Reference

Glossary of loan terms.

The vocabulary that turns up across Canadian, US, UK and Australian loan documents. Each entry is short and links to longer treatment where one exists on this site.

Amortisation: The schedule by which the loan principal is paid off over time. See the mechanics page.
AMP: Accredited Mortgage Professional. Designation administered by Mortgage Professionals Canada for licensed mortgage brokers and agents.
APR: Annual Percentage Rate. Nominal annual rate including specified fees but excluding intra-period compounding.
ARM: Adjustable-Rate Mortgage. A US loan structure where the rate adjusts at fixed intervals after an initial fixed period (5/1, 7/1, 10/1).
B-20: OSFI Guideline B-20. Canadian residential mortgage underwriting framework requiring affordability assessment at the greater of contracted rate + 2% or 5.25%.
Balloon payment: A large lump sum due at maturity of a loan whose amortisation schedule is longer than its term. See the loan types page.
Bi-weekly: A payment frequency. Standard bi-weekly = annual ÷ 26 (no acceleration). Accelerated bi-weekly = monthly ÷ 2 (one extra monthly equivalent per year). See the frequency page.
Closed mortgage: A Canadian mortgage with restricted prepayment ability. Most fixed-rate Canadian residential mortgages are closed; open mortgages allow unlimited prepayment but at a higher rate.
FSRA: Financial Services Regulatory Authority of Ontario. The provincial regulator of Ontario mortgage brokers.
HELOC: Home Equity Line of Credit. A revolving credit facility secured by home equity, typically interest-only with flexible repayment and a variable rate.
Interest-only: A loan structure where periodic payments cover only interest; principal is unchanged until maturity. See the loan types page.
IPMT: Excel function returning the interest portion of a specified payment. Counterpart of PPMT.
IRD: Interest Rate Differential. The most common Canadian fixed-rate prepayment penalty calculation: posted-rate spread × remaining term × balance. Can range from 1 to 6 months' interest.
LTV: Loan to Value. The mortgage as a percentage of the property value. Lenders price products in LTV bands (95%, 90%, 85%, 75%, 60%).
NPER: Excel function returning the number of periods required for a loan to fully amortise. Useful for simulating extra-payment scenarios.
OSFI: Office of the Superintendent of Financial Institutions. Canadian federal regulator of banks; issuer of the B-20 mortgage underwriting guideline.
Open mortgage: A Canadian mortgage with unlimited prepayment ability. Higher rate than equivalent closed products. Suits borrowers expecting to repay early via property sale.
PIPEDA: Personal Information Protection and Electronic Documents Act. Canadian federal privacy legislation governing how organisations handle personal information.
PMT: Excel function returning the periodic payment for a loan. Reproduces the closed-form amortisation formula exactly.
PPMT: Excel function returning the principal portion of a specified payment. Counterpart of IPMT; PPMT + IPMT = PMT for any period.
Prepayment privilege: The annual amount a Canadian closed-mortgage borrower can prepay without penalty. Typically 10–20% of original principal per calendar year. See the extra payments page.
Refinance: Replacing an existing loan with a new one, typically to capture a lower rate or extract equity. See the refinance decision page for the math of when it pays.
Stress test: The lender's affordability check at a higher-than-contracted rate. In Canada, the B-20 test uses the greater of contracted rate + 2% or 5.25%.
SVR: Standard Variable Rate. The lender's headline variable rate, typically the most expensive product on offer. Most fixed-rate introductory products revert to SVR at maturity in some jurisdictions.
Term: The length of the loan contract. In Canada, the term and the amortisation are different: a 5-year term with 25-year amortisation means the borrower must renew or refinance after 5 years even though the schedule projects 25 years to payoff.