Whether you’re purchasing your first home, upgrading to a larger home, downsizing or relocating, if you need a mortgage, chances are you’ll come across some if not all of the following terms. Given that a mortgage is a long term commitment, it’s best you understand the terminology used when shopping for your mortgage as you’ll have to live by the terms of your mortgage for years to come.

Amortization

The number of years it would take you to fully repay your mortgage based on a set number of fixed payments; this can range from 1 to 35 years. This is different than the mortgage term.

Closed mortgage

A mortgage which cannot be prepaid, renegotiated, or refinanced before the mortgage term reaches full maturity without some sort of additional charges; often three months worth of interest. Interest rates for a closed mortgage are typically lower than the rates offered for an open mortgage.

This might not be as stringent as it sounds. Many mortgages will allow you to make lump sum payments once a year up to a certain percentage of the mortgage without penalty.

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Convertible mortgage

A convertible mortgage offers you the option to convert your shorter term mortgage into a longer term mortgage at any time without any prepayment charges.

Down payment

The money you put down upfront towards the purchase of your home, which then influences the amount of mortgage you require. Down payments typically range from 10%-25% of the total value of the home.

Fixed rate mortgage

The interest rate for a fixed rate mortgage will not fluctuate. It is set, and will not change for the entire term of the mortgage.

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High ratio mortgage

A mortgage loan when you have less than 20% for a down payment towards the purchase of the property. Or, alternately a mortgage loan for an amount that is more than 80% of the value of the property.

Mortgage

A mortgage is a loan you take out, typically to buy a property (a second mortgage may not involve the purchase of property). The property is used as collateral to ensure that the amount borrowed is paid back.

Mortgage rate

When you take out a mortgage, you are borrowing money. The mortgage rate is the percentage interest you will pay back on top of the money you borrowed.

Compare today to find the best mortgage rates.

Mortgage term

The term of the mortgage is the length of the loan. This is different than the amortization period. A mortgage is usually amortized over say 20 to 35 years, with a shorter term (usually 1 to 10 years). At the end of the term, the remaining balance of the principal (amount of money borrowed) can either be repaid or a new mortgage agreement can be arranged at a new interest rate.

Compare mortgage rates for a variety of mortgage terms today.

Open mortgage

An open mortgage can be prepaid, in part or in full, at any time during the mortgage term, without the penalties associated with a closed mortgage. Interest rates for an open mortgage are typically higher than the rates offered for a closed mortgage.

Prime interest rate

The prime interest rate is usually the lowest interest rate available when borrowing money.

Principal

The amount of the loan owed at any specified time, not including interest.

Published rates

Mortgage rates are published daily. Through Kanetix.ca, you can find today’s current rates from some of the most common mortgage lenders, including banks, trust companies, savings and loan companies and credit unions.

In addition to these published rates, you may qualify for lower unpublished mortgage rates. You can gain access to these unpublished rates with the help of Kanetix®. See what today’s published mortgage rates are, followed by unpublished mortgage rates.

Second mortgage

A second mortgage is a loan taken out on a property for which there is already a mortgage. The money from a second mortgage can be used for a number of purposes but typically includes consolidating debts, or financing a renovation, purchase of additional investments or secondary properties.

Unpublished rates

Mortgage rates are published daily. Through Kanetix.ca you can find today’s current rates from some of the most common mortgage lenders, including banks, trust companies, savings and loan companies and credit unions.

In addition to these published rates, you may qualify for lower unpublished rates. You can gain access to these unpublished rates with the help of Kanetix. See today’s published mortgage rates are, followed by unpublished mortgage rates.

Variable rate mortgage

A variable rate mortgage is a mortgage where the interest rate fluctuates according to changes in the prime lending rate. The payments for a variable rate mortgage do not fluctuate with the fluctuation of the interest rate. Instead, if interest rates go down, more of the payment is applied to reduce the principal; if rates go up, more of the payment is applied to payment of interest.

Compare variable mortgage rates today.

Looking for more information about mortgages and mortgage rates?

• Compare mortgage rates today
• Read: Tips to pay off your mortgage sooner