A Look at Mortgage Jargon

Mortgage Tips Trish Pigott 19 Apr

We often get caught up using mortgage jargon that is not a part of your everyday vocabulary. Some terms that are commonly used in our industry are listed below.

Amortization Period

This is the number of years it will take to repay the entire mortgage in full. A longer amortization period will result in lower payments but it will take longer to pay off, so the interest is higher. The typical amortization range is 15 to 30 years.

Closed Mortgage

This is any mortgage where you have agreed to pay the lender for a specified period of time. This means that you cannot pay it off, refinance or renegotiate before the mortgage term ends without incurring a penalty. Depending on the lender, there may be options for accelerated payments but it depends on your particular mortgage contract. While these mortgages tend to be a lot stricter, they can often provide lower interest rates.

Conventional Mortgage

The loan covers no more than 80% of the purchase price on the property. This means the buyer has to put 20% (or more) down on the property. These mortgages do not require default insurance due to the amount down.


Failure to pay your mortgage on time will result in defaulting on the loan.


Short for ‘derogatory’, it refers to an overdue account or late payments on your credit report.


Short for down payment. In Canada, the minimum down payment is 5%.


A fixed-rate mortgage means that you are locked in at the interest rate agreed.

Flex Down

This refers to a borrowed down payment program, which allows homeowners to “borrow” money for the down payment from a credit card, line of credit or other loan. In this case, the repayment of the loan is included in the debt calculations.


This refers to the possession of a mortgaged property by the bank or lender if a borrower fails to keep up their mortgage payments.

High-Ratio Mortgage

A high-ratio mortgage is where the buyer has provided a down payment of less than 20% of the purchase price and needs to pay Canada Mortgage and Housing Corp (CMHC) to insure the mortgage against default.


Short for Mortgage Investment Corporation, this is a group of investors who will lend you the money for a mortgage if a traditional lender will not due to unusual circumstances.

Open Mortgage

An open mortgage means you can pay out the balance at any time, without incurring a penalty.


Principal, interest and taxes— a calculation representing the amount you can afford to pay monthly on your home.


Also known as a ‘credit check’ or ‘credit inquiry’, a ‘credit pull’ refers to the act of checking a credit report to determine if the borrower is a viable investment prior to approval of the mortgage.


Term is the length of time that a mortgage agreement exists between you and the lender. Rates and payments vary with the length of the term. The most common term is a 5-year, but they can be anywhere from 1 to 10 years. Generally, a longer term will come at a higher rate due to the added security.

Trade Lines

This refers to any credit cards, loans, wireless phone accounts, or mortgages that appear on your credit report.


This refers to the process of determining any risks relating to a particular loan and establishing suitable terms and conditions for that loan.


A variable-rate refers to an interest rate that is adjusted periodically to reflect market conditions.


A condition that refers to repaying 20% of the mortgage balance OR increasing your payment by 20%, without incurring a penalty.

If you hear any mortgage jargon that you’re unsure of, don’t be afraid to ask questions! At the end of the day, your  mortgage contract is unique to you so it’s important that you understand it. Contact us today to discuss your situation and answer any questions you may have. You can call us at 604-552-6190, email us at support@primexmarketing.com or fill out this form.

The Down Payment

General Trish Pigott 19 Apr

A down payment is one of the most essential aspects of every mortgage application and new home purchase. Here are a few things to keep in mind while getting it prepared.

The Source of the Down Payment

Most home buyers are aware that they will require a certain amount of money for a down payment. What many do not realize, is that lenders are required to verify the source of the funds. This allows them to ensure that it is not coming from a source of debt, such as a line of credit or credit card. Instead, the best options for your down payment are as follows.

1. Savings Account

The first and most traditional method is your savings account; you’ve likely been saving for this your whole life!

If you are utilizing your personal savings for a down payment, lenders will require three months of bank statements. These should include your name, account number, past transactions and balance history. Any large deposits made in that time will require an explanation and supporting documentation.

2. Gifted From A Family Member

If you are fortunate enough to receive help from the Bank of Mom and Dad, there are certain requirements:

  • A signed gift letter from the immediate family member
  • Proof of the transfer into your bank account with the account history
  • Important note: If money is being transferred from immediate family overseas, most lenders will require copies of the wire transfer and account history

3. RRSP Withdrawal

Another option for a down payment is the use of a Registered Retirement Savings Plan (RRSP); this only applies to first-time buyers. First-time buyers are allowed to borrow up to $35,000 from their RRSPs tax-free. Note, the money must be repaid within 15 years over 15 equal installments paid once per year.

How Much of a Down Payment is Required?

The minimum down payment amount required in Canada is as follows:

  • 5% on the first $500,000
  • 10% on $500,000 to $1 million
  • 20% over $1 million

For example, on a $600,000 house you would need to put a minimum of $35,000 down ($25,000 on the first $500,000 and $10,000 for the additional $100,000).

If your down payment is less than 20% of the purchase price, you will be required to purchase mortgage loan insurance. These premiums range from 0.6% to 4.50% of the total amount of your mortgage. Using the example above, this would mean an additional $3,600 to $27,000. However, if your down payment is 20% or more, you will not be required to purchase mortgage loan insurance.

Additional Costs and Fees

Lastly, you have to consider closing costs. Closing costs are typically 1.5% to 4% of the purchase price. In order to get financing, you are required to show that you have enough to cover these costs. These funds need to remain in your bank account until they are provided to the lawyer to complete the purchase. This is because lenders will often request updated statements near the closing of the sale to ensure nothing has changed. If money has been moved around or there are new large deposits or withdrawals, they could affect the final approval.

We are always here to help guide you through the process.  Make sure you are upfront about your down payment amount, and where it is coming from. This will help determine whether or not it is suitable, and allow us to find the best lender and mortgage product for you!

Variable Rate or Fixed?

General Trish Pigott 8 Apr

Analysts are predicting another rate increase to the prime rate on April 13, 2022, with a few more to follow in the remainder of the year. Many variable rate mortgage holders have concerns, asking if they should lock in or take a fixed rate on a new mortgage.

If you are shopping for a mortgage or are currently in a variable rate mortgage term, there are many reasons why staying with a variable rate may benefit you.  Below are a few reasons why.

Benefits of Variable Rate Mortgages

  • Variable rates are currently about 2 -2.50% lower than fixed rates
  • If the prime rate changes, it will increase at a slower pace than just jumping to the current fixed rate
  • Paying lower rates will save you thousands of dollars in interest
  • Variable rates have the lowest penalty if you need to make changes to your mortgage during your term

Let’s Break Down the Numbers

This can be overwhelming for homeowners, so we’ve provided some examples below to help give you a better understanding.  The below figures are based on a current mortgage of $400,000 with a 25-year amortization.

Variable Rate: 1.50% to 1.85% (lender dependent)
Fixed Rate: 3.79% to 4.14%

Payment at a Variable Rate of 1.50% = $1598
Payment at a Fixed Rate of 3.79% = $2058

Penalty to Break a Variable Rate Mortgage = $1500 (always 3 months interest)
Penalty to Break a Fixed Rate Mortgage = $26,080 With 2 Years Remaining

These numbers are just estimates to give you an idea of what a variable rate mortgage and fixed rate mortgage could look like.

If you have questions about your specific situation, please reach out and let us know. We’re happy to review your current mortgage term and let you know what the best options are for your unique needs.

Downsizing Your Home

General Trish Pigott 5 Apr

Moving to a larger house is not the only time that things can change with your home and mortgage. Sometimes there comes a point when owning a home becomes a little too much to handle. Perhaps your children have moved out and you no longer need those three extra bedrooms. Whatever the reason, downsizing is a great option when you no longer need a full-size home. Perhaps you want to swap your two-story family home for a rancher, a townhome or a cute little apartment! There are many options for people wanting to scale down.

Homeowners who are fortunate enough to now be mortgage-free and looking to downsize could be sitting on a gold mine!

Breaking Your Current Mortgage

If you do still owe on your current mortgage, it is important to remember that downsizing during your current mortgage cycle, will be breaking the mortgage. This means that you will be required to go through the entire qualification process again – including passing the stress test. The stress test is now required for all mortgages. Its purpose is to determine whether a homebuyer can afford the principal and interest payments, should interest rates increase. It is based on the 5-year benchmark rate from the Bank of Canada or the customer’s mortgage interest rate plus 2% – whichever is higher.

Regardless of your current situation, there are some costs that go with selling your existing home and moving to something smaller or more affordable.

Costs Associated With Downsizing

  • Realtor commission fees (typically 2.5 to 5% of the home selling price)
  • Closing costs and legal fees (1 to 4% of the purchase price on the new home)
  • Miscellaneous costs such as moving expenses, upgrading appliances or buying new furniture
  • If you are moving into a condominium or townhouse there are strata fees to consider