Mortgage Terms Glossary

Mortgage paperwork comes with its own vocabulary. Here are the terms you're most likely to run into, explained without the jargon.

• Amortization Period — how long it would take to pay off your mortgage at your current payments, usually 25 years for a new purchase
• Appraisal — an estimate of your property's market value, used by the lender to confirm the loan amount
• Closing Costs — legal fees, land transfer tax, and other extras due on top of your down payment
• Conventional Mortgage — a mortgage where your down payment covers at least 20%, so no default insurance is required
• High-Ratio Mortgage — a mortgage with less than 20% down, which must carry default insurance
• Equity — the difference between your home's market value and what you still owe on it
• Fixed-Rate Mortgage — an interest rate that's locked in for the full term
• Variable-Rate Mortgage — an interest rate that can move with the market during your term
• GDS Ratio — the share of your gross income going to housing costs; lenders like to see this at 32% or under
• TDS Ratio — the share of your gross income going to housing costs plus all other debts, generally capped around 40%
• Maturity Date — the last day of your current mortgage term, when you renew or pay it off
• Porting — moving your existing mortgage, rate, balance, and term, to a new property instead of breaking it
• Prepayment Charge — a fee for paying off more of your mortgage than your term allows, before it's up
• Principal — the amount you actually borrowed, separate from the interest you pay on top of it

Come across a term that's not here? Ask your broker — we'd rather explain it plainly than have you guess.