Mortgage Glossary

The Bank of Canada is Canada’s central bank. It is responsible for Canada's monetary policy and for the promotion of the economic and financial welfare of Canada and is the sole issuing authority of Canadian banknotes. It also provides banking services and money management for the government, as well as loans to Canadian financial institutions.

Interest rates are often stated in basis points which can be confusing. But, a basis point is simply one-hundredth of a percent, or 0.01%. Here’s an example: a Variable Rate Mortgage rate could be quoted at 20 basis points below the Prime Rate. This means the VRM rate would be the Prime Rate minus 0.20%.

Blended payments are a way of repaying a loan with a fixed monthly payment made up of principal and interest (blended) over an agreed-upon amortization period. The Principal component of the monthly payment increases over time while the Interest component decreases.

An existing mortgage can often be renegotiated to extend the term. Lenders will typically ‘blend’ the penalty for breaking the existing term with the rate for the new extended term. A Borrower is typically motivated to do this for one of two reasons; to take advantage of lower rates in the market or to protect themselves against a potential rate increases in the future.

A person that takes out a loan from a bank or other lender under an agreement to pay it back later, typically with interest.