Mortgage Information

Mortgage calculator: figure out what you can afford
Mortgage Affordability Estimator | Mortgage Comparison

If you’re thinking of buying a home or transferring or refinancing your existing mortgage, use these handy calculators to:

  • Figure out how much you can afford to spend on a home.

  • Determine what your mortgage payments will be.

  • Compare different ways of paying your mortgage off faster.

  • Add lump sum or top-up payments to your mortgage calculation.

  • See your amortization schedule (which provides a breakdown of principal and interest payments for the life of the mortgage)



What is a pre-approved mortgage?
It’s a written commitment from a lender that you will get a mortgage for a set amount at a set interest rate, locked in for 60-120 days, depending on the lender. The commitment is subject to a financial assessment and property appraisal. This service is always free and without obligation.

Why do it?
A pre-approved mortgage gives you an edge. Before you even start house hunting, you’ll know how much you can afford, your interest rate, and your monthly payments. With your financing already mapped out, you can concentrate on finding the right home in your price range.

A pre-approved mortgage shows you’re a serious buyer. In a situation where several people are bidding on the home you want, you may decide to offer the list price and beat out earlier offers.




From offer to closing
When you find the home that’s right for you, your next step is to make an offer to purchase the home from the current owner. The owner can accept your offer, make changes to the offer and present you with a counter-offer, or reject the offer.

About the Offer to Purchase
The Offer to Purchase is a legally binding agreement between you and the person selling the house. It’s a good idea to have your lawyer review it with you before it is presented to the seller. It includes:

  • Your name
  • The seller’s name
  • The address or legal description of the property
  • The price you are prepared to pay for the home
  • The items you expect to be included in the purchase price
  • The amount of your cash deposit
  • Your financing arrangements
  • The closing date
  • Specific terms or conditions that must be met as part of the purchase
  • A time limit for meeting these conditions

Discuss the Offer to Purchase with your lawyer before you sign it. Remember, it becomes a legally binding agreement the moment it is accepted. If you decide to cancel an offer that has already been accepted, you could lose your deposit and the person selling the home could sue you for damages. If the seller does not accept your offer, your deposit will be returned.

When your offer is accepted
You’re in the home stretch, finalizing the details of your mortgage and closing the purchase of your new home. Now you need to call your mortgage specialist and send them the following info:
  • A copy of the real estate listing
  • A copy of the accepted Offer to Purchase
  • Information on the source of your down payment
  • Income verification if you are employed
  • A letter from your employer verifying your place of employment and income, or T4s and Notice of Assessment, or T1 General Tax Return and Notice of Assessment
  • Income verification if you are self-employed
  • 3 years of Financial Statements and 3 years of Notice of Assessments, or 3 years of T1 General Tax Returns and 3 years of Notice of Assessments

Processing the mortgage application
Your mortgage specialist will want to verify the value of the property you are buying, your current financial picture and your credit history, so a property appraisal and credit report will be ordered.

If your down payment is less than 25%, your mortgage is considered "high ratio" and you must pay insurance premiums. You decide whether you want to pay the premium in cash or have your lender add it to your mortgage amount.

Be prepared to pay fees for the mortgage application, credit report and property appraisal.

Closing the purchase
Closing day is the day you become the official owner of your home. However, the closing process usually takes a few days.

Typically, you visit your lawyer’s office to review and sign documents relating to the mortgage, the property you are buying, the ownership of the property and the conditions of the purchase. Your lawyer will also ask you to bring a certified cheque to cover the closing costs and any other outstanding costs.

Once your mortgage and the deed for the property are officially recorded, you become the official owner of the property.


Mortgage terms explained
Mystified by all the financial jargon used to describe mortgages? Here’s a quick overview of key terms to help you understand the language - and make the process clearer and easier.

Mortgage. A personal loan used to purchase a property. You pledge the property being purchased as security for the loan.

Down payment. The portion of the purchase price that you pay initially as a lump sum; the rest is financed by your financial institution. A down payment is generally up to 25% of the purchase price.

Principal. The amount of your loan.

Interest. This is added to the amount you have borrowed to compensate the lender for the use of their money. Your mortgage is repaid in regular payments which are applied toward the principal and interest.

Term. The number of months or years the mortgage contract covers (typically six months to five years), during which you pay a specified interest rate.

Amortization. The number of years it will take to repay the mortgage in full. (This is usually longer than the term of the mortgage.) For instance, you may have a five-year term amortized over 25 years.

Equity. The difference between the value of your property and the amount you still owe on the mortgage.

Conventional mortgage. Offered to buyers who make a down payment of 25% or more of the appraised value or purchase price.

High ratio mortgage. Offered to buyers with a down payment of less than 25%. This type of loan must be insured against default by the federal government through an approved private insurer (the lender usually arranges this). The borrower pays a one-time insurance premium to the insurer (ranging from 0.5% to 3.75% depending on the size of the loan and value of the home; additional charges may also apply). The premium is usually added to the principal amount of the mortgage. If you default on your mortgage, the lender is paid by the insurer.

Fixed rate mortgage. Carries a set interest rate for a specific period of time (the term of the mortgage). The regular payment of the principal and interest remains the same throughout the term. The benefit of choosing this option is that you are protected if interest rates rise.

Open mortgage. Gives you the flexibility to make unlimited pre-payments or lock into a fixed term at any time. This loan’s interest rate changes periodically, and is tied to the prime rate. This type of mortgage is popular when interest rates are expected to fall or remain stable.

Portability. If you are selling your home and buying another, this option allows you to take your mortgage - with the same term, rate and amount - and apply it to your new house. If your mortgage isn’t portable, don’t sign for a longer term than you’re likely to stay in the house or you could wind up paying a penalty to break the mortgage agreement.

Assumability. This feature allows the buyer of your house to take over or "assume" your mortgage. If your mortgage has a fixed interest rate lower than current rates, it could be an attractive selling feature.


First-time buyers plan: a step-by-step guide to help you buy smart

So you’ve decided you’re ready to take the plunge into home ownership. Buying your first place is exciting, but it can be a little scary, too. After all, it’s probably one of the biggest purchases you’ll ever make. Here’s a step-by-step guide that can help you buy smart:

Step 1: Figure out how much you can afford.

Falling in love with a house you can’t afford can be heartbreaking. Avoid disappointment by figuring out your budget before you start looking.
• First, decide how much you can afford for your down payment. The Home Buyers' Plan (HBP) allows you to withdraw up to $60,000 from your Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home. You must be a first-time home buyer or buying for a disabled person. The withdrawn amount must be repaid within 15 years. More on that here. The bigger your down payment, the less principal you will owe, and the less interest you will pay.
• Don’t forget about closing costs, like insurance, legal fees, home inspection costs, land registration and land transfer fees. Add those to your moving expenses and service hookup fees, and they can add up surprisingly fast.
• Your monthly housing expenses (mortgage, taxes, heat, etc.) shouldn’t use up more than 32% of your income. (If your combined monthly income is $5000, for example, 32% of that is $1600.) If you have car payments or credit card debt, the rule of thumb is that debt repayment shouldn’t be more than 40% of your income.
• Get pre-approved for your mortgage. It’s a good way of finding out how much you can borrow – and it speeds up the process once you’ve found the home you want to buy.

Step 2: Figure out what type of home is right for you.

Sit down and make a list of must-haves and nice-to-haves. Be realistic, but be clear about the features you can’t live without. How many bedrooms do you need? Bathrooms? Do you want a home office? A garage? How about a big backyard? Hardwood floors? Eat-in kitchen? Consider your lifestyle and your stage of life. If you’re planning kids in a year or two, the studio loft might not be your best bet.

Step 3: Decide where you want to live.

Living in an area you like is as important as buying a home you love. Do you want a busy urban lifestyle, a house in the ‘burbs, or a quiet place in the country? Do you want to walk to work or are you okay with a longer commute? Do you need to be close to good schools? Rec facilities? Shopping?

Step 4: Start looking.

Go to open houses. Visit mls.ca. Check the classifieds. Drive around neighbourhoods you like looking for For Sale signs. Talk to your REALTOR® about your needs and start looking at properties.

Step 5: Build a team.

Put together the right group of experts to help you buy. Start with a REALTOR® you trust, then look for a reputable lender or mortgage broker, a lawyer (or a notary in Quebec), a home inspector and an insurance broker. Your REALTOR® works closely with all of these professionals, and will be happy to recommend people you can depend on.

Step 6: Make an offer.

You’ve found the perfect place – now it’s time to make an offer. An offer to purchase includes the purchase price you’re offering, chattels to be included in the purchase (like appliances or light fixtures), the amount of the deposit, the closing date and any other conditions.

Your REALTOR® will help you prepare your offer, and will present it to the vendor, who will either accept it or make a counter offer (which asks for a higher price or different terms). You can accept or reject the counter offer. If everyone agrees, the home is yours. If not, you can make another offer, or you may have to keep looking.

Step 7: Get a mortgage.

Once you’re approved, you’ll need to decide what type of mortgage works best for your needs. Will you go with a fixed or variable interest rate? Will your mortgage be closed or open? What will your amortization period be? Will you make payments monthly, biweekly or weekly? Your mortgage broker or lender can help you find a mortgage that suits your needs – and saves you the most money in the long term.

Step 8: Move in and enjoy!

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