible first-time buyers and buyers of new builds.
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Rates, Terms & Payments
The Annual Percentage Rate (APR) is the mortgage’s interest rate plus most other mandatory costs of borrowing, expressed as a single annual percentage — giving borrowers a fuller, all-in cost of borrowing than the interest rate alone.
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Closing & Legal
An appraisal is a licensed appraiser’s professional opinion of a property’s market value, used by a lender to confirm the home is worth enough to support the mortgage, expressed as an appraised value that may differ from the purchase price.
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Closing & Legal
Arrears is the total amount of missed mortgage payments a borrower currently owes a lender; falling into arrears is usually the first stage of mortgage default, before more serious enforcement steps begin.
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Closing & Legal
An assignment (or assignment sale) happens when the original buyer of a property — typically a pre-construction condo or home — sells their rights and obligations under the purchase agreement to a new buyer before the original closing date, without ever taking title themselves.
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Mortgage Types & Features
An assumable mortgage lets a qualified buyer take over the seller’s existing mortgage — including its rate, term, and remaining amortization — instead of arranging new financing, subject to the lender's approval of the buyer.
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Closing & Legal
An Automated Valuation Model (AVM) is a computer-generated estimate of a property’s market value, produced from recent comparable sales and property data instead of an in-person appraisal, that lenders and insurers use to confirm value quickly on lower-risk files.
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Lenders & Industry
A B lender is an alternative mortgage lender — often a trust company or other non-bank institution — that serves borrowers who don’t meet an A lender’s standard credit, income, or ratio requirements, usually at a higher rate and with a lender fee.
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Rates, Terms & Payments
The Bank of Canada policy rate — also called the overnight rate — is the interest rate the central bank targets for overnight lending between financial institutions, set at scheduled announcement dates; it is the single biggest driver of variable mortgage pricing in Canada, and an indirect influence on fixed rates.
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Regulation & Compliance
BCFSA (the BC Financial Services Authority) is British Columbia’s regulator for mortgage brokering, licensing submortgage brokers and brokerages under the Mortgage Brokers Act.
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Credit & Documents
The Beacon score is Equifax Canada’s credit scoring model, producing a number generally between 300 and 900 from the data in a borrower’s credit report; it is one of the most commonly referenced credit scores in Canadian mortgage underwriting.
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Renewals, Refinancing & Penalties
Blend and extend is a lender option that combines a mortgage’s existing contract rate with the current rate for a new, longer term, producing a single blended rate. Instead of charging a lump-sum prepayment penalty, the cost of breaking the old term is folded into the new rate.
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Mortgage Types & Features
Bridge financing is short-term, interest-only borrowing that covers the gap between the closing date of a homebuyer's new purchase and the closing date of the sale of their current home, secured against the expected proceeds of that pending sale.
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Default Insurance & Protection
Canada Guaranty is a private mortgage default insurer, one of the three insurers approved to provide mortgage default insurance in Canada alongside CMHC and Sagen.
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Mortgage Types & Features
A cash-back mortgage pays the borrower a lump sum at closing, often a percentage of the mortgage amount, in exchange for a higher interest rate than a comparable mortgage without cash back.
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Mortgage Types & Features
A closed mortgage restricts how much of the balance can be prepaid before the term ends — beyond the lender’s prepayment privileges, paying it off early typically triggers a prepayment penalty — in exchange for a lower rate than an open mortgage.
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Closing & Legal
Closing costs are the one-time fees and disbursements a buyer pays when a real estate purchase legally completes, separate from the down payment — typically covering legal fees, title insurance, land transfer tax, and adjustments owed to the seller.
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Default Insurance & Protection
CMHC (Canada Mortgage and Housing Corporation) is Canada’s federal housing agency and one of three insurers approved to provide mortgage default insurance on high-ratio mortgages, alongside Sagen and Canada Guaranty.
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Qualification & Ratios
A co-signer — also called a co-borrower — is added directly to a mortgage application and the property’s title, sharing both ownership and full responsibility for repayment. Unlike a guarantor, a co-signer has an equity stake in the home.
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Mortgage Types & Features
A collateral charge is a mortgage registered against a property for an amount that can be higher than the loan actually advanced, securing the initial mortgage plus potential future borrowing, such as a HELOC, all under one registration.
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Credit & Documents
Conditional approval is a lender’s decision to fund a mortgage once specific outstanding items are satisfied — such as a satisfactory appraisal, updated income documents, or proof of down payment — rather than an unconditional commitment to lend.
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Mortgage Types & Features
A construction (draw) mortgage is financing advanced in stages, or “draws,” as a new home or major renovation project reaches agreed construction milestones, rather than as a single lump sum at closing.
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Mortgage Types & Features
A conventional (low-ratio) mortgage is one where the down payment is 20% or more of the purchase price, so the loan-to-value ratio is 80% or below and mortgage default insurance generally isn’t required.
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Mortgage Types & Features
A convertible mortgage is a short closed term — often six months to a year — that lets the borrower convert into a longer fixed-rate term with the same lender before it matures, without paying the full prepayment penalty.
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Lenders & Industry
A courtier hypothécaire is the title for a licensed mortgage broker in Quebec, regulated by the Autorité des marchés financiers (AMF).
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Credit & Documents
A credit report is a detailed record of a borrower’s credit accounts, payment history, balances, and public records, compiled by a credit bureau — in Canada, primarily Equifax Canada or TransUnion — and pulled by lenders to assess mortgage risk.
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Credit & Documents
A credit score is a three-digit number summarizing the risk in a borrower’s credit report; in Canada, scores from Equifax generally range from 300 to 900, with a higher number indicating a stronger credit history.
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Lenders & Industry
A credit union is a member-owned, provincially regulated financial cooperative that offers mortgages and other banking products to its members, often with more locally tailored underwriting than a national bank.
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Qualification & Ratios
Debt service ratios — Gross Debt Service (GDS) and Total Debt Service (TDS) — are the two calculations Canadian lenders use to test whether a borrower’s income can support a mortgage. Insured mortgages generally require a maximum GDS of 39% and TDS of 44%.
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Closing & Legal
A deposit is the sum of money a buyer submits with a signed purchase offer to show good faith, held in a real estate brokerage’s or lawyer’s/notary’s trust account until closing, when it is applied toward the purchase price and down payment.
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Qualification & Ratios
A down payment is the portion of a home’s purchase price a buyer pays upfront from their own funds, with the mortgage covering the rest. Canada’s minimum is tiered: 5% of the first $500,000, 10% of the portion from $500,000 to $1.5 million, and 20% at $1.5 million and above.
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Lenders & Industry
Filogix, branded Filogix Expert, is the dominant deal-submission platform used by Canadian mortgage brokers to send applications, documents, and conditions to lenders electronically.
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Regulation & Compliance
FINTRAC (the Financial Transactions and Reports Analysis Centre of Canada) is Canada’s financial intelligence unit. It requires mortgage brokers and lenders to meet anti-money-laundering (AML) obligations — client identification, record-keeping, and reporting of suspicious transactions.
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Buyer Programs & Taxes
The First Home Savings Account (FHSA) is a registered savings account that lets eligible first-time buyers contribute up to $8,000 per year, to a $40,000 lifetime limit, with contributions tax-deductible and qualifying withdrawals tax-free.
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Qualification & Ratios
The Five Cs of Credit — Character, Capacity, Capital, Collateral, and Conditions — is the framework underwriters use to evaluate a mortgage application beyond a single ratio or score.
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Mortgage Types & Features
A fixed-rate mortgage locks in one interest rate for the entire term, so the principal-and-interest portion of the payment stays identical from the first payment to the last. In Canada, fixed mortgage rates are conventionally compounded semi-annually, not in advance.
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Closing & Legal
Foreclosure is a court-supervised process through which a lender can ultimately take ownership of a defaulted property, used instead of power of sale in provinces where mortgage law follows a judicial process.
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Buyer Programs & Taxes
The federal Prohibition on the Purchase of Residential Property by Non-Canadians Act (the “foreign buyer ban”) restricts non-Canadians from purchasing residential property in Canada; it has been in force since January 1, 2023 and has been extended to January 1, 2027.
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Regulation & Compliance
FSRA (the Financial Services Regulatory Authority of Ontario) is Ontario’s provincial regulator for mortgage brokering, licensing mortgage agents, brokers, and brokerages. Since April 1, 2023, Ontario has used a two-level agent licensing system, Level 1 and Level 2.
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Credit & Documents
A gift letter is a signed statement from a donor — typically an immediate family member — confirming that funds given toward a down payment are a true gift with no repayment expected, which Canadian lenders require before counting gifted funds toward the purchase.
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Qualification & Ratios
The Gross Debt Service (GDS) ratio is the percentage of a borrower’s gross annual income needed to cover housing costs — mortgage principal and interest, property taxes, heat, and 50% of any condo fees. For insured mortgages in Canada, lenders generally require a GDS of 39% or less, calculated at the qualifying rate.
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Qualification & Ratios
A guarantor is a person who promises to repay a mortgage if the primary borrower defaults, strengthening a weak application without being added to the property’s title. Guarantors are commonly used when a borrower’s income or credit history alone doesn’t meet a lender’s requirements.
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Regulation & Compliance
Guideline B-20 is OSFI’s Residential Mortgage Underwriting Practices and Procedures guideline for federally regulated lenders. It’s best known for the minimum qualifying rate — the stress test — that sets the rate a borrower must qualify at, not the rate they actually pay.
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Mortgage Types & Features
A high-ratio mortgage is one where the down payment is less than 20% of the purchase price, meaning the loan-to-value ratio exceeds 80% — which requires mortgage default insurance in Canada.
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Buyer Programs & Taxes
The Home Buyers’ Plan (HBP) is a federal program letting eligible first-time (and some repeat) buyers withdraw up to $60,000 from their RRSP tax-free to put toward a home purchase, repayable to the RRSP over 15 years.
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Mortgage Types & Features
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured against home equity, usually registered as a collateral charge, that lets a borrower draw funds, repay them, and draw again up to an approved limit without applying for a new loan each time.
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Mortgage Types & Features
An insurable mortgage is a conventional (low-ratio) mortgage that still meets an insurer’s eligibility criteria for portfolio (bulk) insurance, even though the borrower isn’t required to buy individual default insurance.
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Mortgage Types & Features
An insured mortgage carries mortgage default insurance, which protects the lender — not the borrower — if the loan goes into default. It’s required whenever the down payment is under 20%, and only available on homes priced under the insured cap.
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Rates, Terms & Payments
The Interest Adjustment Date (IAD) is the date interest begins accruing on a new mortgage, sitting between closing/funding and the day before the borrower’s first regular payment; interest for that short gap is collected separately as an interest adjustment, not folded into the first regular payment.
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Renewals, Refinancing & Penalties
The interest rate differential (IRD) is a prepayment penalty formula that charges the difference between a mortgage’s contract rate and the lender’s current comparison rate, applied to the outstanding balance for the time remaining in the term. It typically applies to fixed-rate mortgages broken before maturity, and is charged only if it is larger than three months’ interest.
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Mortgage Types & Features
An investment (rental) property mortgage finances a property the borrower does not intend to live in, which lenders and mortgage insurers generally treat as higher risk than an owner-occupied home — often requiring a larger down payment and stricter qualification.
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Closing & Legal
Land transfer tax is a one-time provincial (and sometimes municipal) tax paid on closing when a property changes ownership, calculated using tiered rates that rise with the purchase price; eligible first-time buyers can claim a partial rebate of up to $4,000 in Ontario and up to $4,475 in Toronto.
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Credit & Documents
A letter of employment is a document from a borrower’s employer confirming job title, employment status, length of service, and income, used by Canadian lenders to verify that a stated salary or wage is accurate and ongoing.
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Closing & Legal
A lien is a legal claim registered against a property’s title that secures a debt or obligation — such as an unpaid mortgage, contractor’s bill, or tax debt — giving the claimant a right to be paid from the property, typically before it can be sold or refinanced with clear title.
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Qualification & Ratios
The loan-to-value (LTV) ratio is the mortgage amount expressed as a percentage of the property’s purchase price or appraised value, whichever is lower. Canadian minimum down payment rules allow an LTV as high as 95% on the first $500,000 of price, tightening to 80% LTV (20% down) at $1.5 million and above.
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Qualification & Ratios
The minimum qualifying rate — commonly called the mortgage stress test — is the rate Canadian lenders must use to calculate a borrower’s GDS and TDS ratios. It is the greater of the borrower’s contract rate plus 2 percentage points, or 5.25%.
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Lenders & Industry
A monoline lender is a mortgage lender that distributes its mortgages exclusively through the broker channel, with no branch network, deposit accounts, or other retail banking products.
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Lenders & Industry
A mortgage agent is Ontario’s license category for arranging mortgages, regulated by FSRA, with agents holding either a Level 1 or Level 2 license depending on their training and experience.
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Lenders & Industry
A mortgage associate is the license category in Alberta for an individual who arranges mortgages on behalf of clients, regulated by RECA (the Real Estate Council of Alberta) under a licensed mortgage brokerage.
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Lenders & Industry
A mortgage broker is a licensed professional or brokerage that arranges mortgage financing between borrowers and lenders in exchange for a fee or commission, rather than lending money directly.
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Credit & Documents
A mortgage commitment letter is a lender’s formal, signed offer to finance a specific property on stated terms — rate, amount, term, and any remaining conditions — once the file has cleared underwriting.
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Closing & Legal
Mortgage default occurs when a borrower fails to meet the terms of the mortgage agreement — most commonly by missing scheduled payments — giving the lender the right to pursue remedies set out in the mortgage and provincial law.
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Default Insurance & Protection
Mortgage default insurance (also called mortgage loan insurance) protects the lender — not the borrower — if a high-ratio borrower defaults, and it is mandatory whenever the down payment is less than 20% of the purchase price. In Canada it is sold by three approved insurers — CMHC, Sagen, and Canada Guaranty — and the premium is typically added to the mortgage principal.
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Renewals, Refinancing & Penalties
A mortgage discharge is the legal document a lender registers to remove its charge from a property’s title once the mortgage is paid off or replaced. Without it, the property remains encumbered on title even after the debt is gone; registering the discharge is typically handled by a lawyer or notary as part of closing.
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Lenders & Industry
A Mortgage Finance Company (MFC) is a non-deposit-taking lender that originates and funds mortgages — typically through the broker channel — using securitization and institutional capital rather than a retail deposit base.
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Rates, Terms & Payments
The mortgage interest rate — also called the contract rate — is the annual percentage a lender charges to lend the money, and it’s what’s used to calculate the principal-and-interest portion of a borrower’s regular payment for the mortgage term.
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Lenders & Industry
A Mortgage Investment Corporation (MIC) is a pooled investment vehicle, defined under the federal Income Tax Act, that raises capital from investors and lends it out as mortgages — frequently private, higher-rate second mortgages — passing the income back to shareholders.
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Default Insurance & Protection
Mortgage life insurance (creditor insurance) is optional coverage, usually sold by the lender, that pays out toward the mortgage balance if the borrower dies or becomes disabled — it protects the borrower’s family, unlike mortgage default insurance, which protects the lender.
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Qualification & Ratios
A mortgage pre-approval is a lender’s documented, conditional estimate of how much it will lend a borrower, based on verified income, credit, and debts, usually paired with a rate hold for a set period. It is more reliable than a pre-qualification but is not a guarantee of final financing.
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Qualification & Ratios
A mortgage pre-qualification is an informal, unverified estimate of how much a borrower might be able to afford, based on self-reported income, debts, and assets rather than documented proof. It is a starting point for house-hunting, not a lender commitment.
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Renewals, Refinancing & Penalties
Mortgage renewal is the process of signing a new contract — a new interest rate, term, and sometimes a new lender — when an existing mortgage term ends and the balance still isn’t paid off. CMHC estimates roughly 60% of all outstanding Canadian mortgages will renew by the end of 2026, making renewal one of the biggest volume moments in a broker’s book of business.
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Rates, Terms & Payments
The mortgage term is the length of the contractual agreement with a lender — covering the interest rate, payment terms, and conditions — after which the mortgage must be renewed, switched to another lender, or paid off in full; it is shorter than, and sits inside, the overall amortization period.
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Rates, Terms & Payments
Negative amortization happens when a mortgage payment no longer covers the full interest owed for the period, so the unpaid interest is added to the principal balance — meaning the amount owed grows instead of shrinks, even though payments continue on schedule.
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Buyer Programs & Taxes
New to Canada mortgage programs are lender and insurer offerings designed for newcomers with limited or no Canadian credit history, allowing them to qualify for insured financing using alternative proof of income, employment, and international or alternative credit references.
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Credit & Documents
A Notice of Assessment (NOA) is the Canada Revenue Agency’s summary of a filed tax return, showing reported income and any balance owing, and it is one of the standard documents Canadian lenders request to verify a borrower’s qualifying income.
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Mortgage Types & Features
An open mortgage lets a borrower prepay any amount, up to and including the full balance, at any time with no prepayment penalty, in exchange for a higher interest rate than a comparable closed mortgage.
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Regulation & Compliance
OSFI (the Office of the Superintendent of Financial Institutions) is the federal regulator that supervises federally regulated banks and mortgage lenders, setting prudential underwriting rules such as the minimum qualifying rate through Guideline B-20. OSFI does not license individual mortgage brokers or agents — that falls to the provincial regulators.
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Rates, Terms & Payments
Payment frequency is how often a borrower makes mortgage payments — monthly, semi-monthly, bi-weekly, or weekly — and whether that schedule is “regular” (simply the monthly amount split up) or “accelerated” (calculated so the borrower makes roughly one extra monthly payment every year, shortening the amortization).
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Regulation & Compliance
PIPEDA (the Personal Information Protection and Electronic Documents Act) is the federal law governing how private-sector organizations, including mortgage brokerages, collect, use, and disclose clients’ personal information.
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Qualification & Ratios
PITH stands for Principal, Interest, Taxes, and Heat — the four monthly housing costs Canadian lenders add together, plus 50% of any condo fees, to calculate the Gross Debt Service ratio.
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Default Insurance & Protection
Portfolio insurance (also called bulk insurance) is default insurance a lender purchases on a pool of otherwise-conventional, low-ratio mortgages after closing — typically to make those loans eligible for cheaper securitized funding — rather than insurance the borrower requests or pays for directly.
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Renewals, Refinancing & Penalties
Porting is transferring an existing mortgage — its rate, term, and balance — from one property to another when a borrower sells and buys, avoiding the prepayment penalty that would otherwise apply to breaking the contract early.
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Rates, Terms & Payments
The posted rate is a lender’s official, publicly listed interest rate for a given mortgage product and term — the starting point most Canadians never actually pay, since the contract rate is typically negotiated down from it.
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Closing & Legal
Power of sale is a legal remedy that lets a lender sell a property after default without taking ownership of it first, under authority granted directly in the mortgage document rather than through a full court foreclosure action; it is the typical remedy in provinces such as Ontario.
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Renewals, Refinancing & Penalties
A prepayment penalty is the charge a lender applies when a borrower pays off or pays down a closed mortgage beyond its prepayment privileges before the term ends. Canadian lenders generally charge the greater of three months’ interest or the interest rate differential on fixed-rate mortgages, and typically three months’ interest on variable-rate mortgages.
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Renewals, Refinancing & Penalties
Prepayment privileges are the contractual right to pay down a closed mortgage faster than scheduled — through lump-sum payments, increased regular payments, or both — without triggering a prepayment penalty, up to an annual limit set by the lender.
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Rates, Terms & Payments
Prime rate is the benchmark lending rate each Canadian bank sets, moving largely in step with the Bank of Canada’s policy rate; it’s the reference point lenders use to price variable-rate mortgages and HELOCs, typically quoted as “prime minus” or “prime plus” a spread.
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Lenders & Industry
A principal broker is the individual designated by a licensed mortgage brokerage to hold ultimate responsibility for the brokerage’s compliance, supervision of its agents and brokers, and adherence to provincial mortgage regulations.
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Lenders & Industry
A private lender is an individual, syndicate, or company that lends mortgage funds directly, secured by a registered charge against real property, outside the traditional bank and B-lender system.
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Closing & Legal
Property taxes are the annual taxes a municipality levies on a home based on its assessed value, counted as one of the four inputs to GDS/TDS qualification and often collected together with the mortgage payment.
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Mortgage Types & Features
Purchase plus improvements is a mortgage option that lets a buyer finance the cost of planned renovations into the same mortgage used to buy the home, based on the property's expected value after the improvements are complete.
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Qualification & Ratios
A rate hold is a lender’s commitment to honour a specific interest rate for a set period, protecting a borrower from rate increases while they shop for a home or complete a purchase. It is typically offered alongside a mortgage pre-approval.
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Mortgage Types & Features
A readvanceable mortgage is a combined credit product that pairs a traditional amortizing mortgage with a HELOC under a single collateral charge, so the available HELOC room automatically increases as the mortgage principal is paid down.
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Regulation & Compliance
RECA (the Real Estate Council of Alberta) is Alberta’s regulator for mortgage brokering, licensing mortgage associates and mortgage brokers under the Real Estate Act.
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Renewals, Refinancing & Penalties
Refinancing is replacing an existing mortgage with a new one, often before the term ends, to change the amount borrowed, access home equity, or alter the rate and terms. Unlike a switch, a refinance can increase the loan amount and normally requires requalifying at the minimum qualifying rate.
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Renewals, Refinancing & Penalties
A renewal statement is the notice a lender sends before a mortgage term matures, showing the outstanding balance, the maturity date, and a proposed new rate and term. It is the lender’s default offer — borrowers are free to compare it against other lenders before the term ends rather than accept it automatically.
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Mortgage Types & Features
A reverse mortgage is a loan available to eligible senior homeowners that converts home equity into cash without required regular payments, with the loan plus accumulated interest repaid when the home is sold, the borrower moves out, or the last borrower passes away.
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Default Insurance & Protection
Sagen (formerly Genworth Canada) is a private mortgage default insurer approved to insure high-ratio mortgages in Canada, operating alongside CMHC and Canada Guaranty under the same federal rules.
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Mortgage Types & Features
A second mortgage is an additional loan registered against a property that already has a first mortgage, sitting behind it in priority so the second-mortgage lender is repaid only after the first mortgage is satisfied.
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Rates, Terms & Payments
Semi-annual compounding is the calculation method Canadian law requires for fixed-rate mortgages: interest is compounded twice a year, not in advance, even though payments are typically made monthly, bi-weekly, or weekly.
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Mortgage Types & Features
A standard charge is a mortgage registered against a property for exactly the amount advanced, securing only that specific loan — the more traditional alternative to a collateral charge.
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Closing & Legal
The statement of adjustments is the closing document a real estate lawyer or notary prepares showing the final amount a buyer owes on closing day, after crediting the deposit and prorating items like prepaid property taxes or condo fees between buyer and seller.
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Closing & Legal
A status certificate (called an estoppel certificate in some provinces) is a legal document a condominium corporation provides confirming a unit’s financial and legal standing — including reserve fund health, any special assessments, and outstanding fees — before a purchase or mortgage closes.
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Lenders & Industry
A submortgage broker is the license category used in British Columbia for an individual who arranges mortgages under the supervision of a BCFSA-registered mortgage broker or brokerage.
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Renewals, Refinancing & Penalties
A switch (or transfer) is moving an existing mortgage balance to a new lender at renewal, at the same principal amount and remaining amortization, without increasing the loan or accessing equity. Since November 21, 2024, OSFI does not require re-qualification at the minimum qualifying rate for a straight switch of an uninsured mortgage.
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Renewals, Refinancing & Penalties
Three months’ interest is a prepayment penalty equal to three months of interest on the outstanding balance at the mortgage’s contract rate. It is the standard penalty for breaking a variable-rate mortgage early, the minimum lenders compare against the interest rate differential on fixed-rate mortgages, and the maximum penalty allowed by law once an individual borrower passes the five-year mark under the Interest Act.
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Closing & Legal
Title is the legal right of ownership to a property, registered in the applicable provincial land registry or land titles system, which identifies the registered owner and any registered charges against the property.
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Default Insurance & Protection
Title insurance is a one-time-premium policy purchased at closing that protects an owner or lender against financial loss from title defects, fraud, or survey and boundary problems discovered after the purchase closes.
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Closing & Legal
A title search is a review of the applicable provincial land registry to confirm who legally owns a property and to identify any liens, easements, or other registered claims against it before a purchase or mortgage closes.
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Qualification & Ratios
The Total Debt Service (TDS) ratio is the percentage of a borrower’s gross annual income needed to cover housing costs (PITH) plus all other recurring debt payments — car loans, credit cards, lines of credit, and other loans. For insured mortgages in Canada, lenders generally require a TDS of 44% or less, calculated at the qualifying rate.
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Rates, Terms & Payments
The trigger point is the outstanding balance threshold for a variable-rate mortgage — set by the lender’s contract, often near the original principal amount — that, once crossed through negative amortization, requires the lender to take action to bring the loan back under control.
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Rates, Terms & Payments
The trigger rate is the interest rate at which a variable-rate mortgage with a fixed payment amount no longer covers the full interest owed for the period — meaning $0 of each payment would go to principal, and any further rate increase causes a shortfall that gets added to the balance.
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Buyer Programs & Taxes
The Underused Housing Tax (UHT) is a 1% annual federal tax on the value of vacant or underused residential property in Canada, primarily targeting certain non-resident, non-Canadian owners, though some Canadian owners can still have annual filing obligations even when no tax is owed.
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Lenders & Industry
An underwriter is the lender-side professional who evaluates a mortgage application against the lender’s credit policy and, for insured deals, the default insurer’s eligibility rules, before approving or declining the loan.
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Mortgage Types & Features
An uninsured mortgage carries no mortgage default insurance at all — because the down payment is 20% or more, or the file doesn’t qualify for insurance (a price above the insured cap, a rental property, or cash-back, for example) — and the lender sets its own qualifying rules within OSFI’s framework.
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Mortgage Types & Features
A variable-rate mortgage (VRM) has an interest rate that moves up or down with the lender’s prime rate throughout the term. On most Canadian VRMs the payment amount itself stays fixed, so a prime-rate change shifts how much of each payment goes to interest versus principal, not the payment itself.
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Mortgage Types & Features
A vendor take-back (VTB) mortgage is seller financing where the seller of a property acts as the lender, letting the buyer pay part of the purchase price over time instead of receiving it all in cash at closing.
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