Home Equity & Private Lending Terms Explained

MORTGAGE GLOSSARY (A–Z)

A

Amortization

The length of time it takes to fully repay a mortgage through scheduled payments.

Private mortgages often use interest-only payments, not amortization.

Appraisal

A report prepared by a certified appraiser to determine the market value of your property.

Used by lenders to calculate LTV and approve mortgage amounts.

(See: /equity-check)

Arrears (Mortgage Arrears)

When a borrower has missed one or more mortgage payments and is behind on their loan.

B

Bridge Loan

Short-term financing that allows a homeowner to purchase a new property before selling their current one.

(See: /bridge-loans)

Broker Fee

A fee paid to the mortgage brokerage for arranging financing.

B-Side Lending

Refers to alternative or private lenders who lend based on equity, not strict credit rules.

C

Closing Costs

All legal, appraisal, administrative and registration fees when a mortgage funds.

Credit Score

A number indicating the borrower’s creditworthiness.

Private lenders like Lendworth rely less on credit and more on equity.

Consolidation Loan

A loan used to combine multiple debts into one payment.

(See: /debt-consolidation)

D

Debt Service Ratio (DSR / GDS / TDS)

Measures how much of your income goes toward debt payments.

Banks use this heavily — private lenders usually do not.

Default

Failure to fulfill mortgage obligations, resulting in legal action or power of sale.

Down Payment

The initial amount paid upfront when buying a home.

E

Equity

The difference between your home’s value and the amount you owe on your mortgage.

Your equity determines your borrowing power.

Equity Take-Out

Using available home equity to borrow funds for debt consolidation, renovations, investments, or emergencies.

Engagement Letter

A document outlining terms between lender and borrower before funding.

F

First Mortgage

The primary mortgage registered in first position on the property.

(See: /first-mortgages)

Fixed Rate

A mortgage with an interest rate that stays the same for the entire term.

Foreclosure / Power of Sale

Legal processes lenders use when borrowers default on payments.

(See: /stop-power-of-sale)

H

HELOC (Home Equity Line of Credit)

A revolving credit line secured against home equity.

(See: /home-equity-line)

Hard Money Loan

Another term for private equity-based lending.

I

Interest-Only Payments

Payments that cover only the interest, not the principal.

Common in private mortgages.

Investor Mortgage

A mortgage secured to fund investment properties or portfolio expansion.

L

LTV (Loan-to-Value Ratio)

A key metric lenders use to determine how much you can borrow:

LTV = Loan Amount ÷ Property Value

Lendworth typically lends up to conservative LTV limits for safety.

Legal Fees

Costs for the lender and borrower’s lawyers to prepare and register mortgage documents.

M

MIC (Mortgage Investment Corporation)

A pooled investment fund that lends money secured against Canadian real estate.

Mortgage Term

The length of time your mortgage agreement is in effect (1–2 years for private mortgages).

P

Private Mortgage

A mortgage funded by private individuals or companies, based on equity, not income or credit.

Prepayment Penalty

Fees charged for paying off the loan before the term ends.

Principal

The amount borrowed before interest.

R

Refinance

Replacing an existing mortgage with a new one to access equity or lower monthly costs.

(See: /refinance)

Renewal

Extending your mortgage for another term once the current term has expired.

S

Second Mortgage

A mortgage registered behind the first mortgage, allowing you to access additional equity.

(See: /second-mortgages)

Stated Income Mortgage

Used for self-employed borrowers when traditional income documents are limited.

(See: /self-employed)

Stop Power of Sale

A private mortgage used to stop legal action and bring the mortgage back into good standing.

(See: /stop-power-of-sale)

T

Title Search

A legal review of the property’s ownership, mortgages, and liens before funding.

Trust Funds

Money held by lawyers during closing for disbursement.

W

Withdraw Equity

Another term for tapping into your home equity through a refinance, HELOC, or second mortgage.