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Mortgage Information
Mortgage
calculator: figure out what you can afford
Mortgage Affordability Estimator
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Mortgage Comparison
If you're thinking of buying a home or transferring or refinancing your
existing mortgage, use these handy calculators to:
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Figure out how much you can afford to spend on a home.
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Determine what your mortgage payments will be.
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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.
To request a pre-approval, call 1-888-562-3284 or apply online.
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
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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
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Information on the source of your down payment
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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
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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 20%, 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. Your mortgage representative can contact Canada Mortgage and
Housing Corporation (CMHC) or GE Capital Mortgage Insurance Company of
Canada (GEMI) to make the arrangements.
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 20% 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 20% or more of the appraised value or
purchase price.
High ratio mortgage. Offered to
buyers with a down payment of less than 20%. This type of loan must be
insured against default by the federal government through the Canada
Mortgage and Housing Corporation (CMHC) or 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 |
