A mortgage is a loan specifically designed to help you purchase a home, secured by the property itself. In Canada, mortgages are typically structured as 5-year terms, amortized over a 25 or a 30 year period. This means that while your mortgage contract (or term) lasts for five years, the loan is scheduled to be paid off over a longer time frame. At the end of each term, you’ll need to renew or renegotiate the mortgage until the full amount is paid off.

The down payment is the initial amount of money you pay upfront when buying a home. In Canada, a minimum of 5% of the home’s purchase price is required for properties under $500,000. For homes priced above $500,000, a 10% down payment is required for the portion above that threshold. The larger your down payment, the smaller your mortgage and monthly payments.

Interest rates determine how much you’ll pay in interest over the life of your loan. In Canada, there are three main types:

• Fixed-Rate Mortgage: The interest rate remains constant throughout the term of the mortgage, providing stability in your monthly payments.
• Variable-Rate Mortgage: The interest rate fluctuates with the prime rate, but your monthly payments remain constant. If rates increase, more of your payment goes toward interest, and if rates decrease, more goes toward paying down the principal.
• Adjustable-Rate Mortgage (ARM): With this type of mortgage, both the interest rate and the monthly payments adjust in line with changes to the prime rate. As the rate increases or decreases, your payments will change to reflect the new rate, meaning your payment amounts will vary over time.

• Mortgage Term: The length of time you’re committed to a particular mortgage rate, lender, and conditions. Terms typically range from six months to five years in Canada.
• Amortization Period: This is the total time it will take to pay off your mortgage, usually 25 to 30 years. While the amortization period determines the life of the loan, the term allows you to renegotiate your rate and conditions at its conclusion.

A mortgage pre-approval gives you a clear picture of how much you can afford before you start shopping for a home. It shows lenders that you’re serious, helps set your budget, and can give you an edge in a competitive housing market.

Beyond your down payment, there are additional costs associated with purchasing a home. These may include legal fees, home inspections, property taxes, and title insurance. Typically, closing costs range can from 1.5% to 4% of the home’s purchase price in Canada, so it’s essential to budget for these expenses.

Different lenders offer various rates, terms, and conditions. Shopping around for the best mortgage ensures you get the rate and terms that align with your financial situation and long-term goals. At Invis – Canada’s Best Mortgage, we shop over 50 lenders on your behalf to find the best deal that suits your needs. We are your one stop shop!

In Canada, if your down payment is less than 20% of the home’s purchase price, you’ll need to purchase mortgage insurance through the Canada Mortgage and Housing Corporation (CMHC) or a similar insurer. This protects the lender in case you default on the loan but also allows you to buy a home with a smaller down payment.

Once you’ve built equity in your home, you may be able to refinance your mortgage to access a lower interest rate, consolidate debt, or take out equity to fund renovations or other financial needs. Understanding when and how to refinance is key to maximizing your home’s financial potential.

A mortgage broker works on your behalf to find the best mortgage product by comparing offerings from multiple lenders. Instead of being limited to the rates and terms of a single institution, a broker ensures you have access to a variety of options that fit your financial goals.