Mortgage Glossary
The essential mortgage terms every Ontario borrower should know.
Amortization vs term
Amortization is the total number of years to fully pay off your mortgage (typically 25 or 30). Term is the length of time your current rate and conditions apply (typically 3 or 5 years). At the end of each term you renew under fresh conditions until amortization completes.
Insured, insurable, and uninsured
Insured = down payment under 20%, default insurance applies. Insurable = 20%+ down on owner-occupied 1–4 unit, lender can still buy bulk insurance. Uninsured = doesn't fit either bucket (high-value purchases, refinances, rentals). Pricing differs across all three buckets.
Beacon score
Your credit score, ranging 300–900. The number lenders care most about. 'Beacon' is the Equifax scoring model; TransUnion uses 'FICO Risk' but the ranges are equivalent for mortgage purposes.
HELOC, second mortgage, third mortgage
Position descriptions for loans against your home. First mortgage = primary loan, registered first. Second = registered behind the first. Third = behind the first two. Position determines who gets paid first in a default scenario, which drives rate.
IRD, prepayment privilege, blend-and-extend
IRD = Interest Rate Differential, the formula used to calculate fixed-rate break penalties. Prepayment privilege = how much extra principal you can pay each year without penalty (typically 15–20%). Blend-and-extend = restructuring with the same lender to capture a lower rate without triggering a full break.
Stress test
The qualifying rule that requires you to demonstrate ability to service the mortgage at the greater of 5.25% or your contract rate + 2%. Applies to all federally-regulated lender mortgages.
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