Mortgages
Mortgages, explained in plain language
The mortgage decides what your home really costs. These are the five choices that matter, and how lenders will look at you.
The five decisions
Fixed vs. variable
Fixed rates lock your payment for the term; variable rates float with the Bank of Canada and have historically cost less, but you carry the risk. The right answer depends on your buffer, not on predicting rates.
Term vs. amortization
The term (usually 5 years) is how long your rate contract lasts; the amortization (25–30 years) is how long until the loan is gone. You'll renegotiate the rate several times over one amortization.
Down payment
Minimum 5% on the first $500K and 10% on the portion up to $1.5M; homes at $1.5M+ require 20%. Under 20% adds mortgage default insurance to your loan, see our CMHC calculator.
The stress test
Lenders qualify you at the higher of your contract rate plus 2% or 5.25%. That's why your approval amount is lower than the payment you could technically afford.
Bank vs. broker
Your bank offers its own products; a broker shops dozens of lenders, including monolines that often beat branch rates. We work with both and will introduce you to people we trust.
Before you fall in love with a house
Get pre-approved. It costs nothing, holds a rate for 90–120 days, and turns your search from wishful browsing into a real plan. In competitive Greater Toronto Area offer situations, a firm financing position often wins over a slightly higher but conditional offer.
Program rules, limits and tax rates change. This guide is general information, not financial or legal advice, confirm the current numbers with us or your advisor before acting.
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