Mortgage Glossary
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An adjustable-rate mortgage is a type of variable mortgage where the interest rate changes over time and the payment amount can also change. This means monthly payments may go up or down as interest rates move.
Why this matters: Payment amounts can change, which affects cash flow and budgeting.
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Amortization is the process of gradually paying down a mortgage over time through regular payments that include both interest and principal. Early payments are mostly interest, while later payments reduce more of the loan balance.
It explains why balances decrease slowly at first and how extra payments can significantly reduce total interest.
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The amortization period is the total length of time it will take to fully repay a mortgage if payments are made as scheduled. In Canada, this is commonly 25 or 30 years.
A longer amortization lowers monthly payments but increases total interest paid.
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An appraisal is an independent estimate of a property’s market value ordered by a lender.
It helps confirm that the purchase price or mortgage amount is supported by the property’s value.
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A blended mortgage combines an existing mortgage rate with a new rate into a single average.
It is often used to reduce penalties when changing or extending a mortgage.
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Bridge financing is short-term funding used when buying a home before selling another.
It covers the gap between purchase and sale dates.
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A cash-back mortgage provides a lump-sum payment at the start of the mortgage.
The cash is usually offered in exchange for a higher interest rate.
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Item descriA closed mortgage limits how much you can pay off early without penalties.
It often comes with a lower rate, but breaking it before the term ends can be costly.
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A collateral mortgage is registered for an amount that can be higher than the loan you’re using today.
It can make future borrowing easier, but it may complicate switching lenders.
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Compound interest is interest calculated on both the original amount and previously added interest.
It helps explain why borrowing costs grow faster the longer debt stays outstanding.
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A conventional mortgage is a mortgage with at least 20% down and no mortgage default insurance.
It typically reduces total borrowing cost and offers more flexibility in some cases.
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Debt service ratios measure how much of your income goes toward housing costs and total debt payments.
They help lenders decide how much you can borrow and whether the payment is affordable.
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A down payment is the upfront amount you pay toward the purchase price of a home.
It affects whether insurance is required, how much you can borrow, and your long-term interest cost.
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Equity is the portion of your home’s value that you own outright.
It builds as you pay down your mortgage and can be accessed through refinancing or borrowing.
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A fixed-rate mortgage has an interest rate that stays the same for the entire mortgage term.
It provides predictable payments even if market rates rise or fall.
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Gross Debt Service (GDS) is a ratio that measures how much of your income goes toward housing costs.
It helps lenders decide whether your mortgage payments are affordable.
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A high-ratio mortgage is a mortgage with less than 20% down.
It requires mortgage default insurance, which increases the total cost of borrowing.
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An interest rate is the cost of borrowing money, expressed as a percentage.
It affects your payment amount and how much interest you pay over the life of the mortgage.
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A mortgage is a loan used to buy or refinance real estate, secured by the property.
It is repaid over time through scheduled payments of principal and interest.
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A mortgage broker is a licensed professional who helps arrange mortgage financing through one or more lenders.
They compare options and help structure a mortgage that fits the borrower’s needs and situation.
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A mortgage term is the length of time your mortgage rate and conditions are set.
At the end of the term, you renew, refinance, or pay out the mortgage.
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An open mortgage allows you to pay off the mortgage at any time without a penalty.
It offers flexibility, but usually comes with a higher interest rate.
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The prime rate is a benchmark interest rate used by lenders to price variable-rate borrowing.
When prime changes, many variable mortgage rates and payments change too.
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Refinancing replaces your current mortgage with a new mortgage.
It is often used to change the rate or term, consolidate debt, or access home equity.
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Total Debt Service (TDS) is the percentage of a borrower’s gross household income used to cover housing costs plus other monthly debt payments.
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A variable-rate mortgage has an interest rate that can change during the mortgage term.
It can lower costs when rates fall, but payments or interest costs can increase when rates rise.
Buying, renewing, or refinancing a home often means learning a new language.
This mortgage glossary explains common terms you may encounter when working with a lender, bank, or mortgage broker in British Columbia.
Each definition is written in plain language and focuses on how the term affects real decisions such as affordability, flexibility, risk, and long-term cost, rather than technical jargon.
How to use this glossary
You can read definitions individually, or follow the related links on each page to explore connected concepts. Many mortgage terms are closely related or commonly confused, so cross-links are included to help build a clearer overall understanding.
This glossary is for general educational purposes only and does not replace professional mortgage advice. If anything, hopefully it will help you ask your mortgage broker or bank better questions about your individual scenario.