About Mortgages


Length of time over which the debt will be repaid.


Money placed in trust by the purchaser when an Offer to Purchase is made. The sum is held by the real estate representative or lawyer/notary until the sale is closed, and then it is paid to the vendor.

Down Payment

The portion of the home price that is not financed by the mortgage loan. The buyer must pay the down payment from his/her own funds or other eligible sources before securing a mortgage.

Gross Debt Service Ratio (GDS)

The percentage of the gross income that will be used for payments of principal, interest, taxes and heating costs (P.I.T.H.) and 50% of any condominium maintenance fees or 100% of the annual site lease for leasehold tenure.


A mortgage is a security interest given in the property you are purchasing which secures repayment of the loan related to the property. That security interest is discharged on payment of the principal and interest owing on the loan in accordance with the mortgage document. In Quebec, “mortgages” are called “hypothèques”.

Mortgage Approval

Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.

Mortgage Broker

The job of the mortgage broker is to find you a lender with the terms and rates that will best suit you.

Mortgage loan insurance

Mortgage loan insurance is required for residential mortgage loans with a loan-to-value ratio of more than 80% and is available from CMHC or a private company. Because mortgage loan insurance protects the lender against losses in the event that a borrower fails to pay his or her mortgage, it enables more Canadians to purchase their home earlier, at competitive interest rates, and can benefit from the growth in home equity sooner.

Mortgage Lender

A mortgage lender is an institution (bank, trust company, credit union, etc.) that lends money for a mortgage.

Mortgage payment

A regular payment to the lender that includes both the interest and the principal.

Mortgage Term

Length of time that the mortgage contract conditions, including interest rate, are fixed.


Principal, interest, taxes and heating — costs used in both the Gross Debt Service ratio (GDS) and Total Debt Service ratio (TDS) calculations.

Total Debt Service Ratio (TDS)

The percentage of gross income that will be used for payments of principal, interest, taxes and heat (P.I.T.H.) and other debt obligations, such as car payments or payments of other loans.

Source: www.cmhc-schl.gc.ca