Rates and interest
Annual percentage rate (APR)
The cost of a mortgage expressed as a yearly rate, including the mandatory fees that the interest rate on its own leaves out.
Also called APR.
The interest rate tells you what the lender charges on the balance. The APR adds every required cost of getting that mortgage into one annual figure, which makes it the one number that compares two mortgages on equal terms.
In Alberta, showing it is the law. The Consumer Protection Act and the Cost of Credit Disclosure Regulation require the APR to be disclosed at least as prominently as whatever figure triggered the disclosure. That's why every rate on this site shows its APR at the same size and weight, right beside the rate, and never in a footnote.
The gap between the rate and the APR shows how much required cost comes with the product. A small gap means a clean mortgage with no lender fee. A large gap means fees are adding a lot to the cost, so ask what they are before you look at anything else.
APR figures are calculated on stated assumptions, normally a specific mortgage amount and amortization. An APR quoted on $500,000 over 25 years won't match the APR on your $280,000 mortgage over 18 years.
Related terms
Posted rate
A lender's advertised list rate, well above what borrowers pay, and the rate some penalties are calculated from.
Discounted rate
The rate you pay after the lender's discount off its posted rate, and the rate a fair penalty calculation should use.
Closing costs
The cash you need on possession day on top of the down payment, including legal fees, registration fees, adjustments, insurance and inspections.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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