• ATMs/Branches
  • Rates
  • Careers
  • Join Libro
  • Log in
  • to online banking
  • Home > personal banking > Mortgages > Glossary
    image of happy family

    How to Speak Mortgage

    The follow is a list of terms you should understand when talking about mortgages.

    • Amortization period: The number of years over which the repayment of your mortgage is calculated, e.g. 25 years. The shorter the amortization period, the less interest you will pay over time.
    • Assumable term: If you sell your home in the middle of your mortgage term, an approved purchaser as part of the sale can assume your payments until the term is over.
    • Closed mortgage: A set payment schedule that is locked in for the term of the mortgage at a negotiated interest rate. Anniversary pre-payment options are usually available.
    • Collateral mortgage: Up to 80% of your home's value
    • Fixed and variable: Fixed interest rates are locked in for the term of your mortgage. Variable rates fluctuate with the prime rate.
    • Foreclosure: When you miss payments on your mortgage, the lender has legal recourse to resell your home.
    • Gross debt service ratio: The monthly cost of carrying your mortgage principal, taxes and interest plus energy costs, divided by your monthly household income.
    • Hardware store: A place you'll visit once a week for about the first two months after you buy a home.
    • High-ratio mortgage: When the mortgage amount exceeds 80% of the purchase price.
    • Home equity: The value of your home less your mortgage balance.
    • Maturity date: The date on which the term of the mortgage expires.
    • CMHC: The Canada Mortgage and Housing Corporation administers the Federal Housing Act and insures mortgage loans for lenders. These are the people who make it possible (at an additional cost) to mortgage up to 95% of the cost of your home with approval.
    • Mortgagee: The individual or institution that lends you the money. Also known as the chargee.
    • Mortgage-free: A good thing to be.
    • Mortgagor: You. Also known as the chargor or borrower.
    • Open mortgage: Allows you to pay off any mortgage amount at any time without penalty, although it may come with a higher interest rate.
    • Pre-approved: The purchaser has agreement from the lending institution to a pre-arranged, available mortgage.
    • Rate guarantee: When the lender guarantees an interest rate for a period of time prior to the purchase. This protects the purchaser against escalating interest rates.
    • Term: The period over which your interest rate applies. Can be short term (usually starts at six months) or long term (up to seven years).