What the mortgage terms mean.
Term and amortization
The term is how long your current mortgage agreement lasts. Amortization is the longer repayment schedule used to calculate payments. A three-year term and 25-year amortization describe different things.
Fixed and variable
A fixed rate stays the same during the term. A variable rate changes with the lender’s reference rate. Some variable products keep payments steady while others change the payment; ask how your product handles a rate increase.
Prime and your discount
A variable quote may be expressed as prime minus a discount or plus a premium. The lender and exact prime benchmark matter. We compare spreads using a recently checked reference and withhold the calculation when that reference is missing.
Insured, insurable and uninsurable
Default insurance protects the lender. “Insured” means the loan has that coverage. “Insurable” generally means a loan can meet an insurer’s eligibility rules even if you aren’t paying a borrower insurance premium. “Uninsurable” means it does not meet the applicable rules. These categories can affect pricing. A down payment alone does not confirm your category; ask your lender or broker.
Loan-to-value
The mortgage amount divided by the property value. A $400,000 mortgage on a property valued at $500,000 has an 80% loan-to-value ratio. Use an appropriate current value when comparing a renewal.
Open, closed and prepayment privileges
An open mortgage generally gives more freedom to repay without a prepayment charge. A closed mortgage limits repayment beyond the agreement’s privileges. Ask about annual lump sums, payment increases and the cost of ending the mortgage early.
Quote, rate hold, accepted and funded
A quote describes an offer, often subject to conditions. A rate hold protects a rate for a stated period and does not by itself establish final approval. “Accepted” means the borrower reports agreeing to the offer; “funded” means they report the mortgage took effect. These are separate comparison groups.
Renewal, switch and refinance
A renewal starts a new term. A switch moves a mortgage to another lender. Refinancing changes the borrowing arrangement, often including extra money or a changed repayment schedule. Fees and qualification requirements can differ.
Read the Financial Consumer Agency of Canada’s mortgage guidance, and check your own agreement for its exact terms.