Mortgage Rate

Definition

  • The interest rate on a mortgage loan, or the cost of a property loan expressed as a percentage. For example, the monthly payments of a property loan of $200,000 at a mortgage rate of 7% would consist of a portion of the original loan plus 7% interest.

Notes
You can compare mortgage rates using this website by clicking 'Rates' above.

Synonyms
lending rate, mortgage interest rate, home loan 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.
  • Annual Percentage Rate (APR) Acronym, Very Important,
    • A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.
    A number used to compare costs associated with mortgage loans and other forms of financing.
  • 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.
  • Blended Rate Mortgage Definition, Important,
    • If a homeowner renews his or her mortgage early, the old and the new mortgage rates are blended together to split the difference between the interest rates.
  • Building and Loan Association Definition,
    • A financial institution designed to help members finance real-estate transactions.
  • Canada Mortgage and Housing Corporation (CMHC) Company Est. 1946, Canada-wide, Very Important,
    • The Canada Mortgage and Housing Corporation: this is a Federally run institution that provides banks and lenders with mortgage insurance. Not to be confused with life or property insurance. In the event of default or foreclosure CMHC assumes responsibility of the property and reimburses the bank/lender the entire mortgage amount. This insurance is required generally when you have less than 25% equity or down payment. This insurance is paid by the property owner in advance but usually added to the mortgage amount. See also "G.E. Capital."
    Insures Canadian mortgage lenders.
  • Conventional Mortgage Definition, Important,
    • A mortgage that is not insured or guaranteed by CMHC or GE Capital.
  • Fixed Rate Mortgage (FRM) Acronym, Very Important,
    • A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.
  • Initial Interest Rate Definition,
    • The introductory interest rate on an adjustable-rate mortgage (ARM), which usually changes at a predetermined time.
  • Interest (int, IN) Acronym & Abbreviation,
    • Money paid for the use of borrowed funds, usually expressed as an annual percentage.
    Bank account transaction code.
  • 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.
  • Interest Rate Differential (IRD) Acronym, Very Important,
    • The penalty one pays for breaking a mortgage.
  • 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 Application Definition, Very Important,
    • A document in which a prospective borrower details his or her financial situation to qualify for a loan.
  • Mortgage Brokerage Definition, Very Important,
    • An individual or group who brokers deals between their clients and lenders.
    CanEquity is a mortgage brokerage.
  • Mortgage Calculator Definition, Very Important,
    • A program that calculates the costs involved in a mortgage or determines what kind of mortgage a person can qualify for.
    CanEquity's mortgage calculator has been rated number one by the Globe and Mail.
  • Mortgage Lender (ML) Acronym, Very Important,
    • A lender that offers mortgages, often through a mortgage broker.
    Used internally by mortgage brokers and mortgage lenders.
  • No Money Down Mortgage Definition, Important,
    • Available in Canada as a true 100% mortgage financing product.
  • 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.
  • Origination Date Definition,
    • The date on which a loan is funded.
  • Origination Fee Definition,
    • The fee a lender charges to process a loan. It usually includes the cost to prepare loan documents, check a borrower's credit history, inspect the property and sometimes conduct an appraisal. CanEquity will in most cases use a lender who doesn't charge this fee or we will cover the cost in full.
  • Overnight Rate Definition,
    • The interest rate banks use to lend or borrow funds from each other.
  • Per Diem Interest Definition,
    • Interest that is charged daily; usually refers to the partial month's interest that the buyer pays on the mortgage covering the period from the day of closing to the end of the month.
  • Point Definition,
    • A point equals 1 percent of a mortgage loan. Some lenders charge "origination points" to cover expenses of making a loan. Some borrowers pay "discount points" to reduce the loan's interest rate.
  • Porting Definition,
    • A portable mortgage allows you to transfer the terms and conditions from an existing property loan to a new property loan.
  • Posted Rate Definition,
    • The mortgage rates initially offered by a bank which a borrower is then expected to negotiate down.
  • 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.
  • Private Lender Definition,
    • A lender not associated with a traditional lender.
  • 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.
  • Rate Definition,
    • Percentage a borrower pays for the use of money, usually expressed as an annual percentage.
  • Rate Hold Definition,
    • The length of time, typically between 60 and 120 days, that a lender will guarantee a loan's interest rate once you are locked in.
  • Rate Lock-in Definition,
    • A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.
  • Shared-Appreciation Mortgage (SAM) Acronym,
    • A mortgage loan where the lender or a third-party backer agrees to offer a highly reduced mortgage rate to the borrower in exchange of sharing profits when the property is sold.
    • A home loan in which the lender offers a below-market interest rate in exchange for sharing in the profit when the home is sold. Usually done only with private funds/lenders.
  • Variable Rate Definition,
    • A floating percentage value that fluctuates based on certain conditions.
  • 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.
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