Adjustable interest rate mortgage: A mortgage where monthly payments and interest vary based on market rates.

Amortization: The time required to completely pay off a mortgage.

Appraisal: Report on the estimate of the current market value of a home, conducted by an appraiser.

Closed mortgage: A mortgage that cannot normally be paid off/renegotiated before the end of the term without financial penalty. Pre-payment terms and conditions individual to each mortgage.

Conventional mortgage: A mortgage with a loan-to-value of 80% or less of the property value. Does not require mortgage insurance.

Down payment: The portion of the home’s purchase price that is not financed by a mortgage loan.

Equity: The value that a homeowner has left in their home after subtracting the amount of the mortgage(s) owed on the property from the property value.

Fixed interest rate mortgage: A mortgage with a locked-in interest rate. The rate will not change over the mortgage term.

Foreclosure: A legal process where the lender takes possession of a property if the borrower defaults on a loan. The lender then sells the property to cover the unpaid debt.

High-ratio mortgage: A mortgage with a loan-to-value of less than 80% of the property value. A high-ratio mortgage has to be insured against default with mortgage loan insurance with CMHC or Genworth.

Interest: The cost of borrowing money.

Lien: A claim against a property by another person or company for money owed.

Maturity date: The last day of the term of a mortgage. The mortgage must scheduled to be paid off, re-negotiated or renewed on the maturity date.

Mortgage term: The length of time that the conditions of a mortgage are in effect.

Open mortgage: A mortgage loan that allows a borrower to pay off or re-negotiate their loan at any time without having to pay penalties. Open mortgages have a higher interest rate than closed mortgages.

Principal: The amount a person borrows for a loan.

Title: A document that gives the holder legal ownership of a property.

Variable interest rate mortgage: A mortgage where, as interest rates fluctuate, payments will remain the same, but the amount of each payment that goes toward the principal or the interest changes.