Glossary of Terms

Type Feature Benefit
Fixed Rate Mortgage Interest rate locked in for the term of the mortgage, standard prepayment conditions apply.
  • Security and peace of mind.
  • The interest rate will not increase over the term of the mortgage.
  • Monthly payments do not change.
  • If the interest rate goes up you will not pay more interest over the term of the mortgage.
Variable Rate Mortgage
(not available at this time)
Interest rate changes with the market.
  • Low interest rate. Potential interest savings.
  • If interest rates go down you could pay off your mortgage faster with fixed mortgage payments.
  • Payments will remain constant with mortgage rate cap.
Open Mortgage
(6 month open term)
Pay off your mortgage in part, or in full, at any time without penalties.
  • Flexibility. Short-term option.
  • An open mortgage offers flexibility to pay off your mortgage in part, or in full, at any time without penalties.
  • It also allows you to renegotiate at any time.
  • This option comes at a higher interest rate and therefore is likely only considered for the short term.
Closed Mortgage Interest rate locked for the term of the mortgage, cannot pay off your mortgage in part of in full.
  • Closed term mortgages are usually the better choice if you’re not planning to pay off your mortgage in the short term.
  • Interest rates are generally lower than for open term mortgages.
  • Closed term mortgages offer you the ability to save on interest costs and pay off your mortgage faster.
  • You will pay a prepayment charge if you wish to renegotiate your interest rate or pay off your mortgage balance prior to the end of its term.
Short-term Mortgage Usually 2 years or less
  • Usually at a lower interest rate
Long-term Mortgages Usually 3 years or more
  • Security and peace of mind
Amortization Can affect how much interest you pay over the life of your mortgage
  • The length of time you will need to pay off your mortgage completely, assuming the interest rate stays the same throughout that period.
  • The standard amortization period is usually 25 years, but shorter and longer (up to 30 years-has to be conventional financing) time frames are also available.