The Process of Buying a Home

A Mortgage Broker offers you in-depth knowledge and experience. Most importantly, they have access to a wide variety of mortgage lenders and they will negotiate the best mortgage that is personalized to fit your financial situation.

Here are 5 key things to consider when looking for a mortgage:

1. Down Payment

A down payment is required when purchasing a home.

  • 20% down payment – the lender will then provide up to 80% of the appraised value of the purchase price.
  • 5% down payment – this is for cases in which the purchase can be financed for up to 95% as a high-ratio mortgage. This type of mortgage is required by law to be insured against non-payment by the Canada Mortgage and Housing Corporation, Genworth Canada or Canada Guaranty.
2. Amortization Period

The amortization period is the amount of time it will take for the mortgage to be paid off completely.

A longer amortization period means your payments will be lower, but the total amount of interest you will pay will be higher.

A shorter amortization period means you will save a lot by paying less interest.

And you will be mortgage free much sooner.

3. Mortgage Term

The term of the mortgage refers to the amount of time you are committed to paying your mortgage. Most mortgage terms run from 6 months to 5 years. The term of the mortgage also tells you how long the interest rate will be guaranteed. The longer the term, the higher the interest rate, because you will be getting a fixed rate for a longer period of time.

4. Type of Mortgage
Open Mortgage

Allows you to pay off your mortgage in part or in full, at any time without penalties. This type of mortgage is better suited for shorter terms, usually ranging from 6 months to 1 year and is usually associated with higher interest rates due to its flexibility.


Closed Mortgage

You cannot pay off this type of mortgage at any time, like the mortgage above. But  you do have the option of making a lump sum payment towards the principal (or outstanding) amount at specified times. If the lump sum payment exceeds a certain limit or if the loan is repaid in full before the end of the term, a penalty is usually applied.


Fixed Rate Mortgage

Has the same interest rate for the entire term of the mortgage and is usually closed. The mortgage payment is fixed, but the amounts that are applied towards interest and principal will vary with each payment.


Variable Rate Mortgage

Offers lower interest rates than fixed-rate mortgages, although the interest rate can fluctuate depending on market conditions. Some variable rate mortgages have a fixed payment for the term. The amount of payment applied to the principal will fluctuate with changes in the interest rates. You may consider a variable rate mortgage if you think interest rates will stay the same or go down, and if you’re comfortable with fluctuations in your payments and interest rates. You may require greater flexibility because of the potential need to break your mortgage term before it reaches full maturity, should interest rates start to climb.

5. Payment Term

You may choose to make payments on a monthly, semi-monthly, accelerated bi-weekly or accelerated weekly basis. Accelerated payments save you interest over the length of your mortgage, so you’ll be mortgage free much sooner.

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