Hustle & GritWatch us on YouTube
A term sheet is a short document summarizing the key proposed terms of a mortgage — amount, rate, term, fees, and major conditions — issued before a full commitment letter, most commonly used in private, alternative, and commercial mortgage financing.
A term sheet is typically an early, largely non-binding outline used to confirm a lender's interest and key terms before both sides commit to full underwriting. It's standard practice on private and commercial deals, where terms are negotiated file by file, and much less common on standard bank or monoline residential deals, which usually move directly from application to a conditional approval and commitment letter.
Because fees — lender fee, renewal fee, prepayment terms — and conditions can vary widely between private lenders, a broker should review the term sheet carefully with the client before they accept it. Some term sheets require a deposit or lock the borrower into that lender for a set period, so it's worth confirming whether accepting the term sheet creates any binding obligation before underwriting is even complete.
Common in private and commercial deals: term sheets are standard practice in private, MIC, and commercial mortgage financing, where terms are negotiated file-by-file rather than following a fixed rate sheet.
Precedes the commitment letter: link commitment letter — a term sheet typically comes before full underwriting and the formal commitment letter, and its terms can still change once the lender completes its review.
May include a fee or exclusivity clause: some term sheets require a deposit or commit the borrower to that lender for a period, so brokers should flag any binding elements before a client signs.
Less common on standard bank deals: prime A-lender residential mortgages usually move from application directly to a conditional approval, without a separate term-sheet stage.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
Every term a Canadian mortgage professional needs — defined, sourced, and kept current.
See how Treadstone can scale your brokerage — a free call, no commitment.