# Fixed Rate Mortgage

Definition

- A mortgage in which the interest rate and payments remain the same for the life of the loan. The interest rate and payment amounts are established at the time or of origination.

**Synonyms**

fixed rate closed mortgage, fixed rate term, fixed-rate mortgage, fixed term mortgage, fixed mortgage, fixed mortgage rate, fixed rate

**Acronyms**

FRM

**Alternate Spellings**

Fixed Rate, Fixed Mortgage Rate

## Related Terms and Acronyms

- Adjustable-Rate Mortgage (ARM) — Acronym,
- A type of mortgage loan program in which the interest rate and payments may be adjusted as frequently as every month. The principal loan balance or term of the loan may also be adjusted to reflect the rate change. The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions.

➥ A type of variable rate mortgage product. - Alternative Mortgage — Definition,
**Important**,- A home loan that is not a standard fixed-rate mortgage.

- Amortization — Definition,
- Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.

- Bank Rate — Definition,
- Closely related to the overnight rate, the bank rate is the interest rate the Bank of Canada charges to banks and other major financial institutions for one-day loans.

- Closed Mortgage — Definition,
**Important**,- Closed mortgages involve a strict repayment schedule of a specific amount with optional limited lump sum payments and payment increases.

- Conventional Mortgage — Definition,
**Important**,- A mortgage that is not insured or guaranteed by CMHC or GE Capital.

- Convertible Mortgage — Definition,
**Important**,- A mortgage where the borrower has the option at specified times to change the term length.

- Fixed Instalment — Definition,
- Periodic (usually monthly) payment on a loan whose sum does not vary.

- Hybrid Mortgage — Definition,
- A mortgage split into different components in order to better manage risks and costs.

- Interest Rate (IR) — Acronym,
**Very Important**,- The rate a lender charges an individual to borrow money.

- Interest Rate Cap — Definition,
- A limit to the interest rate increases and decreases on an adjustable rate loan; either from one adjustment period to the next or over the life of the loan.

- Level Payment — Definition,
- A method of repayment where periodical payments of principal and interest are made in a certain way so the payment amount remains constant.

- Level-Premium Insurance — Definition,
- Insurance where the premiums the policyholder pays are guaranteed to remain the same for an agreed upon period of time.

- Lock-in — Definition,
- A lender's guarantee that the mortgage rate quoted will not change for a specific period. The borrower wants the lock to stay in effect until closing.

- Mortgage (mtg) — Abbreviation,
**Important**,- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.

- Mortgage Broker (MB) — Acronym,
**Important**,- One who finds clients perspective lenders at generally no cost. Mortgage Brokers have a special relationship with lenders and can offer their clients the best rates and service. CanEquity goes through great lengths to ensure you are serviced by the best Mortgage Brokers in Canada.

- Mortgage Rate — Definition,
**Very Important**,- The interest rate on a mortgage loan.

➥ You can compare mortgage rates using this website by clicking 'Rates' above. - One-year Adjustable — Definition,
- Mortgage whose annual rate changes yearly. The rate is usually based on movements of a published index plus a specified margin, chosen by the lender.

- Open Mortgage — Definition,
**Important**,- A mortgage that can be paid off prior to maturity without penalty.

- Prime Lending Rate (PLR) — Acronym,
**Very Important**,- The rate of interest charged on loans by chartered banks to their most creditworthy customers.

➥ Bank of Canada's prime (best) lending rate. - Prime Rate — Definition,
- The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.

- Qualifying Rate — Definition,
- The mortgage rate that one must qualify for when applying for a variable rate or a term less than 5 years, so that if rates increase, the borrower can continue to make payments.

- Roll Over Mortgage — Definition,
**Important**,- A type of loan where the interest rate is set for a specific term. At the end of this term, the mortgage is said to "roll-over" and the borrower and lender may agree to extend the loan. If satisfactory terms cannot be agreed upon, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing.

- Step-rate Mortgage — Definition,
**Important**,- A fixed-rate home loan on which payments are lower at the beginning, typically for two years, and which then rise.

- Variable Rate Mortgage (VRM) — Acronym,
**Very Important**,- Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an "Adjustable-rate Mortgage."

➥ A type of mortgage loan offered by brokers and lenders.