Our Mortgage FAQ section covers the most common topics, from loan types and down payment requirements to interest rates and the approval process.
Whether you’re a first-time buyer or a seasoned homeowner, you’ll find clear, straightforward answers to help guide your decisions every step of the way.
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FAQS
A mortgage is a loan used to purchase a property or used to access equity against the value of a property you already own. It is a secured loan, meaning the property itself serves as collateral.
When you take out a mortgage, you agree to repay the lender over time through scheduled payments, which typically include:
If you fail to repay the loan, the lender has the right to foreclose on the property, meaning they can take ownership and sell it to recover the debt.
No, a Home Equity Line of Credit (HELOC) is not the same as a mortgage loan, but they are both ways to borrow against your home’s value. Here’s how they differ:
Mortgage Loan:
Home Equity Line of Credit (HELOC):
Key Difference:
Open Mortgage
Closed Mortgage
The mortgage amortization and mortgage term are two key aspects of a mortgage, but they refer to different things:
Mortgage Amortization
This is the total length of time it takes to fully pay off your mortgage if you follow the agreed-upon payment schedule. It’s typically 15 to 30 years and determines how much of each payment goes toward the principal and interest over time.
Mortgage Term
This is the length of time your current mortgage agreement is in effect before you need to renew or refinance. A term can range from a few months to 10 years, with 5 years being common. At the end of each term, you either pay off the remaining balance, renew with your lender, or switch to a new lender.
Key Difference:
Mortgage terms range from six months to 10 years, and the right choice depends on your financial situation, goals, risk tolerance, and preference for a fixed or variable rate.
Many homeowners choose a 5-year term, offering stability and predictable payments—especially when interest rates are low. A shorter term (1 to 3 years) may appeal to those seeking lower variable rates or planning to move soon, though it carries the risk of rate increases.
Also referred to as; Mortgage Default Insurance, Mortgage Loan Insurance, Default Insurance, and CMHC Insurance.
Mortgage default insurance protects lenders in case a borrower defaults (fails to make payments) on their mortgage. It does not protect the borrower—it is required by lenders when the down payment is less than 20% of the home’s purchase price (high-ratio mortgage).
In Canada, mortgage loan insurance is provided by three main insurers:
If you’re buying a home with a down payment of less than 20%, your broker and lender will automatically arrange for mortgage default insurance through one of the three approved providers: CMHC, Sagen, or Canada Guaranty. You do not need to apply for it yourself.
The main difference between a conventional mortgage and a high-ratio mortgage is the size of the down payment and whether mortgage insurance is required.
1. Conventional Mortgage
2. High-Ratio Mortgage
A high-ratio mortgage applies when your down payment is less than 20% of the purchase price. In these cases, the mortgage must be insured by CMHC, Sagen, or Canada Guaranty.
If you plan to live in the second property, you can qualify for a high-ratio mortgage. However, if the property is intended as a rental, a minimum 20% down payment is required.
Example Scenarios:
These four types of insurance serve different purposes in protecting homeowners, lenders, and other stakeholders. Here’s how they differ:
Lender
Yes (if down payemnt <20%)
Lender losses if borrower defaults on mortgage.
Homeowner (premium may be added to the principal at purchase)
Homeowner & Lender
Yes
Property damage, liability
Homeowner
Homeowner & Lender
Lender will likely require it. Discuss with lawyer. (Recommended)
Title fraud, errors, liens.
Homeowner
Homeowner & Family
Optional (Recommended, separate from lender)
Mortgage balance and/or payments and optional property tax payments in case of death, disability or job loss.
Homeowner
A mortgage charge is a legal claim that a lender places on a property when issuing a mortgage. It gives the lender the right to take ownership of the property if the borrower fails to repay the loan.
There are two types of mortgage charges, a Standard Charge Mortgage and a Collateral Charge Mortgage.
Registered for the exact mortgage amount borrowed.
Registered for more than the borrowed amount (e.g., 125% of home value).
Requires refinancing.
Allows additional borrowing with the same lender.
Easier and usually free at renewal.
Harder and often requires legal fees to discharge and re-register.
Standard legal fees for setup and refinancing.
Potential additional legal fees if switching lenders.
Less flexible—must refinance for more funds.
More flexible—can borrow more under the same registration.
Most borrowers, keeping options opened.
Homeowners will low loan-to-value.
FAQS
In Canada, you’re considered a first-time home buyer if you have never owned a home before. In some programs, you may also qualify if you haven’t owned a home in the past 4 years or are starting fresh after a marital breakdown.
The difference between pre-qualification and pre-approval for a mortgage comes down to how in-depth the lender evaluates your finances and how strong the commitment is.
Basic
Comprehensive
No
Yes
No
Yes
Estimated
Verified
Helps set a budget
Makes you a serious buyer
No
Yes, Pre-Approval letter given to show sellers
Which One Should You Get?
Pre-Qualification is useful if you’re just starting to explore your options and want a general idea of your price range.
Pre-Approval is better if you’re serious about buying because it gives you more credibility with sellers and speeds up the mortgage process.
To qualify, you must prove you can afford payments at the greater of:
The Bank of Canada’s qualifying rate (currently 5.25%)
Your contract rate + 2%
This protects you from rate increases and ensures affordability.
Yes. Many buyers purchase with a spouse, family member, or co-signer to boost qualifying income. A co-signer (often a parent) helps with mortgage approval but is also responsible for the loan.
To determine how much you can afford, you’ll need to consider your taxable income, outstanding debts, and monthly expenses.
Step 1: Calculate Housing Costs
For a primary residence, lenders typically allow you to allocate up to 39% of your income toward housing expenses, including:
Step 2: Consider Debt Obligations
Next, calculate 44% of your taxable income, then subtract all monthly debt payments, such as:
The lower amount from Step 1 or Step 2 is what lenders generally use to determine how much of your income can go toward housing costs.
Step 3: Stay Financially Comfortable
While these ratios provide a guideline, it’s essential to ensure you’re comfortable with the debt level. If 39% of your income feels too high, you may want to opt for a lower percentage to avoid becoming “house poor” and still have room in your budget for other expenses and lifestyle choices.
Additionally, you must qualify for your mortgage under the federal government’s mortgage stress test regulations, ensuring you can afford payments even if interest rates rise.
By carefully assessing these factors, you can find a home price that fits your financial situation and lifestyle.
In short—yes, you should get a home inspection.
A home inspection is a professional, visual assessment of a property’s condition. Conducted by a certified home inspector, it evaluates the home’s key components, including:
After the inspection, you’ll receive a detailed written report—usually within 24 hours—outlining any issues, from minor repairs to major structural concerns.
A pre-purchase home inspection helps protect your investment by revealing potential problems that could affect your decision or negotiation strategy. It also gives you peace of mind and allows you to plan for future maintenance, reducing unexpected surprises after you move in.
When purchasing a home, you’ll need to budget for several expenses beyond the purchase price. Here’s a breakdown of key costs to consider:
Being aware of these costs helps ensure a smooth home-buying process without unexpected financial surprises.
Owning a home is a rewarding investment, but it comes with ongoing expenses.
Budgeting for these costs helps ensure financial stability and prevents unexpected financial strain.
Key Monthly Homeownership Costs include:
By understanding these costs and planning ahead, you can enjoy homeownership while staying financially prepared for both expected and unexpected expenses.
Yes! This is often called a construction mortgage or construction-to-permanent mortgage. It’s designed for buyers who are building a home and need financing in stages until the house is complete.
Here’s how it works:
Stage Payments: Instead of receiving the full mortgage upfront, the lender releases funds in stages (called “draws”) as construction milestones are completed.
Interest During Construction: You typically pay interest only on the funds that have been released, not the full mortgage amount.
Conversion to Permanent Mortgage: Once construction is finished, the mortgage converts into a standard mortgage for your long-term term.
Documentation Required: Lenders usually require a detailed construction plan, builder contracts, and proof of permits and insurance.
Tips:
Work with a mortgage broker experienced in construction financing — not all lenders offer this type of mortgage.
Budget for contingencies in case construction costs rise.
Coordinate closely with your builder and lender to ensure draws are released smoothly.
FAQS
It’s the amount of money you put toward the purchase price of your home upfront. The rest is covered by your mortgage.
Homes under $500,000 → minimum 5%
Homes $500,000 – $999,999 → 5% on the first $500,000 + 10% on the rest
Homes $1,000,000+ → minimum 20%
Rental/investment properties → usually 20%+
You’ll need mortgage insurance (through CMHC, Sagen, or Canada Guaranty). This protects the lender, but it lets you buy with as little as 5% down.
Yes! With the Home Buyers’ Plan, you can withdraw up to $60,000 tax-free from your RRSP to buy your first home. You’ll need to pay it back over 15 years.
In most cases, lenders want to see that your down payment comes from your own savings or a gift from family. However, some programs do allow borrowed down payments (from a line of credit, loan, or credit card) if you have strong income and credit. The borrowed funds must be factored into your debt ratios, so this option is less common today.
Yes — but with conditions. Canadian lenders do not accept cryptocurrency directly. To use crypto for your down payment, you must sell it and deposit the proceeds into your bank account, showing a clear paper trail of the transaction. Lenders require proof that the funds are legitimate, sourced from your crypto investments, and comply with anti–money laundering rules.
The First Home Savings Account (FHSA) is a game changer. You can save up to $40,000 tax-free for your first home, and your withdrawals are also tax-free. Think of it as a TFSA + RRSP combined, designed specifically for homebuyers.
Yes. Many buyers get help from family. Lenders require a gift letter confirming it’s not a loan.
Yes. If you’re buying a home from a family member, they can sell it to you below market value and gift you the difference as equity. For example, if the home is worth $500,000 and they sell it for $450,000, the $50,000 discount counts as your down payment. Lenders will require:
An appraisal to confirm market value
A signed gift of equity letter from the seller
This strategy can help buyers enter the market without needing as much cash upfront.
Smaller down payment = easier to buy sooner, but higher monthly payments.
Bigger down payment = lower payments, no insurance, more equity from day one.
Absolutely! Many buyers mix:
FHSA savings
RRSP Home Buyers’ Plan
Gifts from family
This makes it easier to reach a stronger down payment.
Yes. Closing costs (like legal fees, land transfer tax, and inspections) are separate. Budget about 1.5–4% of the purchase price in addition to your down payment.
Start saving early in an FHSA or RRSP.
Try to aim for 20% if possible, but don’t let that stop you from getting into the market sooner.
Work with a mortgage broker who can show you how to structure your down payment and mortgage for both short-term affordability and long-term savings.
FAQS
A mortgage interest rate is the percentage charged on your loan by the lender. It determines how much extra you pay on top of the principal over the life of your mortgage.
Here’s a breakdown of the differences between Fixed Rate, Variable Rate, and Adjustable Rate Mortgages (ARM):
Stays the same for the entire term.
Fluctuates based on the lender’s prime rate but payments stay the same.
Fluctuates based on the lender’s prime rate, and payments adjust accordingly.
Fixed and predictable.
Stay the same, but if rates rise, more of the payment goes to interest and less to principal (and vice versa).
Change when interest rates change—if rates go up, payments increase. If rates go down, payments decrease.
No impact—rate is locked in.
Rate changes affect how much of the payment goes to interest vs. principal.
Rate changes affect both interest and payment amount.
Low—predictable costs.
Moderate—rate risk exists, but payments remain stable.
High—risk of increasing payments if rates rise.
Those who want stability and predictability.
Those who want some flexibility and can handle potential rate changes.
Those who can manage fluctuating payments and want to take advantage of falling rates.
Rates are influenced by:
Bank of Canada policy rate → Directly affects variable rates and indirectly influences fixed rates.
Inflation expectations → Higher inflation often leads to higher rates.
Mortgage type and term → Shorter terms usually have lower rates than longer terms.
Borrower profile → Credit score, income, down payment, and debt levels affect the rate offered.
Variable rates → Can change anytime based on the lender’s prime rate, which tracks the Bank of Canada rate.
Fixed rates → Locked for the term, but market conditions influence new term rates at renewal.
Work with a mortgage broker to compare multiple lenders.
Maintain a good credit score and low debt-to-income ratio.
Consider a larger down payment to reduce risk for the lender.
Shop early, especially before your mortgage term ends, to take advantage of competitive rates.
Posted rate → Lender’s advertised rate; rarely the rate you’ll get.
Contract rate → The actual rate you negotiate for your mortgage. Your broker helps you secure the best contract rate.
APR stands for Annual Percentage Rate. It’s a measure that shows the true annual cost of borrowing, expressed as a percentage. APR includes:
Interest rate – The base rate charged by the lender on your mortgage.
Fees and charges – Some lenders include application fees, legal fees, or mortgage insurance in the calculation (depending on the lender and type of loan).
Why It Matters:
APR gives you a more complete picture of your borrowing costs than just the interest rate.
It allows you to compare different mortgage products more accurately, because two mortgages with the same interest rate can have very different APRs if one has higher fees.
Example:
Mortgage A: 5% interest, low fees → APR ≈ 5%
Mortgage B: 5% interest, higher fees → APR ≈ 5.3%
Even though the interest rate is the same, the APR shows the true annual cost of the loan.
Fixed rate → Payments stay the same, interest portion may decrease over time.
Variable rate → Payments can increase if rates rise. Planning a buffer in your budget helps manage fluctuations.
Yes. At renewal or even mid-term (with potential penalties), switch lenders for a better rate.
Decide if fixed or variable fits your risk tolerance.
Lock in rates when market conditions are favorable.
Use a broker to compare deals and negotiate better terms.
Consider paying down principal faster to reduce the impact of rising rates.
FAQS
When your mortgage term ends (usually 1–5 years), you don’t pay off your entire loan right away. Instead, you “renew” the remaining balance into a new term with updated rates and conditions.
Most Canadians have terms of 5 years or less. With a typical 25-year amortization, this means you’ll renew multiple times before your mortgage is fully paid off.
No. You’re free to shop around. Staying with your current lender may be easy, but comparing options with a broker often leads to better rates or terms.
It’s smart to start reviewing your options 4–6 months before your renewal date. Many lenders allow early renewal without penalty, and this gives you time to lock in rates before they rise.
If you don’t take action, most lenders will automatically roll your mortgage into a short-term open or closed term at whatever rate they offer. This is often not the best rate available.
Yes! Renewal is the perfect time to adjust your mortgage to match your life. You can:
Switch from a fixed to variable (or vice versa)
Shorten your amortization
Change your payment frequency
No — this is called a refinance. If you’ve built up equity in your home, you can access it by refinancing.
If you stay with your existing lender, often no credit check is needed. If you switch to a new lender, a full application (including credit, income, and property details) is usually required.
When rates rise, your payments may increase. Planning ahead with a broker can help you:
Lock in a rate early
Explore shorter terms until rates stabilize
Adjust amortization to keep payments affordable
Start shopping months before your term ends
Compare offers from multiple lenders (not just your bank)
Decide if you need to refinance or simply renew
Work with a broker to negotiate the best rate and terms for your goals
FAQS
When your mortgage term ends (usually 1–5 years), you don’t pay off your entire loan right away. Instead, you “renew” the remaining balance into a new term with updated rates and conditions.
Most Canadians have terms of 5 years or less. With a typical 25-year amortization, this means you’ll renew multiple times before your mortgage is fully paid off.
No. You’re free to shop around. Staying with your current lender may be easy, but comparing options with a broker often leads to better rates or terms.
It’s smart to start reviewing your options 4–6 months before your renewal date. Many lenders allow early renewal without penalty, and this gives you time to lock in rates before they rise.
If you don’t take action, most lenders will automatically roll your mortgage into a short-term open or closed term at whatever rate they offer. This is often not the best rate available.
Yes! Renewal is the perfect time to adjust your mortgage to match your life. You can:
Switch from a fixed to variable (or vice versa)
Shorten your amortization
Change your payment frequency
No — this is called a refinance. If you’ve built up equity in your home, you can access it by refinancing.
If you stay with your existing lender, often no credit check is needed. If you switch to a new lender, a full application (including credit, income, and property details) is usually required.
When rates rise, your payments may increase. Planning ahead with a broker can help you:
Lock in a rate early
Explore shorter terms until rates stabilize
Adjust amortization to keep payments affordable
Start shopping months before your term ends
Compare offers from multiple lenders (not just your bank)
Decide if you need to refinance or simply renew
Work with a broker to negotiate the best rate and terms for your goals
FAQS
A credit score is a number (typically 300–900 in Canada) that represents your creditworthiness. Lenders use it to see how likely you are to repay loans on time. The higher your score, the better your chances of getting favorable mortgage rates.
Your credit score helps lenders determine:
Interest rate you qualify for
Mortgage approval odds
Down payment or insurance requirements
Higher scores often mean lower rates and fewer restrictions, while lower scores may require higher down payments or additional documentation.
Factors include:
Payment history – Paying bills on time
Credit utilization – How much of your available credit you’re using
Credit history length – Longer, responsible history helps
Types of credit – Loans, credit cards, lines of credit
Recent inquiries – Multiple applications in a short period can lower your score
Excellent: 750+ → Best rates and terms
Very Good: 720–749 → Strong approval chances
Good: 650–719 → Moderate approval; may need higher down payment
Fair: 600–649 → Approval possible, higher rates, or mortgage insurance required
Poor: <600 → Harder to qualify; options are limited
Pay bills on time and in full
Reduce high credit card balances
Avoid opening multiple credit accounts at once
Check your credit report for errors and dispute mistakes
Keep older accounts open to maintain a long credit history
It’s a good idea to check your credit at least once a year.
Soft inquiries (checking your own credit) do not affect your score.
Hard inquiries (lenders checking your credit for a mortgage) may lower it slightly, but multiple mortgage inquiries within a 14–45 day window are usually treated as one inquiry to minimize impact.
High credit scores → Better rates, lower insurance, more lender options
Moderate credit → May require higher down payment or insurance
Low credit → May need a co-signer, alternative lender, or specialized mortgage programs
FAQS
A mortgage brokerage is your personal advocate, while a bank only offers its own products. Brokers work with multiple lenders — banks, credit unions, monoline lenders, and private lenders — to find the mortgage that best fits your financial situation and goals. They provide guidance throughout the process, often saving you time, stress, and money.
A mortgage broker is a licensed professional who acts as an intermediary between borrowers and lenders to help secure a mortgage loan.
Instead of working for a single bank or lender, mortgage brokers have access to multiple loan products from different financial institutions, allowing them to find the best rates and terms for their clients.
What Does a Mortgage Broker Do?
Benefits of Using a Mortgage Broker:
For most clients, there is no cost. Mortgage brokers in Canada are generally paid by the lender, not you. This means you get access to multiple lenders, professional advice, and assistance through the mortgage process without any upfront fees.
Note: Some specialized products or private lending options may involve a fee, but your broker will always disclose this upfront.
Mortgage brokers are usually compensated by the lender after your mortgage is approved and funded. This is typically a small percentage of the mortgage amount.
You usually don’t pay out-of-pocket.
Brokers are incentivized to find the best mortgage for you, because happy clients lead to referrals and repeat business.
Any exceptions (e.g., private mortgages) are disclosed upfront.
We work with a wide range of lenders, including:
Major banks
Credit unions
Monoline lenders
Private lenders
This access gives you more options and competitive rates than going to a single bank branch.
The timeline depends on your situation and lender:
Pre-approval: 1–3 days (sometimes instantly online)
Application and approval: 3–10 business days
Funding/closing: Usually aligns with your purchase date or renewal date
Your broker will guide you through every step to ensure a smooth process.
No! One of the benefits of working with a modern mortgage brokerage is flexibility. Most of the mortgage process can be completed online, by phone, or through email, depending on your preference.
Here’s how it works:
Pre-approval: You can submit documents digitally (income, ID, credit info) without visiting an office.
Application & Documentation: Secure portals and email allow you to send necessary paperwork safely.
Guidance & Questions: Meetings can happen virtually, over the phone, or in person — whichever is most convenient.
Closing: While some documents may require signing in person (with a lawyer or notary), your broker coordinates everything so you don’t have to manage it alone.
Yes! We help clients in a variety of situations, including:
Self-employed or irregular income
First-time buyers
Credit challenges
High debt-to-income ratios
Investment or second properties
We work with lenders who are flexible and experienced in finding solutions tailored to your needs.
More options → Access to multiple lenders, not just one.
Better rates → Brokers often secure lower rates or better terms.
Tailored advice → Your mortgage is structured around your goals, not the bank’s products.
Full support → Guidance from pre-approval to closing, plus ongoing help for renewals or refinancing.
Absolutely! We don’t disappear after closing. We can:
Monitor rates for renewals or refinancing opportunities
Offer advice on prepayments and mortgage strategies
Keep you informed of programs or changes that could save you money
Getting Pre-Approved is as easy as 1-2-3 with our online application
