Mortgage glossary
Short definitions in MKG's own words. Each one links to the service or tool where that idea is used. A definition is not an approval, and a figure inside one is an example, not a rate.
- Amortization
- Amortization is the number of years used to calculate the payment, often longer than the term you actually sign. A longer amortization lowers the payment and increases the interest paid over the life of the loan. The lender sets the maximum it will allow. Home Purchase
- Term
- The term is the length of the contract you sign, commonly a few years, not the full amortization. When the term ends, the balance is still there and the mortgage comes up for renewal. The rate and the privileges apply only for that term. Mortgage Renewals
- Pre-approval
- A pre-approval is a budget before you write an offer. It is based on the income, debts, and down payment reviewed at that time. It is not a promise that a specific property will be funded. Mortgage Pre-Approval
- Condition of financing
- A financing condition is the time in the agreement of purchase and sale to confirm that a lender will fund that property. Waiving it means the buyer is proceeding without that protection. The documents for the property still have to be in the file. Home Purchase
- Down payment
- The down payment is the cash you put toward the purchase price. Insured programs can allow 5 to 10 percent depending on the program, the income verification, and a purchase price under $1.5 million. You may qualify with less than 20 percent down, subject to lender and insurer approval. Closing costs sit on top of that cash. First-Time Home Buyers
- Insured mortgage
- An insured mortgage is one a mortgage insurer covers for the lender, which is how a purchase can proceed with less than 20 percent down. The insurer and the lender both still review income, credit, and the property. The premium can be added to the mortgage. Home Purchase
- Conventional mortgage
- A conventional mortgage is generally one with at least 20 percent down, so default insurance is not required. The lender still qualifies the income and the property. A larger down payment does not remove the need for documents. Home Purchase
- Stress test
- A stress test checks whether the payment still fits if the rate used for qualifying is higher than the contract rate. Federally regulated lenders follow OSFI's residential mortgage guideline. The rate you are offered and the rate used to qualify are not the same number. Mortgage Pre-Approval
- Gross debt service (GDS)
- GDS is housing costs — the mortgage payment, property tax, heat, and half the condo fee where that applies — divided by gross income. Many lenders illustrate a ceiling around 39 percent. It is a guideline the lender applies, not a promise of approval. Required income calculator
- Total debt service (TDS)
- TDS adds other debt payments, such as car loans and credit cards, to the housing costs, then divides by gross income. A common illustration is 44 percent. The lender's own worksheet controls the real file. Required income calculator
- Land transfer tax
- Ontario land transfer tax is paid on registration, using the brackets for registrations on or after 1 January 2017. It is separate from the down payment. Rebates exist for some buyers. Confirm the figure with your lawyer. Closing costs and land transfer tax
- Toronto municipal land transfer tax
- A purchase in the City of Toronto also pays municipal land transfer tax. For one or two single-family residences, By-law 132-2026 applies to transactions on or after 1 April 2026. On a $500,000 single-family residence each tax is $6,475 before rebates. Oakville, Milton, and the other cities outside Toronto pay the Ontario tax only. Closing costs and land transfer tax
- Status certificate
- A status certificate is the condo corporation's package: the budget, the reserve, any special assessments, and the rules. The maintenance fee in that package changes what payment the file can carry. It is read before a condo condition is waived. Home Purchase
- Refinance
- A refinance replaces the current mortgage, often to change the payment, the amortization, or the amount borrowed. If the term is not over, the penalty is part of the math and can erase the reason for doing it. Refinancing
- Renewal
- A renewal is the offer from the current lender when the term ends. You can accept it, or you can move the mortgage if another lender's terms suit the file. Signing the letter without a comparison is the step this office asks you to pause. Mortgage Renewals
- Switch
- A switch moves the balance to a new lender at renewal, usually without taking extra money out. It is different from a refinance. The new lender still reviews the file, and the penalty should be zero if you wait until the term actually ends. Mortgage Renewals
- Prepayment penalty
- A prepayment penalty is what the contract charges if you pay the mortgage out, or pay more than the privilege allows, before the term ends. Two common ideas are three months of interest and an interest-rate differential. The lender's formula is the one that gets charged. Prepayment penalty estimator
- Interest rate differential (IRD)
- An IRD compares the rate on your contract with a rate the lender chooses, then applies that gap to the balance for the time left in the term. A simplified sketch on this site is not that formula. Ask the lender for the payout statement. Prepayment penalty estimator
- HELOC
- A HELOC is a revolving limit secured by the home. You pay interest on what you draw, and you can pay it back and draw again. It can sit beside the mortgage or replace part of it. It is not automatically cheaper than a refinance. HELOC
- Second mortgage
- A second mortgage is a loan registered behind the first mortgage. The first lender gets paid first if the property is sold. Seconds are used when the first mortgage should stay in place, and they carry their own fee and term. Second and Private Mortgages
- Private mortgage
- A private mortgage is short-term capital from a private lender, often when a bank will not fund in time. It carries lender fees, broker fees, a higher cost, and a date you have to leave it. The exit is written down before an advance. Second and Private Mortgages
- Exit
- The exit is how a short-term mortgage gets paid out: a sale, a refinance with a bank, or another planned source of funds. A private mortgage without an exit is a file this office will not present as complete. Second and Private Mortgages
- Debt consolidation
- Debt consolidation can roll higher-interest balances into the mortgage so there is one payment. It only helps when the equity, the penalty, and the new payment all work. Stretching a credit card into a 25-year mortgage can cost more, even when the monthly payment drops. Debt Consolidation
- Notice of assessment
- A notice of assessment is the Canada Revenue Agency's record of the income it assessed. Self-employed files use it with the T1 General. Line 15000 is the figure many stated-income programs ask to see retained, not a number that gets ignored. Self-Employed Mortgages
- T1 General
- The T1 General is the personal tax return. For a self-employed borrower it is read with the T2125 statement of business activities and the notice of assessment. CMHC's insured self-employed program uses verified income from those documents. Self-Employed Mortgages
- Stated income
- Stated-income programs, such as Sagen's BFS Alt A and Canada Guaranty's Low Doc, let a self-employed borrower declare income the documents can support. They are not a file with no income proof. They currently sit around 90 percent loan-to-value, with at least 10 percent down and at least 5 percent from the borrower's own resources. Commission is excluded. Self-Employed Mortgages
- Add-back
- An add-back puts a business expense the lender accepts, or a gross-up, back into income for qualifying. CMHC's verified self-employed approach can use a 15 percent gross-up or add-backs. The expense still has to be in the tax return. It is not a blank line. Self-Employed Mortgages
- Secondary suite
- A secondary suite is a self-contained unit in a house, often a basement apartment with its own entrance. A lender may offset part of the payment with market rent only when the unit is legal and the program allows it. A suite that is not legal is not treated as income. Rental suite qualifier
- Laneway suite
- A laneway suite or a garden suite is a second unit on a house lot, separate from the main house. In Toronto it shows up beside condos and multiplexes. The file uses the unit only when it is legal, and rent only when the program can support it. Home Purchase
- Appraisal
- An appraisal is the lender's opinion of value, not the price in the agreement. If it comes in lower, the buyer has to cover the gap with extra cash or renegotiate. Pre-construction closings run into this when the contract price and the finished value differ. Pre-Construction
- Bridge financing
- Bridge financing covers the days between buying the next house and the sale of the current one closing. It is short, and it depends on a firm sale. It is not a substitute for the down payment on the purchase. Home Purchase
- Portability
- Portability is the option in some contracts to move the existing mortgage to the next house and keep the rate for the time left in the term. The new property still has to be approved. If the new mortgage is larger, the extra amount is priced on its own. Mortgage Renewals
- Reverse mortgage
- A reverse mortgage lets a homeowner 55 or older draw equity without a monthly principal-and-interest payment. Interest accrues. The title stays in the owner's name, and the cost shows up in what is left for the estate. Reverse Mortgages
- Newcomer mortgage
- A newcomer mortgage is a program that can work with a shorter Canadian credit history when the down payment, the job, and the documents line up. It is not a file without income documents. The lender still names what it needs. Newcomers
- Investment property
- An investment property is a home you do not live in as your principal residence. Lenders read the rent, the down payment, and the mortgages you already carry. A rental is not underwritten as a second version of the house you live in. Investment Property
- Commercial mortgage
- A commercial mortgage is financing secured by property used mainly for business or investment, such as retail, industrial, or a mixed-use building. The equity and the documents depend on the building and the lender. There is no single down payment that fits every commercial file. Commercial Mortgages
- Pre-construction
- A pre-construction purchase is agreed years before the building is ready. The mortgage has to still be available at occupancy and at final closing. Deposits, incentives, and the appraisal are planned before that date. Pre-Construction
- Occupancy
- Occupancy is the date you can move into a new build, which can be months before the building is registered and the mortgage actually funds. Interim occupancy fees are not the mortgage payment. The file plans for both dates. Pre-Construction
- First-time buyer
- A first-time buyer is purchasing a home without already owning one, and some tax rebates use a legal definition that is wider than that. The mortgage steps are still the same: what you can carry, the cash to close, the offer, and the conditions. First-Time Home Buyers
- Mortgage broker
- A mortgage broker arranges mortgages with lenders and is licensed to do it. Micky Khaneka is a licensed mortgage broker, FSRA M21002608, at FLOW Lending Group, Brokerage #12864. The broker presents the file. The lender decides. About MKG Mortgages
- FSRA
- FSRA is the Financial Services Regulatory Authority of Ontario. It licenses mortgage brokerages, brokers, and agents in the province. You can confirm a licence on FSRA's public register. MKG Mortgages works through FLOW Lending Group, Brokerage #12864. About MKG Mortgages
- Closing costs
- Closing costs are the cash due on top of the down payment: land transfer tax, legal fees, title insurance, and adjustments. In Toronto that tax line is two taxes. A pre-approval that spends every dollar on the down payment has not planned the closing. Closing costs and land transfer tax