Mortgage Glossary Alberta — Every Term You Need to Know

Mortgages come with their own language — amortization, LTV, stress test, collateral charge, CMHC, GDS, TDS... it can be overwhelming.

This glossary defines every mortgage term you're likely to encounter, in plain language, with links to my detailed guides where you can learn more. Bookmark this page — you'll come back to it.

A B C D E F G H I L M N O P R S T U V

A-Lender

A traditional, institutional lender — banks, credit unions, and monoline lenders — that offers the best interest rates and terms. A-lenders have the strictest qualification criteria: strong credit (typically 680+), verified income, and standard debt ratios. Most homebuyers get their mortgage through an A-lender.

Amortization

The total length of time it takes to pay off your mortgage in full, assuming regular payments. In Canada, the most common amortization is 25 years for insured mortgages. First-time buyers purchasing new construction may qualify for 30-year amortization. Longer amortization = lower monthly payments but more total interest paid over the life of the mortgage. First-time buyer guide →

Appraisal

A professional assessment of a property's market value, conducted by a licensed appraiser. Lenders require appraisals to confirm the property is worth what you're paying (or what you claim it's worth for a refinance). Cost is typically $300–$500 for a standard residential property, more for acreages or rural properties. Acreage guide →

Approval (Conditional vs. Full)

A conditional approval means the lender has reviewed your application and will fund the mortgage once certain conditions are met (usually property appraisal, title review, and final document verification). A full approval means all conditions are satisfied and the mortgage is ready to fund.

Assignment

The transfer of a mortgage from one party to another. In pre-construction real estate, an assignment sale is when the original buyer sells their purchase agreement to a new buyer before the home is completed.

B-Lender

An alternative lender (such as a trust company or specialized mortgage company) that serves borrowers who don't quite meet A-lender standards — lower credit scores, non-traditional income, or higher debt ratios. B-lender rates are typically 1%–3% higher than A-lender rates. Often used as a stepping stone: fix what caused the decline, then refinance to an A-lender at renewal. Second mortgage & private lending guide →

Blended Rate

A rate that combines your existing mortgage rate with a new rate when you increase your mortgage amount mid-term. Instead of breaking your mortgage (and paying a penalty), some lenders allow a "blend and extend" — blending the old rate with the new rate and extending to a new term. Can save thousands in penalties.

Bridge Financing

A short-term loan that covers the gap when you buy a new home before your existing home has sold. The bridge loan covers the down payment on the new home, and is repaid when the old home closes. Typically available for 30–120 days.

Builders' Lien Act (Alberta)

Alberta legislation requiring a 10% holdback on all construction payments to protect against liens from unpaid subcontractors or suppliers. The holdback is released 45 days after substantial completion. Applies to all construction draw mortgages. Construction mortgage guide →

Canada Guaranty

One of Canada's three mortgage default insurers (along with CMHC and Sagen). Provides insurance for high-ratio mortgages (less than 20% down), allowing lenders to offer competitive rates to borrowers with smaller down payments.

Closed Mortgage

A mortgage that limits your ability to pay it off early without penalties. Most fixed-rate mortgages are closed. You can still make prepayments (usually 10%–20% of the original balance per year), but paying off the full mortgage before the term ends triggers a prepayment penalty. See also: Open Mortgage.

Closing Costs

The expenses beyond the purchase price that you pay when buying a home. Includes legal fees ($1,000–$2,000), title insurance ($200–$400), property tax adjustments, home inspection, appraisal, and land transfer registration. In Alberta, there is no provincial land transfer tax. Budget 1.5%–2% of the purchase price for closing costs. First-time buyer guide →

CMHC (Canada Mortgage and Housing Corporation)

A federal Crown corporation and Canada's largest mortgage default insurer. CMHC insures high-ratio mortgages (less than 20% down), which allows lenders to offer lower interest rates to borrowers with smaller down payments. CMHC also runs the newcomer, self-employed, and purchase plus improvements programs.

Collateral Charge

A method of registering your mortgage on title. A collateral charge allows the lender to register the mortgage for more than the actual loan amount — making it easier to borrow more in the future without re-registering. The downside: switching to a different lender at renewal may require a full discharge and new registration (with associated legal fees). Most big banks use collateral charges. See also: Standard Charge.

Completion Date

The date when the property sale is finalized. The buyer takes legal ownership, the mortgage funds are advanced, and the keys are handed over. Also called the closing date or possession date.

Conditional Offer

An offer to purchase a property that includes conditions that must be met before the deal is final — typically financing, home inspection, and property appraisal. Once all conditions are satisfied (or waived), the offer becomes firm.

Construction Draw Mortgage

A mortgage that releases funds in stages as a new home is built, typically at 4–5 milestone stages (foundation, framing, mechanical, interior, completion). The lender inspects at each stage before releasing the next draw. Construction mortgage guide →

Conventional Mortgage

A mortgage where the borrower has a down payment of 20% or more. Because the lender's risk is lower, mortgage default insurance is not required. Also called an uninsured mortgage.

Co-signer / Guarantor

A person who guarantees the mortgage payments if the primary borrower can't pay. A co-signer's income and credit are used to strengthen the application. The co-signer is legally responsible for the full mortgage if the borrower defaults.

Credit Score

A number (typically 300–900 in Canada) that represents your creditworthiness. Based on payment history, credit utilization, length of credit history, types of credit, and new credit inquiries. Most A-lenders require 680+ for the best rates. Scores below 600 usually require B-lender or private financing.

Debt Consolidation

Combining multiple debts (credit cards, car loans, lines of credit) into a single mortgage payment at a lower interest rate. Reduces monthly cash outflow and simplifies repayment. Requires sufficient equity in your home. Debt consolidation guide →

Default

Failure to make mortgage payments as required. Defaulting can lead to the lender starting foreclosure or power of sale proceedings. In Alberta, the foreclosure process is court-supervised and can take several months.

Discharge

The legal process of removing a mortgage from your property's title once it's paid off, or when you switch to a new lender. Discharge fees typically range from $200–$400 and are charged by your existing lender.

Down Payment

The portion of the purchase price you pay upfront. Minimum in Canada: 5% for homes up to $500,000, 10% on the portion above $500,000 (up to $1.5M). Homes over $1.5M require 20% down. Higher down payments reduce your mortgage amount and may eliminate the need for mortgage insurance. First-time buyer guide →

Equity

The difference between your home's current market value and the amount you owe on your mortgage. If your home is worth $600,000 and you owe $350,000, your equity is $250,000. Equity grows as you pay down your mortgage and as your home's value increases. You can access equity through refinancing, a HELOC, or a second mortgage. HELOC vs. refinance guide →

Equity Takeout

Borrowing money against the equity in your home — either through a refinance, HELOC, or second mortgage. The funds can be used for any purpose: renovations, debt consolidation, investment, or personal needs.

FHSA (First Home Savings Account)

A tax-free savings account designed to help first-time home buyers save for a down payment. Contributions are tax-deductible (like an RRSP), and withdrawals for a qualifying home purchase are tax-free (like a TFSA). Maximum annual contribution: $8,000. Lifetime contribution limit: $40,000. First-time buyer guide →

First-Time Home Buyer

In Canada, you qualify as a first-time buyer if you (and your spouse/partner) have not owned a home anywhere in the world in the last 4 years. First-time buyers may access the FHSA, RRSP Home Buyers' Plan ($60,000), 30-year amortization on insured new-build purchases, and the federal GST rebate on new homes. First-time buyer guide →

Fixed Rate

An interest rate that remains the same for the entire mortgage term. Provides predictable monthly payments. Most popular in Canada: the 5-year fixed rate. Generally slightly higher than variable rates at the time of signing, but protected from rate increases. See also: Variable Rate.

Foreclosure

The legal process a lender uses to take possession of a property when a borrower defaults on mortgage payments. In Alberta, foreclosure is court-supervised (judicial foreclosure), meaning the lender must go through the courts. The process typically takes several months to over a year. Borrowers have a redemption period to bring payments current and stop the process.

GDS Ratio (Gross Debt Service)

The percentage of your gross (pre-tax) income that goes toward housing costs — mortgage payment, property taxes, heating, and 50% of condo fees if applicable. Lenders generally require GDS to be 39% or lower. This is one of the two debt ratios lenders use to determine affordability.

Gift Letter

A signed letter from a family member confirming that down payment funds are a gift — not a loan — and do not need to be repaid. Required by lenders whenever part or all of the down payment comes from a relative. Most lenders require the donor to be an immediate family member.

Gross Income

Your total income before taxes and deductions. This is the number lenders use to calculate your debt ratios (GDS and TDS). For salaried employees, it's your annual salary. For self-employed borrowers, it's typically your net income reported on your tax returns — which creates a common challenge. Self-employed guide →

HELOC (Home Equity Line of Credit)

A revolving line of credit secured against your home's equity. Maximum 65% of your home's value standalone, or 80% when combined with a mortgage. Variable interest rate (typically prime + 0.50%). Interest-only minimum payments. Can be drawn, repaid, and drawn again without reapplying. Requires 20%+ equity and good credit. HELOC vs. refinance guide →

High-Ratio Mortgage

A mortgage where the borrower has less than 20% down payment. High-ratio mortgages must be insured through CMHC, Sagen, or Canada Guaranty. The insurance premium (typically 2.8%–4% of the mortgage amount) is added to the mortgage balance. See also: Mortgage Default Insurance.

Holdback

Funds retained by the lender's lawyer during a purchase plus improvements or construction mortgage. The holdback is released after the work is verified complete. Also refers to the 10% statutory holdback under Alberta's Builders' Lien Act for construction projects.

Home Buyers' Plan (HBP)

A federal program allowing first-time home buyers to withdraw up to $60,000 from their RRSPs tax-free to put toward a home purchase. Must be repaid to the RRSP over 15 years, beginning 5 years after withdrawal (for withdrawals made before December 31, 2025). First-time buyer guide →

Insured Mortgage

A mortgage backed by mortgage default insurance from CMHC, Sagen, or Canada Guaranty. Required when the down payment is less than 20%. Insured mortgages generally receive the best interest rates because the lender's risk is covered by the insurer. Purchase price must be under $1.5 million.

Interest Rate Differential (IRD)

A method used by lenders to calculate the prepayment penalty when you break a fixed-rate mortgage. IRD is the difference between your current rate and the rate the lender can currently charge for a term closest to the time remaining on your mortgage. IRD penalties from big banks can be very large — often $5,000–$15,000+. This is one of the biggest reasons to use a broker who places your mortgage with lenders that use fairer penalty calculations.

Investment Property

A property purchased to generate rental income or capital appreciation, not as your primary residence. Requires minimum 20% down payment. Rates are typically 0.10%–0.25% higher. Rental income can help you qualify, but the method varies dramatically by lender. Investment property guide →

Lien

A legal claim against a property as security for a debt. Your mortgage is a lien. Tax arrears, unpaid contractors, and court judgments can also result in liens on your property. All liens must be cleared before a property can be sold or refinanced.

Loan-to-Value Ratio (LTV)

The percentage of the property's value that is financed by the mortgage. If your home is worth $500,000 and your mortgage is $400,000, your LTV is 80%. Lower LTV = more equity = lower risk for the lender. Key thresholds: under 80% LTV = conventional (no insurance required); over 80% = high-ratio (insurance required); maximum insured LTV is 95%.

Lump Sum Payment

An extra payment made against your mortgage principal, above and beyond your regular payments. Most closed mortgages allow annual lump sum prepayments of 10%–20% of the original mortgage amount without penalty. A powerful way to pay off your mortgage faster and save thousands in interest.

Maturity Date

The date your current mortgage term ends. At maturity, you must either renew with your current lender, switch to a new lender, or pay off the mortgage. This is your best opportunity to shop for a better rate — penalty-free. Renewal guide →

Monoline Lender

A lender that only offers mortgages — not bank accounts, credit cards, or other products. Monoline lenders (such as First National, MCAP, and RMG) often offer lower rates and better prepayment policies than big banks. They are only available through mortgage brokers.

Mortgage Broker

A licensed professional who shops your mortgage application across multiple lenders (40+ in my case) to find the best rate, terms, and product for your situation. Unlike a bank mortgage specialist (who only sells their bank's products), a broker works for you, not the lender. In most cases, the broker's fee is paid by the lender — not you. Pre-approval guide →

Mortgage Default Insurance

Insurance that protects the lender (not you) if you default on your mortgage. Required when your down payment is less than 20%. The premium ranges from 2.8% to 4% of the mortgage amount and is added to your mortgage balance. Provided by CMHC, Sagen, or Canada Guaranty.

Mortgage Term

The length of time your current interest rate and mortgage contract are locked in. Most common: 5 years. Available terms range from 1 to 10 years. At the end of the term, you renew, switch lenders, or pay off the balance. The term is NOT the same as the amortization.

Net Worth

Your total assets minus your total liabilities. Lenders may review net worth as part of their overall assessment, particularly for self-employed borrowers or large mortgage amounts.

New Home Warranty

In Alberta, all newly constructed homes must be covered by an approved warranty program. Provides protection against defects in materials, labour, and building envelope for specified periods. Lenders require the warranty registration number for construction mortgage approval. Construction mortgage guide →

Newcomer Mortgage

A mortgage program designed for people who have immigrated to Canada within the last 5 years. Allows qualification with limited or no Canadian credit history, international credit reports, and as little as 5% down. Available through CMHC, Sagen, and Canada Guaranty programs. Newcomer guide →

Open Mortgage

A mortgage that can be paid off in full at any time without a prepayment penalty. Open mortgages have higher interest rates than closed mortgages. Best for borrowers who expect to pay off or refinance their mortgage very soon (within 6–12 months).

OSFI (Office of the Superintendent of Financial Institutions)

Canada's federal financial regulator. OSFI sets the mortgage stress test rules and other lending guidelines that federally regulated banks must follow. OSFI's rules don't apply to provincially regulated lenders (like credit unions) — though most choose to follow similar guidelines.

Portable Mortgage

A mortgage feature that lets you transfer your existing mortgage (same rate, same term) to a new property when you move. Avoids breaking the mortgage and paying a penalty. Not all mortgages are portable — and not all lenders make the process easy. Ask about portability before signing any mortgage.

Pre-Approval

A lender's preliminary commitment to lend you a specific amount at a specific rate, typically valid for 90–120 days. Pre-approval involves a credit check, income verification, and rate hold. It tells you exactly what you can afford before you start shopping — and shows sellers you're a serious buyer. Pre-approval guide →

Prepayment Penalty

A fee charged by the lender when you break your mortgage before the term ends. For variable-rate mortgages, the penalty is typically 3 months' interest. For fixed-rate mortgages, the penalty is the greater of 3 months' interest or the Interest Rate Differential (IRD) — which can be very large at big banks. Always ask about penalty calculations before choosing a lender.

Prepayment Privileges

The amount you're allowed to prepay each year without triggering a penalty. Common privileges: 10%–20% of the original mortgage amount as a lump sum per year, plus the ability to increase regular payments by 10%–20%. These features help you pay off your mortgage faster.

Prime Rate

The base interest rate set by individual banks, closely tied to the Bank of Canada's overnight rate. Variable-rate mortgages and HELOCs are priced relative to prime (e.g., prime minus 0.50%, or prime plus 0.50%). As of early 2026, prime rate is approximately 4.45%.

Private Lender

An individual or investment group that lends their own money for mortgages, outside the traditional banking system. Private lenders focus primarily on equity (the value of the property) rather than credit score or income. Rates are higher (8%–15%) with upfront fees (2%–4%), but approval is faster and criteria are more flexible. Best used as a short-term solution. Second mortgage & private lending guide →

Purchase Plus Improvements

A mortgage program that lets you roll renovation costs into your purchase mortgage — one loan, one payment. Available with as little as 5% down. Renovation funds are held back by the lawyer until the work is verified complete. Construction & renovation guide →

Rate Hold

A guarantee from the lender that your approved interest rate will be honoured for a set period — typically 90–120 days — while you shop for a home. If rates go up during the hold period, you keep the lower rate. If rates go down, most lenders will give you the new lower rate. A rate hold is part of a pre-approval.

Readvanceable Mortgage

A combined mortgage product that includes both a traditional mortgage and a HELOC under one facility. As you pay down the mortgage portion, the HELOC limit automatically increases — giving you growing access to equity without refinancing. Total borrowing capped at 80% LTV. HELOC vs. refinance guide →

RECA (Real Estate Council of Alberta)

The regulatory body that licenses and oversees mortgage brokers in Alberta. All mortgage brokers and associate brokers must hold a valid RECA licence to operate in the province. You can verify any broker's licence status through RECA's website.

Refinance

Replacing your existing mortgage with a new, often larger one. Allows you to access equity as cash, consolidate debts, or secure a better rate. Maximum LTV on a refinance is 80%. Closing costs and potential prepayment penalties apply if breaking mid-term. Best done at renewal to avoid penalties. HELOC vs. refinance guide →

Renewal

When your mortgage term ends and you negotiate a new rate and term — either with your current lender or a new one. This is your best opportunity to shop for a better rate. Never simply sign your lender's renewal offer without comparing. Renewal guide →

Reverse Mortgage

A mortgage for homeowners aged 55+ that lets you access your home equity as tax-free cash without monthly payments. The loan (plus interest) is repaid when you sell the home, move out, or pass away. Available up to 55% of your home's value. Reverse mortgage guide →

RPR (Real Property Report)

A legal document (prepared by a land surveyor) that shows the property boundaries and the location of all structures. In Alberta, a current RPR with municipal compliance stamp is typically required at closing. Cost: $500–$1,000 for a new RPR. The seller is usually responsible for providing it.

Sagen

One of Canada's three mortgage default insurers (along with CMHC and Canada Guaranty). Offers the New to Canada Program, Purchase Plus Improvements, Progress Advance (construction draws), and other specialized mortgage insurance programs.

Second Mortgage

A loan secured against your property that sits behind (in second position to) your existing first mortgage. Higher rates than first mortgages. Can be a HELOC, B-lender loan, or private mortgage. Useful when you can't or don't want to break your first mortgage. Second mortgage & private lending guide →

Separation Agreement

A legally binding document between separating or divorcing spouses that outlines the division of property, debts, support payments, and child custody. Required for the spousal buyout program (95% LTV). Must be signed by both parties' lawyers. Divorce & separation guide →

Spousal Buyout

When one spouse keeps the family home after a separation and refinances to pay the other spouse their share of the equity. Through CMHC, Sagen, or Canada Guaranty, this can be done at up to 95% LTV — treated as a purchase, not a refinance. Requires a formal separation agreement. Divorce & separation guide →

Standard Charge

A method of registering a mortgage on title for the exact amount of the loan. Unlike a collateral charge, a standard charge makes it easier to switch lenders at renewal without needing a full discharge and re-registration. Most monoline lenders use standard charges. See also: Collateral Charge.

Stress Test

A federal requirement that borrowers must qualify for their mortgage at a rate higher than their actual contract rate. Currently, you must qualify at the greater of 5.25% or your contract rate + 2%. This ensures you can afford payments even if rates rise. Applies to purchases, refinances, and most switches. Some exceptions exist at renewal.

TDS Ratio (Total Debt Service)

The percentage of your gross income that goes toward all debt payments — housing costs (GDS) plus car loans, credit cards, student loans, lines of credit, and other obligations. Lenders generally require TDS to be 44% or lower.

Title

The legal document that proves ownership of a property. When you buy a home, the title is transferred to your name. Your mortgage is registered against the title as a charge (lien). The title is held by the Alberta Land Titles Office.

Title Insurance

Insurance that protects the lender (and optionally the buyer) against defects in the property's title — such as fraud, errors in surveys, or unknown liens. Most lenders require title insurance. Cost: $200–$400 for a standard residential purchase.

Uninsured Mortgage

A mortgage with a down payment of 20% or more that does not require mortgage default insurance. Also called a conventional mortgage. While no insurance premium is charged, uninsured mortgage rates may be slightly higher than insured rates because the lender carries the full risk.

Variable Rate

An interest rate that fluctuates with the lender's prime rate. When the Bank of Canada changes its overnight rate, prime moves, and your variable rate adjusts. Variable rates can be "adjustable" (payment changes) or "static" (payment stays the same, but the interest/principal split changes). Variable-rate mortgages typically have a 3-months-interest penalty to break — much cheaper than fixed-rate IRD penalties.

Vendor Take-Back Mortgage (VTB)

A mortgage where the seller (vendor) lends money directly to the buyer as part of the transaction — essentially the seller becomes the lender for a portion of the purchase price. More common in commercial real estate, but occasionally used in residential transactions when traditional financing falls short.

Still Have Questions?

This glossary covers the terms — but every situation is different. If you want to understand how any of these concepts apply to YOUR mortgage, call me. 15 minutes. Free. No obligation.

Shawn Selanders — Your Alberta Mortgage Expert

25+ years. 40+ lenders. Plain language advice. Free.

Call/Text: 403-703-6847

Email: ShawnSelanders@gmail.com

Office: 614 High View Park NW, High River, AB T1V 1E5

Explore My Mortgage Guides

• First-Time Home Buyer Guide Alberta
• Mortgage Pre-Approval — How It Works
• Mortgage Renewal Guide
• Self-Employed Mortgage Guide
• Debt Consolidation Mortgage Guide
• HELOC vs. Refinance Guide
• Second Mortgage & Private Lending Guide
• Investment Property Mortgage Guide
• Acreage & Rural Property Mortgage Guide
• Construction & Renovation Mortgage Guide
• Newcomer Mortgage Guide
• Divorce & Separation Mortgage Guide
• Reverse Mortgages in Alberta

Shawn Selanders — RECA-licensed mortgage broker

Your Local Mortgage Professionals — Independent Mortgage Professional

Serving Calgary, Okotoks, High River, Diamond Valley, Foothills County, and all of Alberta since 1999

This glossary is for informational purposes only and does not constitute financial or legal advice. Terms, rates, rules, and programs are subject to change. Always consult a licensed mortgage professional for guidance specific to your situation. O.A.C. E.&O.E.