Mortgage
Quick Definition
A secured loan used to purchase real estate, with the property as collateral.
Full Explanation
A mortgage is a loan secured by real property, typically used to purchase a home or other real estate in Canada. The property serves as collateral — if you fail to make payments, the lender can foreclose and sell the property to recover the debt. Canadian mortgages have unique rules: a minimum down payment of 5% (10% for homes over $500K), mandatory CMHC insurance if the down payment is below 20%, and a stress test requiring qualification at the higher of 5.25% or your rate plus 2%. Mortgages are typically amortized over 25 years with 5-year renewable terms.
Related Terms
CMHC (Canada Mortgage and Housing Corporation)
Federal Crown corporation that provides mortgage default insurance for high-ratio mortgages.
Amortization
The total length of time to pay off a loan through scheduled payments.
Mortgage Stress Test
A Canadian requirement to qualify for a mortgage at a higher rate than the contract rate.
Down Payment
The upfront cash you pay toward a home purchase, expressed as a percentage of purchase price.
Ready to put this knowledge to use?
Use our free calculators to model your situation based on what you've just learned.