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Mortgage Glossary (plain meanings, with sources)

118 words you meet on a mortgage or business loan, each answered first in plain words, then with an example, how it differs from its neighbours, the calculator or real file that shows it, and the official source we checked it against.

Every meaning here was checked against a primary source (the Financial Consumer Agency of Canada, CMHC, OSFI, the Canada Revenue Agency, federal and provincial laws, the insurers) or against Ramin's own recorded words, and re-read on November 13, 2026. Figures that move say the day they were checked. A word that belongs to one of our specialist desks points you to that desk.

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100% financing (zero down)

Also called: 100% financing, zero down, zero down payment, zero percent down, 100% of project cost

Financing that covers the whole cost with zero down payment. Some lenders offer it for buying or starting a healthcare practice, but not for an insured home mortgage.

As of November 13, 2026, a home mortgage with default insurance needs at least 5% down (CMHC). For licensed physicians, dentists, veterinarians, optometrists and pharmacists in B.C. and Alberta, buying or starting a practice can often be financed to 100% of project cost, most often with zero down payment. That can cover the practice, equipment, build-out and operating line (Ramin, July 31, 2026). Some lenders will finance 100% of the building and still ask for a contribution toward goodwill and leaseholds. What your own file gets is confirmed to you in writing before you commit.

In Ramin's words (July 31, 2026): “zero percent down ... all equipment and startup costs and operating lines at the same time”

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A

Accelerated bi-weekly payments

Also called: accelerated biweekly, accelerated bi-weekly, accelerated weekly

Paying half of your monthly payment every two weeks. Because a year has 26 two-week periods, you make the same as one extra monthly payment each year.

Regular bi-weekly payments split 12 monthly payments into 26 payments, so you pay the same amount in a year. Accelerated bi-weekly payments are the monthly payment divided by 2, which adds up to 13 monthly payments a year. Example: with a $2,000 monthly payment, accelerated bi-weekly is $1,000 every two weeks, or $26,000 a year instead of $24,000. The extra goes to the principal, so you pay less interest and finish sooner. Accelerated weekly works the same way, using the monthly payment divided by 4.

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Adjustable-rate mortgage (ARM)

Also called: ARM, adjustable rate mortgage, adjustable-payment variable, adjustable payment variable, adjustable payments with a variable interest rate, variable rate with adjustable payments, floating variable, adjustable-rate mortgage

A variable-rate mortgage where your payment goes up or down when your lender's prime rate changes. Because the payment changes, you stay on track to pay off the mortgage on schedule.

With an ARM, a set part of each payment pays down your balance, and the interest part changes with the rate. So when prime rises, your payment rises, and when prime falls, your payment drops. You know in advance how much of the balance you will have paid by the end of your term. Compare a VRM, where the payment stays the same and a rate change shows up in how fast the balance goes down instead. Example: at prime plus 1%, if prime goes from 3.5% to 3.7%, your rate goes from 4.5% to 4.7%, and your payment goes up to match.

In Ramin's words (November 4, 2026): “what's the floating variable? That's adjustable rate mortgage or ARM”

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Agricultural Land Reserve (ALR)

Also called: ALR, agricultural land reserve, ALR land

Land in B.C. set aside for farming. Farming comes first there, and other uses must be allowed by the rules or approved by the Agricultural Land Commission.

If a property is in the ALR, you must follow both the ALR rules and local zoning. Zoning cannot allow a use the ALR rules do not, and local zoning can add more limits of its own. Most properties are limited to one main home, an extra home is allowed only under certain conditions, and the land can be subdivided only if the rules allow it or the Commission approves. Before you buy, check the Commission's ALR map. A note on the title can help, but it is not proof either way.

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All-in-one account (Manulife One)

Also called: Manulife One, all-in-one mortgage, all-in-one account

A mortgage that works like a bank account. Your pay goes in and lowers what you owe right away, so money sitting in the account cuts the interest you pay.

Manulife One, from Manulife Bank, is one example. It is secured by your home. In Manulife's client guide (uploaded July 19, 2026), the total limit can be up to 80% of your home's value. For a home you live in, the part you can pay down and borrow again freely is at most 65%, and anything above that sits in a fixed-rate part that is paid down on a schedule. Every deposit lowers the balance you pay interest on. The rate on the main part moves with prime, and there is a monthly account fee. If your balance does not come down over time, you may save little compared with a regular mortgage.

In Ramin's words (July 18, 2026): “the revolving portion doesn't have the payment frequency... only the fixed term portion.”

Alternative lender (B lender)

Also called: B lender, B-lender, alternative lender, alt lender, B-side, B side, alternative (B) lender, B or alternative, alternative mortgage

A lender for files that fall outside a prime lender's rules. It charges a higher rate than a prime lender, usually plus fees, and it is not a private lender.

In Ramin's files, the usual reasons for a B lender are declared income that is too low, GDS or TDS over the usual limits (often over 50%), too much unsecured debt, or bruised credit (Ramin, October 19, 2026). B lenders ask for at least 20% down and offer stated income backed by about 12 months of bank statements or financials (Ramin, July 22, 2026). On a residential B lender mortgage, the lender fee is usually 1% to 2% and the brokerage fee 1% to 2%, with brokerage from $2,500 (our financing fees calculator). A B lender is not the same as a private lender. Watch the wording in government reports: CMHC uses "alternative lender" to mean unregulated private lenders, which is not what a mortgage broker means by a B lender.

In Ramin's words (October 19, 2026): “anytime we're dealing with an alt lender, most of the time the issue is either they don't declare enough income, or the TDS, GDS goes over 50%, or they have too much unsecured debt … or they may have bruised credit.”

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Amortization

Also called: amortization period, amortized

The total time it would take to pay off your whole mortgage, such as 25 or 30 years. A longer amortization means a lower payment but more interest overall.

The amortization is an estimate based on your current term's rate, so it can change when you renew. It is longer than the term, which is why most people renew several times. Limits as of November 13, 2026 (Financial Consumer Agency of Canada and CMHC): with less than 20% down, the longest amortization is 30 years if you are a first-time buyer or buying a newly built home, and 25 years in all other cases. With 20% or more down, the lender sets the maximum. A longer amortization can add thousands or tens of thousands of dollars to the cost of your mortgage.

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Amortization schedule

Also called: amortization table, mortgage payment schedule

A table that shows each mortgage payment: how much goes to interest, how much pays down the loan, and what you still owe after it.

Interest takes its biggest share of your payment at the start of a mortgage. That share gets a little smaller with each payment, so more goes to the principal over time. A schedule lets you see this, and see how extra payments or a shorter amortization change the total interest. The Financial Consumer Agency of Canada's mortgage calculator gives you a payment schedule.

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Appraisal

Also called: appraised value, home appraisal

A professional's estimate of what a property is worth. The lender uses it to decide how much it will lend.

Value is a snapshot of what the home is worth compared with similar homes that have sold, so the appraisal can come in lower than the price you agreed to. If it does not support the mortgage amount you want, talk to your lender (CMHC). Loan to value is the mortgage divided by the property's value (CMHC). Federally regulated lenders are expected to keep the property valuation and appraisal on file (OSFI Guideline B-20).

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APR (annual percentage rate)

Also called: APR, annual percentage rate

The yearly cost of borrowing, counting interest and certain fees, shown as one percentage of what you borrowed. With no fees at all, it is usually the same as the interest rate.

The APR helps you compare loans that charge different fees. For banks, federal rules define it as the cost of borrowing over the loan, shown as a yearly rate. Lender fees count, but the premium for mortgage default insurance, prepayment penalties and the fee to discharge the mortgage do not. Example: a mortgage with a lender fee has an APR higher than its interest rate, because the fee is a cost of borrowing. Our APR calculator also counts your legal fees and appraisal, so it shows one number for what the mortgage costs you (Ramin, October 21, 2026).

In Ramin's words (October 21, 2026): “APR includes those. So don't do that.”

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Arrears

Also called: missed payments, in arrears, mortgage arrears

Payments that were due and have not been paid. Missing a mortgage payment puts the mortgage in default, which can lead to legal action and, in the end, a forced sale of the home.

Section 8 of the federal Interest Act limits what a lender can charge on mortgage arrears. It cannot charge a fine, a penalty or a higher rate that makes them cost more than the rate on the rest of the loan. If you are having trouble paying, the Financial Consumer Agency of Canada says to contact your lender as soon as you can to talk about your options.

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B

Bankruptcy

Also called: bankrupt, discharged bankruptcy, discharge from bankruptcy

A legal process, run by a Licensed Insolvency Trustee, that frees you from most of your debts. In return, you give up some of what you own.

The trustee sells the assets that the law does not protect and shares the money among your creditors. A first bankruptcy with low surplus income can end with an automatic discharge in nine months; with higher surplus income it runs 21 months. Some debts, such as child support and certain student loans, are not released (Office of the Superintendent of Bankruptcy). Bruised credit is one of the main reasons Ramin's clients use an alternative lender.

In Ramin's words (October 19, 2026): “anytime we're dealing with an alt lender, most of the time the issue is either they don't declare enough income, or the TDS, GDS goes over 50%, or they have too much unsecured debt … or they may have bruised credit.”

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Blended rate (blend and extend)

Also called: blend and extend, blend-and-extend, blended rate, blended mortgage

Your lender mixes your current rate with its rate for a new term to give you one new rate. This lets you extend your mortgage early without breaking it.

Lenders call this blend-and-extend or a blended mortgage, and not every lender offers it. You do not pay a prepayment penalty, but you may pay administrative fees and the usual costs of setting up a new mortgage. Your lender must tell you how it works out your new rate, and the blended rate can be higher or lower than the rate you pay now. Here is a simplified example from the Financial Consumer Agency of Canada, for illustration only: 24 months left at 5.5% and a new 5-year rate of 4% blend to 4.6% for the next 60 months. Compare it with the full cost of your other options.

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Bond yield

Also called: Government of Canada bond yield, 5-year bond yield

The return an investor earns on a government bond bought at today's price. In Canada, fixed mortgage rates are mostly based on the 5-year Government of Canada bond yield.

Canada's Department of Finance defines the yield as the rate that makes a bond's future payments worth exactly its market price today. What a lender pays for its money makes up most of a mortgage rate, and long-term government bond yields directly affect the rates charged on mortgages. Bond yields often follow the Bank of Canada's policy rate, but not always: since September 2024, long-term yields stayed high even as policy rates were cut. That is why fixed rates can move differently from the policy rate.

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Bridge loan

Also called: bridge financing, bridging loan

A short loan that covers a gap. For example, you buy your next home before the money from selling your current one comes in.

The usual case: you close on the new home before the sale of your old one closes, so your down payment is still tied up in the old home. A bridge loan covers that gap until the sale money comes in, and then it is paid back. It is meant to be short, and you pay interest and the lender's fees for the time you use it. Private lenders also use bridge loans to carry a property for a short time until longer-term financing is in place.

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C

Cap rate

Also called: capitalization rate, cap rates

A property's yearly net operating income divided by its value or price. It shows the return before any mortgage.

Example: a building with $60,000 of net operating income that sells for $1,200,000 has a 5% cap rate. A lower cap rate means buyers pay more for each dollar of income.

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Cash damming

Also called: cash dam

A plan for people with a rental or a business: pay its bills with money borrowed from a separate account, and use its income to pay down your home mortgage faster. Interest on money borrowed to earn income may be tax-deductible.

The income from the rental or business goes to your home mortgage, while its expenses are paid with borrowed money kept in a separate account. Under the Income Tax Act, interest can be deducted only on money borrowed to earn income from a business or property, and the Canada Revenue Agency looks at how the borrowed money is used now, not how it was first used. The CRA's interest guide names cash damming and says keeping borrowed money in a separate account makes it easier to trace how it was used; showing that is up to you. Keep clear records and set it up with a tax professional.

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Cash-back mortgage

Also called: cash back, cashback mortgage

A mortgage feature where the lender gives you part of your mortgage amount in cash right away. You usually pay a higher interest rate for it.

Cash back is optional, and only some mortgages offer it. The extra interest can end up costing more than the cash you receive, so compare the total cost. Your lender may limit how you use it: for example, you may not be able to put it toward your down payment. If you break the mortgage before the end of the term, the lender may ask you to pay back some or all of the cash.

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Closing costs

Also called: closing fees, purchase costs

One-time costs you pay when the purchase closes, on top of the down payment, such as legal fees and land transfer tax.

As of November 13, 2026, CMHC suggests planning for 1.5% to 4% of the purchase price. Closing costs include lawyer or notary fees, land transfer tax where it applies, GST and PST where they apply, title insurance if you buy it, and adjustments. Example: on a $600,000 home, 1.5% to 4% is $9,000 to $24,000.

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CMHC MLI Select

Also called: MLI Select

CMHC insurance for rental buildings with 5 or more units. Keep some rents affordable, save energy or make units easy to get into, and you can borrow more, take longer to pay and pay a lower premium.

Projects earn points for commitments such as keeping some rents affordable. As of November 13, 2026 (CMHC MLI Select page, published September 21, 2026): 50 points allows up to 85% of value on an existing building and up to 40 years of amortization; 70 points allows up to 95% and 45 years; 100 points allows 50 years. New construction can borrow up to 95% of cost. The building's income must cover the payments at least 1.10 times for standard rental housing. Affordability commitments last at least 10 years.

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Collateral charge

Also called: collateral mortgage, collateral charge mortgage

A way to register a mortgage on your home's title. It can also secure other loans with the same lender, and it is sometimes registered for more than the mortgage.

When you take out a mortgage, the lender registers a charge on your property. A standard charge secures only the mortgage, for the amount of the mortgage. A collateral charge can secure several loans with that lender, such as a mortgage and a line of credit, and may be registered for more than your mortgage. That lets you borrow more later without paying to discharge your mortgage and register a new one, and you only make payments on the money you actually borrow. Ask your lender which kind you are signing.

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Compounding (semi-annual compounding)

Also called: compounding, compounded semi-annually, semi-annual compounding, half-yearly, effective annual rate, EAR

How often interest is added to the balance so that it earns interest too. For the same quoted rate, the more often it compounds, the more it really costs.

Under section 6 of the federal Interest Act, a mortgage with blended payments must state its yearly rate, calculated yearly or half-yearly, not in advance. A bank must also tell you how the interest is compounded. Half-yearly (semi-annual) compounding means twice a year. Example: 5% compounded twice a year works out to an effective annual rate of 5.0625%, because 2.5% is added twice (1.025 times 1.025 is 1.050625). The same 5% compounded monthly works out to about 5.12% a year. In Canada, semi-annual is the cheapest compounding any institutional lender offers (Ramin, October 16, 2026).

In Ramin's words (October 16, 2026): “in Canada for mortgages, cheapest compounding interest is semi annual”

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Conditions and subject removal

Also called: subjects, subject clause, subject to financing, financing condition, condition precedent, subject-free offer, removing subjects

Conditions in your offer, such as getting your financing approved, that must be met before you have to buy. Removing subjects means you are now committed.

In B.C., you can make your offer subject to financing by a set date. Once your financing is approved, you remove the subject, and only when all subjects are removed are you obligated to buy (BCFSA). The contract is legally binding as soon as both sides sign, even with subjects in it. As of November 13, 2026, B.C. also gives buyers of many homes a rescission (cooling-off) period of three business days after the offer is accepted, with a fee of 0.25% of the offer price.

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Construction mortgage (progress draws)

Also called: progress draw, draw mortgage, draw schedule, construction loan, progress advance

A mortgage for building a home, paid out in stages (draws) as the work is done and checked, instead of all at once.

The lender releases money in stages as the build moves along, such as after the foundation is in, and an appraiser or inspector checks how much is complete before each draw. Money is not advanced for the land alone. On an insured progress-advance mortgage, Sagen bases its insurance on the lower of the market value of the work in place or the cost to complete. These mortgages are used when buying from a builder, hiring one general contractor, or acting as your own general contractor. In B.C., part of each payment to a contractor is held back (a holdback) under the Builders Lien Act.

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Consumer proposal

Also called: proposal to creditors

A legal deal to pay your creditors part of what you owe, or to take longer to pay, so you do not go bankrupt. A Licensed Insolvency Trustee runs it.

It is for individuals whose debts, not counting the mortgage on their home, are $250,000 or less (as of November 13, 2026). It can last up to five years. Once it is filed, you stop paying your unsecured creditors directly and pay through the trustee, and wage garnishments and lawsuits stop. Creditors have 45 days to accept or reject it (Office of the Superintendent of Bankruptcy). Bruised credit is one of the main reasons Ramin's clients use an alternative lender.

In Ramin's words (October 19, 2026): “anytime we're dealing with an alt lender, most of the time the issue is either they don't declare enough income, or the TDS, GDS goes over 50%, or they have too much unsecured debt … or they may have bruised credit.”

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Credit score

Also called: beacon, beacon score, credit rating

A 3-digit number, usually from 300 to 900, that shows how likely you are to repay what you borrow. It comes from your credit report.

Canada has 2 main credit bureaus, Equifax and TransUnion. Lenders look at your credit report and score before approving a mortgage. A weak score can mean a refusal or a request for someone to co-sign (FCAC). For an insured mortgage, as of November 13, 2026, federal rules call for at least one borrower or guarantor with a score of 600 or more (Eligible Mortgage Loan Regulations). Lenders should not rely on the score alone (OSFI Guideline B-20).

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Creditor insurance (mortgage life insurance)

Also called: creditor insurance, mortgage life insurance, mortgage protection insurance, mortgage disability insurance

Optional insurance sold with a mortgage that may pay off your mortgage if you die, or make payments if you are disabled or seriously ill. The lender is paid, not your family.

It is different from mortgage default insurance (such as CMHC insurance), which protects the lender if you stop paying. It is optional: you do not need it to be approved, and the lender cannot insist you buy it. The payout is your mortgage balance, so the cover shrinks as you pay the mortgage down, while the premium usually stays the same. Pre-existing medical conditions are usually not covered. Check what coverage you already have, and compare it with term or permanent life insurance before you decide.

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D

Debt consolidation

Also called: consolidate debt, debt consolidation mortgage, debt consolidation loan

Putting several debts, like credit cards and loans, into one loan, such as a home equity loan, a line of credit or a mortgage refinance. It can lower your interest rate, but not always.

When home equity is used, the new loan or line of credit pays off the higher-rate debts, and your home secures what you borrow. Moving high-interest debt to a lower rate may save you money, but a longer repayment period can cost more in interest over time, and with a weak credit history the new rate may not be lower. It only works if the old debts stay paid off: if the spending that caused them continues, new debt builds up.

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Debt service coverage ratio (DSCR)

Also called: DSCR, DCR, debt coverage ratio, debt service coverage

How many times a rental property's yearly income, after running costs, covers its yearly mortgage payments. 1.10 means $1.10 of income for each $1.00 of payments.

Lenders use the DSCR to size loans on rental and commercial property. Take the net operating income (the property's income minus its operating costs, before loan payments) and divide it by the yearly mortgage payments. At 1.00 the income just covers the payments; below 1.00 it does not. As of November 13, 2026, CMHC's MLI Select program asks for at least 1.10 on standard rental housing, 1.20 for other shelter models and 1.4 for non-residential space (CMHC MLI Select page, published September 21, 2026). CMHC's other programs and other lenders set their own minimums.

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Down payment

Also called: minimum down payment, downpayment

The part of the purchase price you pay yourself. The mortgage covers the rest.

As of November 13, 2026, the minimum is 5% of the first $500,000 plus 10% of any part above $500,000, for homes under $1,500,000; at $1,500,000 or more it is 20% (FCAC; Eligible Mortgage Loan Regulations). Example: on a $700,000 home, 5% of $500,000 is $25,000 and 10% of $200,000 is $20,000, so the minimum is $45,000. With less than 20% down you need mortgage default insurance. It normally comes from your own money; CMHC also accepts money from selling a property and a gift from a relative that does not have to be paid back.

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E

EBITDA

Also called: earnings before interest, taxes, depreciation and amortization

Short for earnings before interest, taxes, depreciation and amortization. It shows what a business makes from running it, before loan interest, tax and write-downs are taken off.

Start with profit, then add back interest, income tax, depreciation and amortization. Here, depreciation and amortization mean writing off the cost of equipment and other assets that last for years, a bit each year. In this term, amortization does not mean paying down a mortgage. The federal government uses a tax version of EBITDA, called adjusted taxable income. It uses it in rules that limit how much interest some businesses can deduct (Department of Finance, explanatory notes, November 2023). Our DSCR calculator compares a business's adjusted EBITDA with its yearly loan payments. Each lender sets its own test.

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Equipment financing (lease)

Also called: equipment loan, equipment lease, equipment leasing, equipment finance

A loan or a lease that lets a business get equipment and pay for it over time.

With a loan, the business owns the equipment and the lender takes it as security. With a lease, the leasing company owns the equipment and the business pays to use it. Some leases run for most of the equipment's useful life and usually end with the business owning it. Others are shorter, and the equipment usually goes back at the end (Industry Canada, Gaps in SME Financing, 2002, quoting the Canadian Finance and Leasing Association). The federal Canada Small Business Financing Program says a term loan can pay for buying or improving new or used equipment. The Canada Revenue Agency lets a sole owner or a partnership deduct lease payments for things used in the business.

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Equity take-out

Also called: take equity out, equity takeout, cash-out refinance, equity release

Borrowing some of the value you have built up in your home. Most often you refinance to a bigger mortgage or add a HELOC.

An equity take-out turns part of your home equity into cash. The usual ways are a refinance (a new, larger first mortgage), a HELOC, or a second mortgage. As of November 13, 2026, a lender will usually let you borrow up to 80% of the home's value in total, counting what you already owe. Example: a home worth $800,000 with $400,000 owing could support up to $640,000 in total, so up to about $240,000 could come out before costs, if you qualify. Your home secures the money, so missing payments can put the home at risk.

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Exit strategy

Also called: exit plan

Your plan for paying off a loan from a B lender or a private lender when its term ends. Most often you move to a regular bank or lender, or you sell the property.

Loans from B lenders and private lenders are not meant to last. In CMHC's research on private (unregulated) lenders, the plan for how the loan will end is made with the borrower before the loan starts, usually as part of approving it; CMHC calls an exit strategy effective when the borrower can move to a regular (conventional) lender or sell the property without falling behind on payments, and calls a well-defined exit strategy vital.

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F

FHSA (First Home Savings Account)

Also called: FHSA, first home savings account, tax-free first home savings account

A registered account first-time buyers use to save for a home. What you put in is generally tax-deductible, and you can save tax-free for a first home, up to set limits.

As of November 13, 2026, you can put in $8,000 in the first year you open one, and $40,000 over your lifetime (CRA). To open one you must be a first-time home buyer: in this calendar year or the previous 4, you did not live in a home that you owned, or one that your spouse or partner owned (CRA).

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First-time home buyer

Also called: first-time buyer, first-time homebuyer, FTHB

For most federal programs, you count as a first-time buyer if you have not lived in a home owned by you or your spouse lately. That means this year or the four years before it.

Each program words it a little differently. For the Home Buyers' Plan, the look-back is this calendar year (except the 30 days before you withdraw) and the four years before it (CRA). The FHSA and the mortgage insurance rules use a similar four-year test (CRA; Eligible Mortgage Loan Regulations). As of November 13, 2026, being a first-time buyer can open a 30-year amortization on an insured mortgage, an FHSA, a Home Buyers' Plan withdrawal and the First-Time Home Buyers' GST/HST rebate on a new home.

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Fix and flip (after-repair value)

Also called: fix-and-flip, fix and flip, after-repair value, ARV

Buying a property to fix up and sell within a short time. The after-repair value (ARV) is what the property should be worth once the work is done.

A fix-and-flip loan pays for the purchase and the renovation together. For example, the U.S. fix-and-flip program on privatewealthfinancing.ca is short-term and interest-only. It pays out the renovation money in draws as the work is done. It limits the loan by both the total cost and the ARV, and whichever gives the lower loan sets the limit. As of November 13, 2026, a Canadian tax rule also applies to flips. If you sell a home in Canada that you owned for less than 365 days in a row, the profit is taxed as business income, not as a capital gain, and a loss cannot be claimed. Exceptions include a death, a separation after at least 90 days apart, a serious illness, losing a job, some moves for work or school, and insolvency.

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Fixed rate

Also called: fixed-rate mortgage, fixed interest rate, fixed mortgage

An interest rate that stays the same for your whole term, so you know your payment ahead of time. Fixed rates are usually higher than variable rates.

A fixed rate protects you if rates rise during the term, and you do not gain if they fall. When the term ends, you renew at the rates of that day. If you break a fixed-rate mortgage early, the penalty is usually the higher of three months' interest or the interest rate differential (IRD), which can be large when rates have dropped since you signed. Your contract says how your lender works it out.

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Fixed-payment variable rate mortgage (VRM)

Also called: VRM, fixed-payment variable, fixed payment variable, static-payment variable, variable rate with fixed payments, fixed payment with a variable interest rate

A variable-rate mortgage where your payment stays the same when the rate changes. Instead, more or less of each payment goes to interest.

With a VRM, your interest rate moves with your lender's prime rate, but your regular payment does not. When rates rise, more of each payment goes to interest and less pays down what you owe. When rates fall, more goes to your balance, so you pay the mortgage off faster. If rates rise past your trigger rate, your payment no longer covers all the interest. The lender will generally add the unpaid interest to what you owe, so your balance grows. It may also ask you to raise your payment, pay extra or switch to a fixed rate. Your mortgage agreement is the best place to find your trigger rate. Example: at prime plus 1%, if prime goes from 3.5% to 3.7%, your rate goes from 4.5% to 4.7%, but your payment stays the same, and more of it goes to interest. The Financial Consumer Agency of Canada warns that this kind of mortgage may be riskier than people expect.

In Ramin's words (November 4, 2026): “fixed payment variable, which is VRM”

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Foreclosure and power of sale

Also called: foreclosure, power of sale, court-ordered sale

The legal steps a lender can take to sell a home, or take it, when the mortgage is not paid. The steps depend on the province.

If you fall behind and cannot catch up, the lender can enforce the mortgage. In British Columbia, foreclosure is a court case, and the court can order the home sold on the terms the court considers just. In Ontario, if the mortgage gives the lender a power of sale, the lender can send a written notice once a payment has been missed for at least 15 days, and the sale cannot happen until at least 35 days after that notice. Speak with a lawyer about where your file stands.

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G

Goodwill

Also called: practice goodwill, business goodwill

The part of a business's price that is more than its equipment, inventory and other assets are worth, less its debts. Simply put, it is what a buyer pays for the good name and the customers or patients.

When you buy a practice or business, the price is often more than its equipment, furniture, leasehold improvements and inventory are worth, after its debts. The Canada Revenue Agency says to work out goodwill by taking the value of those net assets away from the purchase price. Since January 1, 2017, goodwill has its own tax class (Class 14.1). When a healthcare practice is bought, our healthcare program looks at the buyer's licence first. Then it looks at 2 to 3 years of financials or projections (Ramin, October 16, 2026).

In Ramin's words (October 16, 2026): “on the healthcare program, yes, more emphasis on your license ... Financials and projections, 2 years, 2 to 3 years.”

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Gross debt service (GDS)

Also called: GDS, GDS ratio, gross debt service ratio, housing ratio

The share of your before-tax income that goes to housing: the mortgage payment, property tax, heat and half of any condo fees.

GDS = (principal + interest + property tax + heat + 50% of condo fees) divided by gross income. For an insured mortgage the limit is 39%, as of November 13, 2026 (CMHC; Eligible Mortgage Loan Regulations). The payment is worked out at the stress-test qualifying rate, not your actual rate. Example: housing costs of $3,000 a month on a gross income of $120,000 a year ($10,000 a month) is a GDS of 30%.

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GST and the new housing rebate

Also called: GST, GST/HST, HST, new housing rebate, GST rebate, First-Time Home Buyers' GST/HST rebate, FTHB rebate

GST (or the federal part of HST) is charged on new homes. Rebates can give back part or all of it, depending on the price and whether you are a first-time buyer.

As of November 13, 2026: the GST/HST new housing rebate gives back 36% of the GST, up to $6,300; it shrinks for homes between $350,000 and $450,000, and there is none at $450,000 or more (CRA). The First-Time Home Buyers' GST/HST rebate can give back up to 100% of the GST, up to $50,000, on a new home of $1,000,000 or less; it shrinks between $1,000,000 and $1,500,000, and there is none at $1,500,000 or more (CRA).

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H

HELOC (home equity line of credit)

Also called: HELOC, home equity line of credit, equity line

A line of credit secured by your home. You borrow, repay and borrow again up to a limit, and you pay interest only on what you use.

A HELOC lets you borrow against the equity in your home. At banks and other federally regulated lenders, as of November 13, 2026, the line itself (the part where you can pay only the interest) can be at most 65% of the home's value. Anything you borrow above that has to be paid down on a schedule, like a mortgage. Most HELOCs have a variable rate tied to the lender's prime rate. Many lenders sell a HELOC joined to a mortgage under their own brand name, sometimes called a readvanceable mortgage. Your home secures the line, so if you don't pay back what you owe, the lender can take the home.

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Holdback

Also called: lien holdback, builders lien holdback, holdback amount

Money kept back from a payment until a set time has passed or work is finished. In B.C. construction, the law requires 10% to be held back so unpaid trades can still be paid.

Under B.C.'s Builders Lien Act, the owner, and each contractor paying a subcontractor, must keep back 10% of the value of the work or of the payment made, whichever is greater. This way, trades who are not paid can still claim against it. A savings institution (such as a bank or credit union) that pays out mortgage money for the owner, with the owner's authority, can keep this holdback instead. The holdback period usually ends 55 days after the work is certified complete, or after the contract or the work is finished. Lenders also use the word for part of a loan they keep until a condition is met; for example, CMHC says a rental achievement holdback may apply to new rental construction under MLI Select. Other provinces have their own rules.

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Holding company (holdco)

Also called: holdco, holding company, holding corporation

A company set up mainly to own shares in other companies, or to hold investments for a person or a family. It does not run a business itself.

A business owner's holdco can own the shares of the operating company. It can also hold investments and other family wealth. Under the Income Tax Act (section 112), when a company gets a taxable dividend from a taxable Canadian company, it can deduct it when it works out its taxable income. A private company can still owe a refundable tax on some dividends it gets (section 186). Talk to an accountant before you move money between companies.

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Home equity

Also called: your equity

The part of your home's value that you own: its value minus what you still owe on any mortgage or loan secured by it.

If your home is worth $600,000 and you owe $350,000 on the mortgage, your equity is $250,000. Equity grows as you pay down the mortgage and as the home rises in value, and it shrinks if values fall. Lenders let you borrow against it through a refinance, a HELOC, a second mortgage or, usually from age 55, a reverse mortgage.

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I

Insured price cap

Also called: $1.5 million cap, insured mortgage cap, maximum purchase price for insurance, $1,499,999 cap, price cap

The highest price a home can have and still get an insured mortgage with less than 20% down. As of November 13, 2026, the home must cost less than $1,500,000.

The cap is in federal rules (Eligible Mortgage Loan Regulations, section 5(1)(d), current to October 19, 2026) and CMHC applies it to homeowner loans. At $1,500,000 or more you need at least 20% down. A lower limit applies to insurable (low-ratio) loans: the property must be worth under $1,000,000. Some older pages still show the former $1 million cap for insured mortgages; the regulations are the source.

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Insured, insurable and uninsured mortgages

Also called: insured mortgage, insurable mortgage, uninsured mortgage, uninsurable, conventional mortgage, high-ratio mortgage, low-ratio mortgage

Insured means less than 20% down, and you usually pay for default insurance. Insurable means 20% or more down on a loan that still fits the insurance rules, so the lender can insure it; anything else is uninsured.

Insured (high-ratio): the mortgage is more than 80% of the value, the home is worth less than $1,500,000, and you usually pay the premium. Insurable (low-ratio): the mortgage is 80% or less of the value, the loan is for a purchase or moves an existing insurable loan without adding money, and the home is worth less than $1,000,000. The amortization must be 25 years or less, and a one-unit home must be lived in by you or your spouse, partner, parent or child. The lender insures it as part of a group (portfolio) of loans. Uninsured (conventional): 20% or more down and outside those rules, for example a home of $1,000,000 or more, an amortization over 25 years, a refinance that adds money, or a one-unit rental. Figures as of November 13, 2026 (Eligible Mortgage Loan Regulations, current to October 19, 2026).

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Inter alia (blanket mortgage)

Also called: inter alia, blanket mortgage, blanket charge, inter alia security

One mortgage that is registered on more than one property. The extra property adds security for the loan.

With an inter alia mortgage, the lender takes security on two or more properties under one mortgage. It can help reach the amount needed when one property alone does not carry enough equity.

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Interest Act

Also called: Interest Act (Canada), Interest Act section 6

A federal law with rules for interest in Canada. For mortgages, it says the yearly rate must be shown, limits charges on missed payments, and caps the penalty after five years on longer terms.

Three parts matter most to a borrower. Section 6: a mortgage with blended payments must show the rate calculated yearly or half-yearly, not in advance. Section 8: a lender cannot charge a higher rate on arrears than on the rest of the loan. Section 10: on a mortgage term longer than five years, after the fifth year the borrower can pay it off with no more than three months' further interest. Section 10 does not apply to a mortgage given by a company.

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Interest rate differential (IRD)

Also called: IRD, interest rate differential, interest differential, IRD penalty

One way a lender works out the penalty for breaking a mortgage early. It is the difference in the interest left in your term at two rates: one tied to your contract, and today's posted rate for a similar term.

To find the IRD, the lender works out all the interest still to be paid for the rest of your term at two rates. The first is either the lender's posted rate when you signed or your own discounted rate from your contract. The second is today's posted rate for a term of similar length, sometimes minus the discount you were first given. Lenders usually use the IRD when your rate is higher than today's rate and you signed your current contract less than 5 years ago. The penalty is usually the higher of the IRD and three months' interest. When rates have dropped since you signed, the IRD can be much larger: in the Financial Consumer Agency of Canada's example it was $12,000, against $3,000 for three months' interest. Each lender sets its own method, so the IRD on the same balance can differ from one lender to another. Your contract says how yours is worked out.

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Interest-only payments

Also called: interest only, interest-only

Payments that cover only the interest, so the amount you owe does not go down.

Interest-only payments keep the payment lower, because none of it pays down the loan. You will see them on HELOCs, and on some private mortgages and commercial loans, sometimes only for a set time such as the first year or two. The trade-off is that the full balance is still owed at the end. On a HELOC, the lender may require you to pay only the interest, but if that is all you pay, you will not pay off the loan.

In Ramin's words (October 20, 2026): “you can ask for a third option, which is interest only.”

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ITIN

Also called: individual taxpayer identification number, U.S. ITIN

A 9-digit U.S. tax number. The IRS gives it to people who need one for U.S. taxes but cannot get a Social Security number.

A Canadian who has to file a U.S. federal tax return, or wants to claim a tax treaty benefit, and cannot get a Social Security number needs an ITIN. Some U.S. lenders have loan programs for borrowers who use an ITIN. An ITIN is for federal tax only: it does not let you work legally in the U.S. or change your immigration status.

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J

Joint tenancy and tenancy in common

Also called: joint tenants, joint tenancy, tenants in common, tenancy in common, right of survivorship

Two ways to own a home with someone else. When one owner dies, a joint tenant's share passes to the surviving owners, while a tenant in common's share goes to their estate.

In British Columbia, joint tenants each have an equal interest, and when one dies their interest passes to the surviving joint tenants. A share held as tenants in common is passed on under the owner's will, or under the Wills, Estates and Succession Act if there is no will. If the title does not say which kind it is, the owners are tenants in common, and their shares are presumed equal unless the title says otherwise. How you hold title decides what happens to your share, so get legal advice before you choose.

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L

Land transfer tax (property transfer tax)

Also called: property transfer tax, PTT, land transfer tax, LTT

A one-time provincial tax you pay when you buy property and the transfer is registered. In B.C. it is called property transfer tax.

In B.C., as of November 13, 2026, it is 1% of the fair market value up to $200,000, 2% from $200,000 to $2,000,000, 3% above $2,000,000, and a further 2% on residential property above $3,000,000 (B.C. government). Example: on a $700,000 B.C. home, 1% of $200,000 is $2,000 and 2% of $500,000 is $10,000, for $12,000. Ontario charges land transfer tax when the purchase closes, normally based on the amount paid (Ontario government). Exemptions may apply. It is not the same as yearly property tax.

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Leasehold improvements

Also called: leaseholds, tenant improvements, build-out, fit-out

Work a tenant has done in a space it rents, such as walls, plumbing and cabinets for a clinic.

The tenant pays for the work but does not own the building. A federal program for small business loans, the Canada Small Business Financing Program, lists leasehold improvements as a cost a term loan can pay for. Under that program, a lender that pays for equipment takes the equipment as security. For leasehold improvements, it takes security on the business's assets in general (Innovation, Science and Economic Development Canada, page modified June 22, 2026).

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Lender fee and broker fee

Also called: lender fee, broker fee, brokerage fee, finder's fee, financing fee

One-time fees for arranging a mortgage. A lender fee goes to the lender; a broker fee goes to the mortgage broker.

Whether there are fees, and how much, depends on the kind of lender and the kind of file. On residential files, from our financing fees calculator: a prime (A) mortgage is lender-paid, so there is zero fee to you; on a B lender mortgage the lender fee is usually 1% to 2% and the brokerage fee 1% to 2%; on a private mortgage the lender fee is usually 1% to 3% and the brokerage fee 1% to 2%. Residential minimums: brokerage from $2,500, and private lender fees from about $2,500. Commercial files are different: even a commercial prime (A) file usually carries a 0.25% lender fee and a 1% brokerage fee, paid by the client. Fees are part of the true cost of a mortgage, which is why an APR figure includes them.

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Lien

Also called: builders lien, builder's lien, claim of lien, liens

A legal claim against a property for money owed. In B.C., an unpaid contractor, trade or supplier can file a builders lien on the title of the land they worked on.

In construction, a contractor, subcontractor or worker who is not paid for work or materials has a lien on the land and can file a claim of lien in the land title office. In B.C., a mortgage advance made after a claim of lien is filed ranks behind that lien, so a lien can hold up a construction draw until it is paid or removed, for example by posting security. The rules are in B.C.'s Builders Lien Act; other provinces have their own.

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Loan-to-cost (LTC)

Also called: LTC, loan to cost, loan-to-cost ratio

The loan as a share of what a building project costs. Lenders use it for new construction the way they use loan-to-value for a finished property.

Example: a project costs $10,000,000 and the lender lends up to 75% loan-to-cost. The loan tops out at $7,500,000, and the builder brings the rest. As of November 13, 2026, CMHC's MLI Select allows up to 95% loan-to-cost on the residential part of new rental construction (CMHC MLI Select, published September 21, 2026). CMHC's Apartment Construction Loan Program allows up to 100% for residential space, depending on how strong the application is (CMHC, page published November 6, 2024). Other lenders set their own limits.

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Loan-to-value (LTV)

Also called: LTV, loan to value, loan-to-value ratio, LTV ratio, combined LTV

How big your mortgage is compared with what the home is worth, shown as a percentage. A $400,000 mortgage on a $500,000 home is 80% LTV.

The lower the LTV, the more of the home you own (your equity). When there is more than one mortgage on the home, they are added together, which is sometimes called combined LTV. Under the federal Bank Act (read November 13, 2026), a bank may not lend more than 80% of a home's value to buy, renovate or improve it, or to refinance such a loan. The exception is when the part above 80% is insured by a government agency or an approved private insurer. That is why a purchase with less than 20% down usually needs mortgage default insurance. Federally regulated lenders work out the LTV again when you refinance.

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M

Maturity date

Also called: maturity, mortgage maturity, end of term, term end, renewal date

The day your mortgage term ends. It is usually not the day the mortgage is fully paid off; that comes at the end of the amortization.

On the maturity date you renew for a new term if your lender agrees, move the mortgage to another lender that approves you, or pay off what is left. The prepayment penalty is for paying before the term ends, so leaving on the maturity date avoids it. If your lender is federally regulated, such as a bank, it must send you a renewal statement at least 21 days before the term ends. If it will not renew, it must tell you at least 21 days before the term ends. If you do nothing, the mortgage may renew automatically, so it pays to start comparing a few months ahead. Example: a 5-year term on a 25-year amortization reaches its maturity date after 5 years, with about 20 years still left to pay.

In Ramin's words (November 4, 2026): “somebody's looking at the maturity date and just doesn't know is it the maturity date to the end of the term or the end of amortization, right?”

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Mezzanine financing

Also called: mezzanine debt, mezz

Extra financing that ranks behind the main lender but ahead of the owners. If the business fails, it is paid after the secured lenders and before the owners.

Mezzanine financing is often part loan and part ownership: the investor lends money and also buys shares in the business. It is usually used by established businesses, not start-ups, and is often refinanced or paid out after a few years (Industry Canada, Gaps in SME Financing, 2002). Not to be confused with a mezzanine floor in a building.

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Monoline lender

Also called: monoline, monolines, mortgage finance company, mortgage finance corporation

A lender that only offers mortgages. It does not take deposits like a bank, and you usually reach it through a mortgage broker.

Monoline lenders are also called mortgage finance companies (CMHC). They are not supervised the way banks are. But their mortgages generally meet federal standards, because most of their money comes from programs backed by the government (Bank of Canada). CMHC lists monoline lenders among conventional lenders, along with banks and credit unions. Because they only offer mortgages, you will not get a chequing account or credit card from them. We place prime files with monoline lenders as well as banks (Ramin, November 13, 2026).

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Mortgage broker

Also called: broker, mortgage brokerage

A licensed person who helps you find a mortgage lender and set up your mortgage.

Using a broker usually gives you access to more lenders, including lenders that work only through brokers, such as monoline lenders (Bank of Canada; CMHC). In B.C., mortgage brokers are regulated by BCFSA, the provincial regulator.

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Mortgage default insurance (CMHC insurance)

Also called: CMHC insurance, mortgage loan insurance, mortgage insurance, default insurance, CMHC premium, insurance premium, high-ratio insurance

Insurance that protects the lender, not you, if the mortgage is not paid. It is required when your down payment is less than 20%.

You pay for it with a premium, a percentage of the mortgage that is usually added to the loan. The smaller your down payment, the higher the premium. As of November 13, 2026, CMHC's standard premiums are 4.00% of the loan at 90.01% to 95% loan to value, 3.10% at 85.01% to 90% and 2.80% at 80.01% to 85%. A non-traditional down payment, such as a borrowed one, costs more (4.50% at 90.01% to 95%), and an amortization over 25 years adds a 0.20% surcharge. Example: a $600,000 home with 5% down has a $570,000 mortgage and a $22,800 standard premium. In Ontario, Quebec and Saskatchewan, provincial sales tax applies to the premium and cannot be added to the loan (CMHC). CMHC and Canada Guaranty are among the insurers that sell it.

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Mortgage discharge (discharge fee)

Also called: discharge fee, release of mortgage

Removing a paid-off mortgage from your property's title. The lender may charge a fee to do it.

When a mortgage is paid off, the lender's claim on your home is released. In British Columbia, most lenders file the release form (Form C) electronically for you, so owners usually do not need to act; to check it was filed, contact your lender. When you switch to a new lender, discharge fees are among the costs to ask about. A bank must tell you in its disclosure statement whether there is a discharge fee and how much it is.

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Mortgage investment corporation (MIC)

Also called: MIC, MICs, mortgage investment corporation, mortgage investment entity, MIE, mortgage fund

A Canadian company that pools money from many investors and lends it out as mortgages. MICs are a common kind of private lender.

Under the Income Tax Act (section 130.1), a MIC must be a Canadian corporation whose only business is investing its funds. It must have 20 or more shareholders. At least half of its property must be mortgages on houses, insured deposits and cash. MICs usually make short-term, higher-rate mortgages for borrowers who don't qualify with traditional lenders. Their investors take more risk for higher returns (CMHC; Bank of Canada).

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N

Negative amortization

When your payment does not cover all the interest. The unpaid interest is added to what you owe, so your balance grows.

This can happen on a variable-rate mortgage with fixed payments (a VRM) when rates rise past the trigger rate. The balance grows instead of shrinking. The lender may raise your payment or offer to extend your amortization. The Bank of Canada estimated that in September 2024, about 12% of variable-rate mortgages with fixed payments were in negative amortization. That was about 2% of all mortgages.

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Net operating income (NOI)

Also called: NOI, net operating income

A property's income minus what it costs to run. It is counted before mortgage payments, major upgrades and income tax.

Take the rent and other income from the property, then subtract the costs of running it. Mortgage payments, major upgrades (capital spending) and income tax are not subtracted (CMHC). NOI is used to work out a property's cap rate, and our DSCR calculator compares it with the yearly mortgage payments.

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Net worth

Also called: personal net worth, assets minus liabilities

What you own minus what you owe.

Add up what you own at today's values: your home, savings, investments, vehicles and business interests. Then take away what you owe: mortgages, loans, lines of credit and credit card balances. On commercial and high net worth files, lenders look at your personal net worth as well as your income. As of November 13, 2026, CMHC's MLI Select program requires the borrower's net worth to be at least 25% of the loan amount, with a minimum of $100,000. CMHC may allow some flexibility for applications that score 100 points or more (CMHC MLI Select product sheet). For the $250,000 liquid-asset minimum, Private Wealth Financing's net worth tool counts cash, non-registered, TFSA and FHSA money in full, and RRSP or RRIF money at 60%. Money locked until retirement does not count.

In Ramin's words (October 16, 2026): “TFSA and FHSA at 100% and RRSP at 60 to 70% .. anything locked until retirement doesn't get counted”

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Non-recourse

Also called: non-recourse loan, never owe more than the home is worth

A loan the lender can collect only from the home. If the home sells for less than what is owed, you and your heirs do not have to pay the difference.

The term comes from the United States. There, the government-insured reverse mortgage (called a HECM) works this way: the lender can collect the debt only by selling the home, and cannot sue the borrower for any shortfall. Heirs can pay off the loan by selling the home for at least 95% of its appraised value, and the mortgage insurance covers the rest. In Canada, the same kind of protection is a lender's own guarantee, with its own terms. For example, Equitable Bank says you will never owe more than the fair market value of your home, as long as you keep the property taxes and home insurance paid, look after the property and keep up your other mortgage obligations. Its guarantee does not cover fees and interest that build up after the loan comes due. Each lender's terms are different, so read yours.

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Notice of assessment (NOA)

Also called: NOA, notice of assessment, CRA assessment, tax assessment

The summary the CRA sends after it processes your tax return. Lenders use it to confirm your income.

It sums up the amounts the CRA calculated for your return and your balance (CRA). Lenders and insurers read the total income on line 15000 (Canada Guaranty). Self-employed borrowers are usually asked for the last 2 years (FCAC).

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O

Open and closed mortgages

Also called: open mortgage, closed mortgage, fully open, open term, closed term

An open mortgage lets you pay extra, or pay it all off, any time with no penalty. A closed one limits extra payments and usually has a penalty to break, but its rate is usually lower.

Open mortgages usually have a higher rate than closed ones with a similar term, in exchange for that freedom. Many closed mortgages let you make some extra payments each year (prepayment privileges), though not all lenders allow them. Beyond that, or if you break the mortgage, they charge a prepayment penalty. A bank must tell you in writing whether your term is open or closed and what that means. On the commercial and practice loans we arrange, a variable rate is fully open with no penalty. A fixed rate is closed with blended amortization (Ramin, October 16, 2026).

In Ramin's words (October 16, 2026): “fully open, no penalty is the variable. If it's fixed, it's closed and it's amortized ... call it blended amortization for the fix”

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Operating line (line of credit)

Also called: operating line, working capital line

A business line of credit for day-to-day costs. You can borrow up to a set limit, pay it back at any time, and you pay interest only on what you use.

An operating line pays for working capital: the day-to-day costs of running a business (Canada Small Business Financing Program). A line of credit can be secured by something you own, such as business assets or a home, or it can be unsecured (FCAC). In the government's small business program, lines of credit are for working capital. Land, buildings and equipment go on a term loan. Ramin counts a corporate credit card beside the line as revolving credit too (Ramin, October 16, 2026).

In Ramin's words (October 16, 2026): “for revolving you can add not just a line of credit but also corporate visa not Visa for corporate credit card”

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OSFI

Also called: Office of the Superintendent of Financial Institutions, B-20, Guideline B-20

The federal agency that watches over banks and other lenders under federal rules. OSFI is short for the Office of the Superintendent of Financial Institutions.

OSFI is an independent agency of the Government of Canada. As of November 13, 2026, it oversees more than 350 financial institutions and 1,200 pension plans. Its Guideline B-20 (Residential Mortgage Underwriting Practices and Procedures) says how banks and other federally regulated lenders should check home mortgage applications. OSFI also sets the minimum qualifying rate (the stress test) for uninsured mortgages. Credit unions are mostly regulated by their province, and OSFI does not regulate private lenders.

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Owner-occupied

Also called: non-owner-occupied, principal residence, live in the home

A property you live in yourself, rather than one you rent out. Many insurance and lending rules depend on it.

For an insurable (low-ratio) loan on a one-unit home, you or your spouse, partner, parent or child must live there (Eligible Mortgage Loan Regulations). As of November 13, 2026, CMHC's price limit is under $1,500,000 for homeowner loans but $1,000,000 for small rental loans. In a two-unit home you live in, CMHC can count up to 100% of the suite's rent (CMHC).

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P

Personal guarantee

Also called: personal guarantor

A promise you make, as a person, to pay back a loan to your company if the company does not pay.

Lenders can ask business owners to personally guarantee a loan made to their company. If the company does not pay, the lender can take legal action against the guarantor personally. A guarantee can be for a set dollar amount or for the whole loan, so check the limit before you sign. For example, as of November 13, 2026, under CMHC's MLI Select, the borrower and guarantor must guarantee 100% of a construction loan until the planned rents are reached and stay steady for 12 months in a row. After that, it can drop to 40%. On an existing building it is 40% (CMHC MLI Select product sheet, 2025).

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Policy rate (Bank of Canada)

Also called: policy interest rate, overnight rate, target for the overnight rate, key interest rate

The Bank of Canada's main interest rate: its target for the rate banks and other financial institutions charge each other on one-day loans. It is the Bank's main tool to control inflation.

You cannot borrow at the policy rate, but changes to it lead to similar changes in short-term rates. These include lenders' prime rates, which lenders use as the base for variable-rate mortgages and lines of credit. The Bank of Canada does not set mortgage rates. A change can also affect longer-term rates, especially if people expect it to last. The Bank announces the rate on eight fixed dates each year, and in special cases at other times.

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Portability (porting)

Also called: porting, port a mortgage, portable mortgage

Taking your current mortgage, with its balance, rate and terms, to a new home when you sell and buy, so you do not break it.

Porting can save you a prepayment penalty when you move during your term. Not every mortgage can be ported, so ask your lender whether yours is eligible and what restrictions apply. If the new home costs less than what you still owe, you may still have to pay a prepayment penalty. If you need to borrow more for the new home, ask your lender how that works.

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Posted rate

Also called: posted interest rate, discounted rate, advertised rate

The rate a lender advertises for each mortgage term. If you are given a lower rate, that lower rate is called a discounted rate.

Posted rates matter even after you sign, because many lenders use them to work out an IRD prepayment penalty. To do that, the lender usually compares a rate from your contract, such as your own rate or the posted rate when you signed, with today's posted rate for a similar term. Sometimes the discount you were first given is taken off today's rate. A variable rate is often set as the lender's prime rate plus a percentage.

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Pre-approval (rate hold)

Also called: pre-approval, preapproval, pre-approved, rate hold, rate guarantee, pre-qualification

A lender's early look at your finances that shows how much it may lend and at what rate. It can hold a rate for a while, but it is not a final approval.

As of November 13, 2026, depending on the lender, a pre-approval can lock in a rate for 60 to 130 days. It does not guarantee you a mortgage: the lender still has to give its final approval (FCAC).

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Prepayment penalty

Also called: penalty, mortgage penalty, prepayment charge, break fee, cost to break, breaking your mortgage

A fee your lender may charge if you pay off, move or break your mortgage before the term ends, or if you pay more than your contract allows. It is most often three months' interest or the IRD, whichever is more.

You can be charged a penalty if you break your mortgage contract, move it to another lender before the term ends, pay it off early (including when you sell), or pay more than your prepayment privileges allow. The amount is usually the higher of two numbers: three months' interest on what you still owe, or the interest rate differential (IRD). Each lender works it out in its own way, so check your mortgage contract. You may also have to pay an administration fee. Example from the Financial Consumer Agency of Canada: a $200,000 balance at 6% has 36 months left, and the lender's posted rate for a 36-month term is 4%. Three months' interest is $3,000 and the IRD is $12,000, so the penalty is $12,000. The penalty is for paying before the term ends, so waiting until the end of your term (the maturity date) avoids it. An open mortgage can be paid down at any time without one.

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Prepayment privileges

Also called: prepayment privilege, prepayment option, double-up payment

The extra you can pay on your mortgage each year with no penalty. It is on top of your usual payments, and your contract sets how much.

Many closed mortgages let you pay extra: a lump sum on dates set in your contract, a higher regular payment, or both, up to a limit in your contract. These privileges vary from lender to lender, and not every lender allows them on closed mortgages, so read your contract. Paying more than the privilege allows can bring a prepayment penalty, and once you raise your payment you normally cannot lower it again until the term ends. With an open mortgage you can pay extra without a penalty.

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Presale and assignment

Also called: presale, pre-sale, assignment sale, presale condo

A presale is buying a condo or other strata home from a developer before it is built. An assignment is selling your right to buy it to someone else before it is done.

With a presale, you sign a purchase agreement before the building is finished and registered. If you pass that right to buy to someone else before completion, that is an assignment. In B.C., the developer must report it to the province's Condo and Strata Assignment Integrity Register. As of November 13, 2026, a presale contract held less than 730 days may be caught by the B.C. home flipping tax (Province of B.C.). The federal flipping rule can also treat a right to buy a home in Canada that was held less than 365 days as business income, with some exceptions (Income Tax Act, s. 12).

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Prime lender (A lender)

Also called: prime lender, A lender, A-lender, A-side, A side, prime (A) lender, traditional lender, institutional lender

A bank, a credit union or one of many monoline lenders: the regular kind of lender. Its rates are usually lower than a B or private lender's, but you need proof of income, good credit and debts within its limits.

Mortgage lenders are often grouped into three kinds: prime (A), alternative (B) and private. Government reports call prime lenders conventional lenders, a group CMHC lists as including chartered banks, credit unions and monoline lenders. They approve a file mainly on whether you can make your regular payments until the loan is paid off, and their rates are usually lower than an alternative or private lender's (CMHC). A prime residential mortgage usually has no lender fee (Ramin, October 21, 2026). Banks and other federally regulated lenders must follow the mortgage underwriting rules of OSFI, the federal regulator (Guideline B-20). Credit unions are mostly regulated by their province and often use their own stress test (Bank of Canada). For an insured mortgage, as of November 13, 2026, housing costs can be up to 39% of gross income (GDS) and all debts up to 44% (TDS) (CMHC). When a file does not fit a prime lender's rules, an alternative (B) lender may be the next step. The word prime in prime lender names this kind of lender. It is not the same thing as the prime rate.

In Ramin's words (October 21, 2026): “prime: no lender fee, broker fee rare”

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Prime rate

Also called: prime lending rate, prime interest rate, bank prime, prime plus, prime minus, lender's prime

The base rate a lender uses to set rates on loans such as variable-rate mortgages and lines of credit. Each lender sets its own, and it is shaped by the Bank of Canada's key interest rate.

Variable rates are often quoted as prime plus or minus a set amount. For example, at prime plus 1%, if prime is 3.5% your rate is 4.5%, and if prime rises to 3.7% your rate becomes 4.7%. Each lender sets its own prime rate based on what it costs the lender to get money. That cost is influenced by the Bank of Canada's target for the overnight rate, often called its policy rate, so a lender's prime rate may change when the Bank of Canada changes its policy rate. Every week, the Bank of Canada publishes the most common prime rate at Canada's six biggest banks. Today's figure is on our prime rate page. The prime rate is not the same thing as a prime lender: one is a rate, the other is a kind of lender.

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Principal and interest

Also called: P&I, interest portion

The two parts of a mortgage payment: principal pays down what you borrowed, and interest is what the lender charges for the loan.

On a regular blended payment, each payment goes first to the interest owing and then to the principal, so early on a bigger share goes to interest and later more of it pays down the principal. Taxes or insurance collected with your payment are not part of principal and interest. Calculators often show the two together as "P&I". On commercial loans, Ramin describes the variable payment in his own words, quoted below.

In Ramin's words (October 16, 2026): “the variable is not blended, it's just principal and interest”

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Private lender

Also called: private mortgage, private lending, private money, private first mortgage, private second mortgage, private side

A lender that is not a bank, a credit union or a B lender, such as a mortgage investment corporation or a private investor. It makes short loans at higher rates to people who banks and other usual lenders turn down.

Private lenders are not regulated the way banks are and do not have to follow federal mortgage standards such as the stress test (Bank of Canada). They usually lend for short terms at higher rates and often offer interest-only payments (CMHC). On a residential private mortgage, the lender fee is usually 1% to 3% and the brokerage fee 1% to 2%; brokerage starts at $2,500 and the lender fee at about $2,500 (our financing fees calculator). Because the term is short, a private mortgage needs a plan to pay it out, such as a sale or a move to a B lender or a prime lender. A B lender is not the same as a private lender.

In Ramin's words (November 4, 2026): “Is a B lender the same as a private lender? Right? No.”

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Professional mortgage program

Also called: physician mortgage program, medical professional program, professional program, doctor mortgage, dentist mortgage

A home mortgage program for doctors, dentists and some other licensed professionals. It can count the income you expect to earn and allow a small down payment.

Each lender publishes its own program and income table, and the professions it covers vary; some lenders do not write every profession. Some lenders count projected (expected) income from their own published tables. A physician can need as little as 5% of their own money: some lenders go to 95% of the value, and others at 90% let the last 5% be borrowed, for example from a physician's line of credit, at a higher insurance premium (lender factsheets dated June to July 2026, supplied by Ramin on August 3, 2026; Ramin's decision, recorded in our rules on August 3, 2026). Insurers charge more for a borrowed down payment: CMHC's premium at 90.01% to 95% is 4.50% with a non-traditional down payment against 4.00% with your own money.

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Purchase plus improvements

Also called: purchase plus improvement, PPI, purchase plus renovations

A purchase mortgage that also covers planned renovations, so the work is paid for in the same mortgage. Insured programs allow a small down payment.

The lender bases the loan on the lower of two amounts: the home's value after the work, or the price plus the direct cost of the work. You give quotes up front. The renovation money is paid out as the work is done and confirmed with proof, such as paid invoices, before and after photos or an inspector's report. As of November 13, 2026, Sagen's program allows up to 95% loan to value on 1 and 2 unit homes, including the cost of the work. You need 5% down on the first $500,000 and 10% on the part above, for homes under $1,500,000 (Sagen, Purchase Plus Improvements Program). Furniture and appliances do not count.

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R

Readvanceable mortgage

Also called: re-advanceable mortgage, readvanceable, mortgage and HELOC combined

A mortgage joined to a line of credit with the same lender. As you pay down the mortgage, the amount you can borrow on the line of credit goes up.

Many lenders sell this under their own brand name. Each payment lowers the mortgage and frees up more room on the line of credit, which you can borrow from again. The line of credit part can usually be at most 65% of your home's value (FCAC and OSFI Guideline B-20, as of November 13, 2026). It is the tool behind strategies like the Smith Manoeuvre. FCAC warns that easy access to the money may tempt you to take on more debt than you can pay back, so have a repayment plan.

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Refinance

Also called: refinancing, refi, refinance your home, mortgage refinance

Replacing your mortgage with a new one, often for a bigger amount. People do it to take out equity, pay off other debts or change the terms.

When you refinance, the new mortgage pays off the old one. People refinance to take cash out of their home, combine debts, pay for a renovation or change the rate or term. The lender rechecks the home's value. At a bank or other federally regulated lender, you must pass the stress test again. As of November 13, 2026, without mortgage insurance, a bank can lend up to 80% of the home's value on a refinance, counting any other mortgage ahead of it. If you refinance before your term ends, you are breaking your mortgage contract, so your lender may charge a prepayment penalty. Compare the penalty with what you save.

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Renewal

Also called: renew, mortgage renewal, renewal statement, renewal letter

Starting a new term when your current term ends, if you are not paying the mortgage off in full. You can stay with your lender or move to a new one.

At renewal you can take a new rate and term, change how often you pay, and shop around. You do not have to stay with your current lender, and you may qualify for a lower rate than the one in your renewal letter. A prepayment penalty can apply if you move to another lender before your term ends. Moving at the end of the term avoids that, but the new lender must approve you and may charge setup fees. A federally regulated lender, such as a bank, must send a renewal statement at least 21 days before your term ends. If it plans to renew you automatically, the statement says so, and if you do nothing the renewal may be automatic.

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Rental income offset and add-back

Also called: rental add-back, addback, add-back, rental offset, rent offset

Two ways a lender counts rent when you qualify. Add-back adds part of the rent to your income; offset takes the rent off the property's costs.

With add-back, as of November 13, 2026, an insured mortgage through CMHC can count up to 50% of the gross rent from the property being financed as income. For the suite in a two-unit home you live in, it can count up to 100% of the rent (CMHC). With offset, the rent is set against the mortgage payment instead. In earlier years, Ramin often got an offset at alternative lenders where prime lenders only added back part of the rent, and offset worked out much better (Ramin, October 19, 2026). Example: $2,000 a month of rent with a 50% add-back adds $1,000 a month to your income.

In Ramin's words (October 19, 2026): “in the previous years, we used to always get offset rental … for the subject property.”

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Reverse mortgage

Also called: reverse mortgages

A loan for homeowners, usually 55 or older, that lets you borrow from your home's value with no regular payments. You pay it back when you sell, move out, the last borrower dies, or the loan is in default.

As of November 13, 2026, you can usually borrow up to 55% of your home's current value. How much depends on your age, the ages of the others on title, and the home itself. You can take it as one lump sum, part now and part later, or as regular payments. Interest is added to the balance, so what you owe grows over time and the share of the home you own can go down. The rate is usually higher than a regular mortgage or a home equity line of credit. In Canada, reverse mortgages are offered by lenders such as HomeEquity Bank (the CHIP Reverse Mortgage) and Equitable Bank, and are also available through mortgage brokers.

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RRSP Home Buyers' Plan (HBP)

Also called: HBP, Home Buyers' Plan, Home Buyers Plan, RRSP withdrawal for a home

A federal plan that lets you take up to $60,000 (as of November 13, 2026) out of your RRSPs to buy or build a home. You pay it back over 15 years.

As of November 13, 2026, the limit is $60,000 per person (CRA). You must be a Canadian resident, have a written agreement to buy or build, and usually be a first-time home buyer. Repayments start later for recent withdrawals: if your first withdrawal was in 2026, your first repayment year is 2031 (CRA).

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S

Sale-leaseback

Also called: sale and leaseback, sale-and-leaseback, leaseback

Selling something you own, such as equipment or a property, to a buyer who leases it straight back to you. You get the sale money now and keep using it, but you no longer own it and you make lease payments.

In the Canada Revenue Agency's example, you sell a piece of heavy equipment to a leasing company for $100,000. It then leases it back to you for monthly payments. When the same idea is used with a building or a home, you stay on as a tenant and the buyer owns the property.

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Second mortgage

Also called: 2nd mortgage, second position

A second loan on a home that already has a mortgage. You keep paying both, and the rate is usually higher because a second mortgage is riskier for the lender.

The mortgage that ranks first on the title is the first mortgage (first position). A second mortgage ranks behind it. In British Columbia, mortgages on the same property rank in the order they were sent in for registration, unless the documents say otherwise or the earlier lender agrees to let a later one rank ahead (a priority agreement). While you pay off the second mortgage, you also keep paying the first one. Your home is the security for the money you borrow, and if you cannot pay it back you could lose your home to foreclosure.

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Self-employed (business for self)

Also called: self-employed, business for self, BFS, self-employed borrower

You earn your income from your own business or contracts. You are not paid as an employee.

Lenders usually ask self-employed borrowers for their notices of assessment from the CRA for the past 2 years (FCAC). The income on a notice of assessment may not show all the income that is really there to pay a mortgage (Canada Guaranty). That is why insurers and B lenders have stated-income programs. In Ramin's voice note of July 22, 2026, as recorded, many self-employed borrowers who cannot fit a prime lender's rules go to a B lender.

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Smith Manoeuvre

Also called: Smith Maneuver, Smith manoeuvre strategy, debt conversion

A plan that uses a readvanceable mortgage. Each dollar you pay off the mortgage is borrowed back and invested, so over time more of your debt can have tax-deductible interest.

Each payment lowers the mortgage, and the same amount is borrowed from the line of credit joined to it and invested to earn income. Under the Income Tax Act, interest on money borrowed to earn income from a business or property can be deductible. For shares, the Canada Revenue Agency expects a reasonable chance of income such as dividends. The agency looks at how the borrowed money is used now, not what it was first borrowed for. Any yearly tax refund can go on the mortgage too. It adds investment risk and keeps your total debt the same, so get advice from a tax professional before starting.

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Spousal buyout

Also called: spousal buy-out, equity buy-out, buying out your ex, co-owner buyout

A new mortgage that lets one owner buy out the other owner's share of the home. It is most often used after a separation.

The owner who keeps the home takes a new mortgage that pays off the old one and pays the departing owner their share. Because the money is used to buy the other owner's share, some mortgage insurers treat it as a purchase. That can allow a bigger loan than a normal refinance, which is usually limited to 80% of the home's value (as of November 13, 2026). As of November 13, 2026, Sagen's policy allows an insured equity buy-out when both people are already on title. An agreement of purchase and sale, a final separation agreement or a court order must be on file (Sagen, Real estate underwriting). Federal rules for insured loans still apply. The home must be valued under $1,500,000, and the loan can be up to 95% of the first $500,000 of value and 90% of the rest (Eligible Mortgage Loan Regulations, section 5). It does not have to be a married couple. Other insurers and lenders can differ.

In Ramin's words (August 4, 2026): “it doesn't have to be a married couple”

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Spread (prime plus or minus)

The fixed amount added to or taken off your lender's prime rate to set a variable rate. In "prime plus 1%", the spread is 1%.

When prime moves, your rate moves with it and the spread stays the same. An example from the Financial Consumer Agency of Canada: at prime plus 1%, a 3.5% prime gives you 4.5%, and if prime rises to 3.7%, your rate becomes 4.7%. A rate below prime is written as prime minus the spread.

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Stated income

Also called: stated income program, bank statement program, low doc, business for self program, BFS program

A way for self-employed people to qualify on a fair income they state. It is used when their tax return shows less than the business really earns.

Many self-employed people show less income on their tax return than they really have to pay a mortgage. Canada Guaranty's insured program for self-employed borrowers with strong credit looks at the income on the notice of assessment and the business's stated gross revenue. The income must be reasonable for the type and age of the business (Canada Guaranty). B lenders also offer stated income. In Ramin's experience, they ask for at least 20% down and use about 12 months of bank statements or financials (Ramin, July 22, 2026).

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Strata fees (condo fees)

Also called: strata fees, condo fees, condominium fees, maintenance fees

Regular fees that owners in a strata (condo) pay for shared costs and to save for future repairs.

In B.C., owners pay strata fees into an operating fund for regular shared expenses and a contingency reserve fund for costs that come up less than once a year (Strata Property Act, section 92). Each unit pays its share under the Act and its regulations (section 99). For an insured mortgage, half of the condo fees count in your GDS and TDS (CMHC).

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Stress test (qualifying rate)

Also called: stress test, qualifying rate, minimum qualifying rate, MQR, mortgage stress test, B-20 stress test

A check that you could still make your payments at a higher rate than the one you are getting.

OSFI's minimum qualifying rate for uninsured mortgages, as of November 13, 2026: "The greater of the mortgage contract rate plus 2% or 5.25%." It applies to uninsured mortgages at federally regulated lenders under OSFI's Guideline B-20 (Residential Mortgage Underwriting Practices and Procedures); CMHC uses the same test for insured mortgages. Example: if you are offered 4.00%, you must qualify at 6.00%. OSFI reviews the rate at least once a year. It does not expect lenders to apply it to an uninsured straight switch at renewal when the amount and amortization do not go up.

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Switch (transfer to a new lender)

Also called: straight switch, mortgage switch, switching lenders

Moving your mortgage to a new lender for the same amount, usually when your term ends.

A switch lets you take a better rate or features from another lender. The new lender must approve you and may use different rules than your current lender. Costs can include discharge, registration, transfer or assignment fees, and sometimes an appraisal. Ask whether the new lender will pay some or all of them. Moving to another lender before your term ends can bring a prepayment penalty.

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T

Term

Also called: mortgage term, term length, 5-year term, term of the mortgage, five-year term

How long your mortgage contract is in effect. Terms run from a few months to 5 years or more, and at the end you renew, switch lenders or pay it off.

The term is not the same as the amortization. The amortization is the whole time it takes to pay the mortgage off, so most people need several terms in a row. Example: a 25-year amortization paid in 5-year terms would take about five terms if nothing changes. If you pay the balance at the end of the term, you don't need to renew. Breaking the contract before the term ends can cost a prepayment penalty; waiting until the end of the term (the maturity date) avoids it.

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Term loan

Also called: business term loan, term financing

A business loan for a set amount that you pay back with regular scheduled payments.

In the Canada Small Business Financing Program, term loans pay for things such as land or buildings used for business, new or used equipment, renovations a tenant makes to rented space, or the cost to buy a franchise. Some working capital can be included. That program treats any loan with regular set payments as a term loan, and a line of credit is not one. The rate can be floating or fixed.

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Term sheet

Also called: indicative terms

A short document from a lender that sets out the main terms and conditions of the loan it is offering, such as the amount and rate. The full loan agreement comes later.

A term sheet is not the final loan agreement. With CMHC's apartment construction loans, for example, the money starts to flow only once the loan agreement is fully signed. Read every condition before you accept.

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Three months' interest

Also called: 3 months' interest, 3-month interest penalty, three-month penalty, three-month interest penalty

A penalty of about three months of interest on what you still owe. Lenders usually charge this or the IRD, whichever is more.

It is the simpler of the two common penalty methods. Example from the Financial Consumer Agency of Canada: on a $200,000 balance at 6%, three months' interest is $3,000. Your mortgage contract says which rate the lender uses for it. There is also a legal limit for long terms. Section 10 of the federal Interest Act covers a mortgage whose term is longer than five years, meaning the balance is not due until more than five years after the mortgage date. After the first five years, the borrower can pay it off at any time by paying what is owed plus three months' extra interest, and no more interest can be charged. This rule does not cover a mortgage where the borrower is a company or other corporation.

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Title insurance

Also called: title policy

A policy you buy once that protects you and your lender if there is a problem with the title, the record of who owns the property. Title fraud is one example.

Your lender may require it as part of your mortgage. You pay a one-time fee based on the home's value. You can buy it from a lawyer (or a notary in Quebec and B.C.), a title insurance company, an insurance agent or a mortgage broker (FCAC).

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Total debt service (TDS)

Also called: TDS, TDS ratio, total debt service ratio

The part of your income before tax that goes to debt payments. It counts your home costs and all your other debts, like car loans, cards and lines of credit.

TDS = (housing costs used for GDS + all other debt payments) divided by gross income. For an insured mortgage the limit is 44%, as of November 13, 2026 (CMHC; Eligible Mortgage Loan Regulations). For an insured mortgage, for unsecured lines of credit and credit cards, the lender counts a payment of at least 3% of the balance each month, as of November 13, 2026 (CMHC). Example: $3,000 of housing costs plus $800 of car and card payments on $10,000 a month of gross income is a TDS of 38%.

In Ramin's words (October 19, 2026): “anytime we're dealing with an alt lender, most of the time the issue is either they don't declare enough income, or the TDS, GDS goes over 50%, or they have too much unsecured debt … or they may have bruised credit.”

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Trigger rate

Also called: trigger point

The interest rate at which the fixed payment on a variable-rate mortgage only pays the interest. At that point, none of the payment goes to the loan itself.

Trigger rates apply to variable-rate mortgages with fixed payments (VRMs). If rates go above your trigger rate, your payment no longer covers all the interest, and the lender will generally add the unpaid interest to what you owe. The lender may then ask you to raise your payment, make extra payments or change to a fixed rate, so the mortgage is still paid off by the end of the amortization. If you are not at the longest amortization allowed, the lender may offer to extend it instead, which means paying for longer and paying more interest. Your mortgage contract shows your trigger rate.

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U

Underwriting

Also called: underwriter, underwrite, credit decision

The lender's review of your application. It decides whether to approve the mortgage, and on what terms.

An underwriter checks who you are and your credit history, your income and job, and your debt ratios (GDS and TDS). They also check the property's value and appraisal, and where your down payment came from (OSFI Guideline B-20). B-20 says the main basis of the decision should be your shown willingness and ability to pay your debts on time.

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Unsecured debt

Also called: unsecured line of credit, unsecured loan, consumer debt

Debt with nothing pledged to back it, such as credit cards, personal loans and unsecured lines of credit.

With an unsecured line of credit no asset secures the loan; with a secured one, such as a home equity line of credit, an asset is the collateral (FCAC). For an insured mortgage, as of November 13, 2026, the lender counts at least 3% of the balance on unsecured lines of credit and credit cards as a monthly payment in your TDS (CMHC). Example: a $20,000 credit card balance counts as at least $600 a month. Too much unsecured debt is one of the main reasons Ramin's clients need an alternative lender; some alternative lenders use the actual payment instead of 3%.

In Ramin's words (October 19, 2026): “anytime we're dealing with an alt lender, most of the time the issue is either they don't declare enough income, or the TDS, GDS goes over 50%, or they have too much unsecured debt … or they may have bruised credit.”

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V

Variable rate

Also called: variable-rate mortgage, variable interest rate, variable mortgage, floating rate

An interest rate that can go up or down during your term. It often follows your lender's prime rate, set as prime plus or minus a set amount.

When prime moves, your rate moves with it. There are two kinds. With fixed payments, the payment stays the same, but when rates rise more of it goes to interest and less to paying down the loan, and in time none of it may go to the loan. If rates reach the trigger point listed in your contract, the lender may raise your payment. With adjustable payments, the payment itself changes when the rate changes, and a set amount of each payment still goes to paying down the loan. Variable rates may start lower than fixed rates, but nobody can promise where they will go.

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Vendor take-back (VTB)

Also called: VTB, vendor take-back mortgage, seller financing, VTB mortgage

When the seller lends the buyer part of the price. The buyer pays the seller back over time instead of borrowing all of it from a lender.

CMHC describes a vendor take-back mortgage as one where the person selling the home lends you money to help make the sale. The seller gets that part of the price later instead of on closing day. The rate, how long you have to pay it back and the other terms are agreed between buyer and seller as part of the purchase.

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