Term
Mortgage Term
Canadian mortgage term definition with formula, examples, and limits used by mortgage brokers.
Definition
The length of time the current mortgage contract (interest rate, conditions) is in effect. At term end, the mortgage renews. Different from amortization.
Standard Limit
Common terms: 1, 2, 3, 5 years. Maximum 10 years.
Example
5-year term on a 25-year amortization: same rate for 5 years, then renew at market rates for next term.
Related Terms
GDSMonthly housing costs divided by gross monthly income. Includes mortgage payment, property tax, heating, and 50% of condo fees.TDSAll monthly debt payments divided by gross monthly income. Includes housing costs plus credit cards, car loans, lines of credit, and other debts.LTVTotal mortgage debt divided by property value. Determines if CMHC insurance is required and which lenders qualify.CMHC InsuranceMandatory mortgage default insurance required when down payment is less than 20% (LTV > 80%). Enables up to 95% LTV financing.Stress TestBorrowers must qualify at a higher interest rate to ensure affordability if rates rise. Calculated as the maximum of contract rate + 2% or 5.25%.
Calculate Term automatically
BIPS calculates GDS, TDS, LTV, stress test, and CMHC premiums automatically for every lender match.
Try BIPS free →