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The Mortgage CentreGlossary

The Mortgage Centre: glossary

Plain-language definitions of the terms used across the Mortgage Centre, from amortization to the interest rate differential.

Amortization period
The total time scheduled to repay a mortgage in full, often longer than the term, which is the length of the current rate agreement. Read the answer ›
Blended payment
A single regular payment combining principal and interest, disclosed under the Interest Act so the split between them can be calculated.
Charge
The formal term in Ontario's land registration system for what is commonly called a mortgage: a registered interest securing a debt against the property.
Co-borrower
A person registered as an owner on title who is jointly and individually responsible for the mortgage alongside the other owner or owners.
Commitment letter
A lender's written offer setting out the amount, rate, term and conditions of a mortgage. It is not final until its conditions are met. Read the answer ›
Discharge
The document a lender registers once a mortgage is paid in full, removing it as a charge against the property in the land registration system.
Guarantor
A person who is not on title but signs a mortgage promising to pay if the primary borrower does not; distinct from a co-borrower. Read the answer ›
Home equity line of credit
A revolving line of credit secured against a property, which must generally be closed, not just paid to zero, before a related mortgage can be discharged. Read the answer ›
Interest rate differential
A common way to calculate the charge for breaking a fixed mortgage early, comparing your rate to the lender's current rate for the time remaining. Read the answer ›
Mortgage default insurance
Insurance that lets a buyer with a smaller down payment obtain financing, generally limited to owner-occupied homes and unavailable for most refinances. Read the answer ›
Notice of Sale
The formal notice a lender must give before exercising a power of sale, stating what is owed and starting a minimum wait before any sale.
Payout statement
A lender's written statement of the balance, interest, any early payout charge and discharge fee needed to pay off a mortgage in full.
Porting
Carrying an existing mortgage's rate and term to a new property with the same lender, instead of breaking it and paying an early payout charge.
Power of sale
A lender's right, after default and Ontario's required notice periods, to sell a mortgaged property and apply the proceeds to what is owed. Read the answer ›
Prepayment privilege
A right built into most closed mortgages to make extra lump-sum payments, usually up to a yearly limit, without triggering an early payout charge.
Private mortgage
A mortgage funded by an individual, syndicate or company outside the banking system, generally shorter-term and at a higher cost. Read the answer ›
Redemption
Paying what is owed, including any costs, to stop a power of sale at any point before a sale to a buyer actually closes. Read the answer ›
Renewal
The point at which a mortgage's term ends and the lender offers a new rate and term on the same outstanding balance.
Second mortgage
A mortgage registered behind an existing first mortgage on the same property, paid out after the first if the property is later sold. Read the answer ›
Stress test
A requirement for federally regulated lenders to qualify borrowers at a rate higher than the one actually charged, set under OSFI's underwriting guideline. Read the answer ›
Switching
Moving a mortgage to a different lender, most often at renewal, without the full requalification a new purchase mortgage requires.
Title insurance
A private insurance policy that can compensate for certain losses from title defects, including some fraud, subject to the specific policy's terms. Read the answer ›
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