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Canadian Financial, Real Estate and Mortgage Glossary
How often this word is used
50% - Moderately
50% - Moderately
|Synonyms:||arrears, deficit, in hock, in the hole, in the red|
|Filed Under:||financial-banking, investments, mortgages|
|Tags:||banking, bankruptcy, investment, mortgage|
Definition of debt
- 1. An obligation or liability to pay or render something to another person or a firm.
Related Terms and Acronyms:
credit rating (CR)
A judgement of a person's ability to repay debts. The rating is often based on a person's current and projected income and past debt payment history. Also called a credit score.
➥ A metric to measure the credit worthiness of a debtor.
credit report (CR)
A report on a loan applicant's willingness and ability to make payments in a timely manner in the past. This report is provided to the bank by an outside agency.
➥ A report that outlines the credit worthiness of an individual or entity.
- refinance To arrange a new loan for an increased amount or better terms whereby the old loan is paid off from the proceeds of the new loan.
- refinancing The act of paying off one mortgage with another mortgage to take advantage of lower interest rates. Refinancing is also used to transform equity into cash for vacations, home improvements, or for consolidating debt.
- secured debt A debt that is secured by a lien on debtor's property that may be taken by the creditor in case of non-payment by the debtor. A common example is a mortgage loan.
- securities/investment dealer One who acts as the agent for another party to buy and sell securities and other investments; also an underwriter.
- solvency To be able to meet one's financial liabilities in the short or long term.
- sub-prime mortgage A mortgage loan that is granted to a borrower who is considered sub-prime (has a less-than-perfect credit report). Sub-prime borrowers have either missed payments on a debt or have made late payments. Lenders charge a higher interest rate to compensate for potential losses from customers who may default on the loan.
- swap An agreement between two businesses to exchange commodities, payments or other financial products to reduce the risk of volatile market conditions or to obtain a better price or rate. For example, interest rate swaps, where floating rate interest is exchanged for fixed rate interest, protects a corporation against rises in rates or allows it to take advantage of a better rate. A cross-currency swap enables two parties to enter into an agreement in which one exchanges its currency for the other's to meet their separate requirements.
- total debt service (TDS) The ratio of a borrower's total monthly debt payments to his or her monthly gross income. Lenders use this ratio to determine how much of a loan a borrower is qualified for.
More Related Terms and Acronyms
- bad debt — Definition
- collateral — Definition
- debt consolidation — Definition
- debt-to-income ratio — Definition
- first lien — Definition
- futures — Definition
- instalment — Definition
- interest-crediting methods — Definition
- investment — Definition
- liabilities — Definition
- long-term liabilities — Definition
- security — Definition
- short-term liabilities — Definition
- unsecured claim — Definition
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