Since you may not have hundreds of thousands of dollars at your immediate disposal, a mortgage is a loan that can help you cover the cost of buying a home.
There are hundreds of banks, credit unions and other lenders out there who would love your monthly mortgage payments. So talk to everybody and don't be money-shy! A REALTOR® can be very knowledgeable about the different types of mortgages and can offer advice based on your needs and comfort level.
Mortgage brokers are another great resource. Their job is to find low lending rates and they usually don't get paid unless you sign a mortgage through them - meaning they're highly motivated to get you the best deal.
Often, you can take over the seller's mortgage. This is a great option if the seller is locked into a lower interest rate than you can get right now. Your REALTOR® may have additional information.
Refers to how long the bank has agreed to lend you the money - typically from six months to five years. At the end of the term, you usually renegotiate a new term.
Amortization refers to the length of time it will take to pay off the whole mortgage, often as long as 25 years. The longer your amortization, the lower your monthly payments, but the more you pay in interest over time.
Interest is the cost of borrowing money, and the interest rate tells you exactly how much. Using our mortgage calculator, check out the difference between borrowing $100,000 at 6% versus 9% at the same amortization.
Keep in mind you can also choose between a fixed or variable rate. A fixed rate will remain unchanged for the entire term whereas a variable rate will fluctuate as rates increase or decrease throughout your term.
Refers to the initial up-front portion you pay against your home purchase. A larger down payment means a smaller mortgage (and less debt).
If you're a first-time homebuyer with money in a Registered Retirement Savings Plan (RRSP), you can withdraw up to $25,000 without paying income tax through the Home Buyers' Plan. If your spouse or partner is also eligible, that's a possible $50,000 you can use towards your down payment. Ask your REALTOR® for details.