Mortgage Resource Centre
Canadian Mortgage Glossary
Plain-language definitions of the terms lenders, brokers and lawyers use. Each term has its own link you can share or cite.
By Saminder (Sami) Juneja, Mortgage Broker · Published · Updated
A lender
- A bank, large credit union or monoline lender offering the lowest rates to borrowers who meet conventional income, credit and stress-test requirements.
Amortization
- The total length of time it would take to repay the mortgage in full with regular payments, commonly 25 or 30 years in Canada. Different from the term.
B lender
- An alternative lender, often a trust company, that accepts files outside bank policy — such as newer self-employment or bruised credit — at higher rates and usually with a lender fee.
Closed mortgage
- A mortgage that restricts early repayment beyond set prepayment privileges; paying it out early usually triggers a prepayment penalty.
Combined loan-to-value (CLTV)
- The total of all mortgages on a property divided by its value. Used to assess second mortgages and HELOCs.
Debt service ratio
- A measure of how much of your income goes to debt payments. Canadian lenders use two: GDS and TDS.
Equity
- The market value of your home minus everything owed against it.
GDS (Gross Debt Service)
- Housing costs — mortgage payment, property tax, heating and half of condo fees — as a percentage of gross income.
HELOC
- A home equity line of credit: a revolving credit line secured by your home. You borrow and repay as needed and pay interest on the balance used. Home equity calculator →
Loan-to-value (LTV)
- The mortgage amount divided by the property's appraised value or purchase price, whichever is lower. Higher LTV means less equity and usually stricter terms. LTV calculator →
Mortgage default
- Failing to meet mortgage obligations, such as missing payments or not paying property taxes. Can lead to power-of-sale proceedings.
Mortgage discharge
- Removing a paid-out mortgage from the property title. Lenders often charge a discharge fee.
Notice of Assessment (NOA)
- The CRA's summary of your filed tax return. Lenders use it to verify self-employed income.
Open mortgage
- A mortgage that can be repaid in whole or part at any time without penalty, usually at a higher rate.
Prepayment penalty
- A charge for paying off a closed mortgage early, commonly three months' interest or an interest rate differential (IRD), whichever is greater.
Private mortgage
- Short-term, equity-based financing from a non-institutional lender, typically for 6–24 months with a defined exit. Private mortgage guide →
Reverse mortgage
- A loan for homeowners 55+ secured by home equity, with no required monthly payment; repaid when the home is sold or the last borrower moves out or dies. Reverse mortgage guide →
Second mortgage
- A mortgage registered behind an existing first mortgage. It carries more risk for the lender and therefore a higher rate.
Self-employed income
- Income from a business you own, verified through tax returns, NOAs, financial statements and sometimes bank statements. Self-employed mortgage guide →
Stated income
- Income declared by a self-employed borrower and tested for reasonableness against their industry and bank deposits. Today it is document-supported, not unverified.
Stress test
- The federal minimum qualifying rate borrowers must qualify at, which is higher than the contract rate.
TDS (Total Debt Service)
- All housing costs plus other debt payments (cars, cards, loans) as a percentage of gross income.
Term
- The length of the current mortgage contract (for example 1, 3 or 5 years), after which it must be renewed or repaid.
Educational information only — not financial, legal or tax advice, and not an offer or approval. Rates and lender policies change; all financing is subject to lender approval.