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CANADIAN MORTGAGE GLOSSARY TERMS
Here is a simple glossary of Canadian 
mortgage lending and finance related
terms.
To find the term you are looking for
quickly, simply click on the letter below.
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
S
Sale Holdback
A percentage of the principal amount of the mortgage held back by the mortgagee until the property in question has been sold to a party satisfactory to the mortgagee who has assumed the responsibility of the mortgage by the appropriate legal document.
Sales Contract
A legal written document that details the agreed upon conditions between a seller and a buyer regarding the sale of a specific property. Also called an "Agreement of Sale."
Sale Leaseback
A technique in which a seller deeds property to a buyer and the buyer simultaneously leases the property back to the seller, usually on a long-term basis.
Schedule I Banks
A designation in the Bank Act that refers to Canadian-owned banks that are widely held. This refers to banks where no single owner holds more than 10% of shares.
Schedule II Banks
A designation in the Bank Act that refers to foreign-owned banks and closely held Canadian banks. This refers to banks where a single owner may hold more than 10% of outstanding stock.
Schematic Designs
Structural plans or drawings for a building's mechanical systems which often include plumbing and electrical functions.
Seasonal Deficiencies
Work necessary to finish a property that cannot be completed immediately because of seasonal or climatic conditions.
Seasonal Unemployment
Changes in the climate and other economic conditions can cause higher unemployment at various times throughout the year. For example, forestry, fishing, and construction are often affected by weather and are only viable during certain months of the year. Retail sales positions are also affected by seasons and holidays because of consumer shopping trends and patterns. For example, additional staff is required during peak shopping seasons such as Christmas.
Secondary Financing
Financing real estate with a loan, or loans, that is subordinate to a first mortgage.
Secondary Mortgage Market
A market where existing mortgages are bought and sold.
Second Mortgage
A mortgage placed on real property which is already encumbered with one mortgage. Determination of first, second, third mortgage is by priority or registration (time and date).
Secure Socket Layer
SSL is a application layer protocol created by Netscape for managing the security of message transmissions in a network. SSL uses the public-and-private key encryption system from RSA, which also includes the use of a digital certificate.
Secured Card
A type of credit card that is secured with a savings deposit from the cardholder. The deposit acts as insurance against the outstanding balance if the cardholder defaults on his or her payments. This type of card is often beneficial to those with little or no credit history, or to those who want to rebuild poor credit.
Secured Debt
A debt that is secured by a lien on a debtor's property (typically a mortgage loan) that may be taken by the creditor if the debtor defaults on his or her payments.
Secured Loan
The borrower must provide collateral in order to borrow the money.
Securities
Negotiable instruments such as stocks and bonds.
Securities/Investment Dealer
An individual who acts on behalf of another party to buy and sell securities and other investments. Also called an underwriter.
Security
1. Something deposited or given as assurance of the fulfillment of an obligation. For example, property is often used as collateral for a loan. 2. A document which indicates ownership such as a stock certificate or bond.
Security Deposit
With vehicle leases, it is an amount of money, often the same as one month's payment, held by the dealer to ensure the vehicle is returned in good condition. The security deposit is returned at the end of the lease agreement minus any fees or damage charges. Also called a reconditioning reserve.
Servicing Agreement
A written agreement between an investor and mortgage loan correspondent stipulating the rights and obligations of each party regarding the origination and continuing administration of the loans.
Self-Employed Person
An individual who owns and operates a trade or business rather than working as an employee for company. 1. You are self-employed if you are a sole proprietor or a partner working in a business. 2. You can be an employee and self-employed at the same time if you have an independent business outside of your regular employee hours. To qualify for many business tax exclusions and deductions, the business must make a profit in three of five years. In most cases, to qualify you must take and average of the last two - three years tax assessments.
Seller Broker
An individual who earns a commission (paid by the seller of a property) in exchange for finding a buyer and assisting in the negotiation for the real estate transaction.
Seller Carryback or Transfer Back
A form of financing where the property seller accepts a down payment and agrees to accept payments until the property is paid for in full.
Seller's Market
When the real estate market favors the seller. This type of market usually means the seller is expected to sell quickly and for market or above market value.
Semi-custom Home
A house in which the layout is predetermined by the builder. This means the buyer cannot alter the layout, but he or she can specify some of the features including the type of cabinets and floor coverings.
Service Charge
Fees charged to customers for specific services or as a penalty for not meeting certain requirements such as insufficient funds in a chequing account.
Service Contract
A type of contract that covers certain vehicle repairs after the manufacturer's or dealer's warranty expires. Extended warranties are sold by vehicle manufacturers, dealers, and independent companies. With a new vehicle, the extended warranty must usually be purchased by the end of the first year of ownership. Also called an extended warranty
Servient Tenement
The parcel of land over or through which an easement runs.
Settlement Points
Regional collection points in the clearing and settlement system operated by the Canadian Payments Association. Settlement points forward each bank's regional balance to the Bank of Canada in Ottawa at the end of each day to allow the central bank to adjust the banks' balances with the central bank.
Settlement Statement
A document that contains the details and conditions of a settlement. It describes whom must pay, the amount to be paid, and to whom the money is to be paid.
Severance
The subdivision of a parcel of land.
Share Certificate
A certificate of deposit issued by a credit union that pays a specific dividend if held for a specific period. It's the credit union equivalent of a certificate of deposit. A penalty is usually assessed if all or any of the principal is withdrawn before maturity.
Shared-appreciation Mortgage
A type of mortgage loan where the lender offers a below-market interest rate in exchange for profit sharing when the property is sold. This is typically only done with private funds/lenders.
Shared-equity Partnership
An agreement between multiple buyers where one buyer inhabits the property and the other buyer has an ownership stake as an investment. The partners split the capital gain after the property is sold.
Shareholder's Equity
The difference between the assets and liabilities of a corporation, sometimes called net worth. Refers to ownership interest in common and preferred shareholders in a company.
Sheriff's Certificate
A signed statement from the sheriff's office certifying that there are no Writs of Execution in the sheriff's hands against specific land and that he or she has not sold the land within a specified period.
Short Tax Year
A tax period that is less than 12 months. This typically occurs with business start-ups or with the transition to a tax year ending on a different date. Short-Term Capital Gain or Loss An individual's profit or loss from the sale of a capital asset that is held for one year or less. Short-term Liabilities Money that must be paid in less than a year (12 months), including wages, short-term loans, taxes, credit card balances and long-term loans.
Simple Interest
Interest that is calculated only on the principal balance, without compounding.
Simple Interest Loan
A method of allocating the monthly payment between interest and principal. The interest charged is determined by the unpaid principal balance on the loan, the interest rate, and the number of days since the last payment. The rest of the payment goes to the principal. Making early payments or additional payments reduces the loan's principal and cuts the total interest paid over the life of the loan.
Small and Medium-sized Enterprises (SMEs)
There are many definitions for this term, but banks define small businesses as those having authorized credit limits of $500,000 or less, while medium-sized businesses have authorization levels of up to $1 million.
Smart Card
A card with an imbedded computer chip which stores more information, performs more functions, and is more secure than a credit card or debit card. Smart Cards are often used at colleges or universities for purchasing goods and services on campus.
Social Insurance Number (SIN)
The Government of Canada assigns Social Insurance Numbers to all individuals with an income or those who pay taxes. Individuals must apply for this number. By law, you are required to provide this number to financial institutions with which you have an interest-bearing deposit account.
Society for Worldwide Interbank Financial Telecommunication (SWIFT)
A co-operative owned by the international banking community that operates a global data processing system for the transmission of financial messages.
Specialized Financing Corporation
A term in the Bank Act referring to specialized business-management services such as making investments, negotiating mergers and acquisitions and many other services traditionally offered as merchant-banking services.
Speculation Home or Spec Home or Built on Spec
A house that is built before it is purchased on the assumption that a buyer will be found.
Speculative Builder or Developer
A company or individual that builds houses without a commitment to buy or lease from a buyer or tenant.
Specific Performance
An equitable remedy to compel performance of a real estate or mortgage contract according to the specific terms of the contract.
Spread
The difference between the cost of money and the yield on the investment.
Spot Zoning
The zoning of a small area of land, or one or more properties, for a use that is not in harmony with the normal zoning plan for the area, especially if a small area is rezoned in a way that does not conform with the surrounding neighborhood. Spot zoning is normally invalid if the permitted use is very different from the surrounding area; the area involved is small; or it can be shown that the municipality has favored one landowner to the unreasonable detriment of the surrounding area, or so as to prejudice the intention of a comprehensive plan.
Square Footage
The area within a building or structure that is calculated by measuring each rooms by length and width and adding the total.
Stagflation
A time period where the unemployment rate and the rate of inflation are both relatively high.
Standard Card
The most basic type of credit card that is offered to customers. This type of card is typically given to new credit card holders to help them establish credit. Those with higher incomes typically opt for credit cards with more options and higher limits such as a gold or platinum card.
Standby Commitment
An agreement by a lender to provide a certain amount of takeout mortgage financing on specific terms in the future. This commitment enables the borrower to arrange construction financing from other sources. The commitment is issued for a fee and the lender is willing to disburse the committed funds in the event that a permanent loan on more favourable terms is not obtained.
Standby Fee
A sum of money given by the borrowers to the lender to hold a mortgage commitment for a certain period of time. The fee is normally non-refundable.
Standing Mortgage
A mortgage that provides for equal, regular lump-sum payments of principal, usually quarterly, plus accrued interest.
Starter Home
A relatively small and inexpensive property that is typically bought by first time home buyers. This type of property is usually traded up for a more expensive property once the home owner has gained equity in the property.
Statement
A paper record of transactions in a bank customer's account(s) for a certain period, usually each month, which shows debits, credits, transfers, payroll deposits, account balance, cheque fees, service charges, ATM activity, etc.
Statute
1. A law established by an act of the legislature. 2. An act of a corporation or its founder intended as a permanent rule.
Statute of Frauds
A law which provides that certain contracts must be in writing to be enforceable at law. This includes real estate contracts.
Statute of Limitations
A period of time specified by statute within which an action at law must be brought or else be forfeited.
Step Down Lease
A lease that allows for decreases in a rental payment on specified dates.
Step-rate Mortgage
A fixed-rate mortgage loan where payments are lower at the beginning of the loan, typically for two years, but then increase after the specified time period.
Step Up Lease
A lease that allows for increases to rental payment at certain time periods.
Sticker Price
This shows the base price, the manufacturer's installed options with the manufacturer's suggested retail price (MSRP), the manufacturer's destination charge and the fuel economy (mileage). It is the Monroney label affixed to the car window and is required by federal law. The label may not be removed by anyone other than the purchaser.
Stocks
Shares are purchased in exchange for owning a part of a specific company and can be traded on the stock market.
Sub-prime Borrower
A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.
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.
Subagent
A real estate agent who finds a buyer for a property, but is not the property's listing agent. The subagent usually earns a portion of the commission.
Subcontractor
An individual or company that does specialty work for a general contractor such as an electrician or plumber.
Subordinate
Subject to, or junior to.
Subordinate Loan
A mortgage with priority that is below that of another mortgage. This includes second or third mortgages, or home-equity loans.
Subordination
The act of a party acknowledging by written recorded instrument that a debt due is inferior to the interest to another in the same property. Subordination may apply not only to mortgages but also to leases, real estate rights, and any other type of debt instrument.
Subrogation
A doctrine adopted in favour of the insurer in order to prevent the insured from recovering more than a full indemnity.
Subscription Policy
An insurance policy that states two or more insurance companies are sharing the risk.
Surety
The guarantee given for the performance of someone else.
Survey
A property survey is a process by which land boundaries and areas are determined and defined and improvements may be plotted thereon. Surveys are also used for locating and identifying property lines, improvements on the land and easements on the land.
Surveyor's Certificate
A formal statement signed, certified, and dated by a surveyor giving the pertinent facts about a particular property and any easements or encroachments affecting it. These are no longer available in Ontario.
Survivorship
The right of an individual to secure ownership by reason of his or her outliving someone with whom he or she has shared undivided interest in the land.
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.
Sweat Equity
The value of the work, including renovations, maintenance, or repairs, put into a house by its owner. This can be used in place of a full down payment (up to and including 50% of a down payment).
Syndication
A group of lenders that share in the principal disbursement of a loan to spread risk or to comply with statutory restrictions on loan size.
Syndicated Loans
Loans given to a company that are backed by a group of banks who share the risk of a large transaction. There is usually a lead bank and several participating banks.
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