If you're a first-time homebuyer, many aspects of the purchase process can be confusing and stressful, including financing. While the mechanics of a mortgage are relatively simple, choosing the right mortgage product can be far from it, as many of the choices available to buyers are obscured by complex and unfamiliar terminology.

To help you cut through the jargon, here's an alphabetical list of common mortgage terms and their definitions:

Understanding different mortgage options

Fixed versus variable; closed versus open; payment frequency: When it comes to picking a mortgage, do you know what's best for you?

BMO mortgage specialist Laura Parsons offers her insights.

Fixed versus variable interest rate

A variable rate will fluctuate with prime – meaning you could end up paying more interest if prime changes. A fixed rate will not fluctuate.

But don't go to your bank for a variable rate

Variable-rate mortgages are once again returning to popularity thanks to low interest rates  and the expectation the Bank of Canada will lower the overnight rate again in the near future.

For the last several years, consumers have favoured fixed-rate mortgages primarily due to the expectation rates would rise before they fell. Those expectations however, have not been fulfilled. In fact, the opposite has ensued and rates have gone lower not higher.

Many who recently took out five year fixed mortgages are now realizing they would have fared better with a variable-rate mortgage.

Mitigation starts before choosing a mortgage

Last week, CBC's Go Public reported on an Edmonton couple that were shocked to learn their bank wanted a $17,000 payout penalty to end their mortgage early.

Just days earlier, a B.C. mortgage broker posted a client's $26,000 payout statement from another bank on Facebook that went viral.

And in July, a B.C. Supreme Court judge certified a class-action lawsuit against yet another financial institution for unfair payout penalty practices.