Learning Centre
Everything you need to know about mortgages in Canada. Expert guides, tips, and resources to help you make informed decisions.
First-Time Home Buyer's Guide
Getting Started
Buying your first home is one of the biggest financial decisions you'll make. In Canada, first-time buyers have access to several government programs designed to make homeownership more accessible, including the First-Time Home Buyer Incentive, the Home Buyers' Plan (HBP), and the First Home Savings Account (FHSA).
Down Payment Requirements
In Canada, the minimum down payment depends on the purchase price. For homes up to $500,000, you need at least 5% down. For homes between $500,000 and $999,999, you need 5% on the first $500,000 and 10% on the remaining amount. Homes priced at $1 million or more require a minimum 20% down payment.
Mortgage Pre-Approval
Getting pre-approved is a crucial first step. A pre-approval tells you exactly how much you can borrow, locks in an interest rate for 90-120 days, and shows sellers you're a serious buyer. Our online pre-approval process takes just minutes to complete.
Closing Costs to Budget For
Beyond your down payment, budget for closing costs of 1.5% to 4% of the purchase price. These include land transfer tax, legal fees, home inspection, title insurance, and property insurance. First-time buyers in Ontario may qualify for a land transfer tax rebate of up to $4,000.
Mortgage Renewal Guide
When to Start Planning
Your lender will send a renewal notice 21 days before your term expires, but you should start shopping for rates at least 120 days in advance. This gives you time to compare options and potentially lock in a better rate. Many lenders offer early renewal options with rate holds.
Don't Just Sign the Renewal Letter
One of the most common mistakes homeowners make is simply signing the renewal letter their current lender sends. The posted rate on a renewal offer is almost always higher than what you could get by shopping around. Even a small rate difference can save thousands over your term.
Switching Lenders at Renewal
Switching lenders at renewal is free in most cases. Your new lender will typically cover the legal and appraisal costs. This is the perfect time to renegotiate your terms, change your amortization, or switch between fixed and variable rates.
Refinancing Your Mortgage
Why Refinance?
Refinancing replaces your current mortgage with a new one, often with different terms. Common reasons include accessing home equity for renovations or investments, consolidating high-interest debt, getting a lower interest rate, or changing your mortgage type from variable to fixed.
Costs to Consider
Refinancing before your term ends may involve a prepayment penalty, which can be significant for fixed-rate mortgages (typically the greater of 3 months' interest or the Interest Rate Differential). Other costs include appraisal fees, legal fees, and potential discharge fees.
When It Makes Sense
Refinancing makes financial sense when the savings from a lower rate or debt consolidation outweigh the costs. A general rule: if you can reduce your rate by at least 0.5% to 1%, the savings often justify the costs. Use our calculators to run the numbers for your specific situation.
Understanding Mortgage Types
Fixed Rate Mortgages
With a fixed-rate mortgage, your interest rate stays the same for the entire term (typically 1-5 years). This provides payment certainty and protection against rate increases. Fixed rates are generally higher than variable rates but offer peace of mind.
Variable Rate Mortgages
Variable-rate mortgages fluctuate with the lender's prime rate, which is influenced by the Bank of Canada's overnight rate. Historically, variable rates have saved borrowers money over fixed rates, but they come with the risk of rate increases during your term.
Open vs. Closed Mortgages
Closed mortgages offer lower rates but limit prepayment options (typically 10-20% per year). Open mortgages have higher rates but allow unlimited prepayments without penalty. Most borrowers choose closed mortgages and use the annual prepayment privileges to pay down their mortgage faster.
Insured vs. Conventional
If your down payment is less than 20%, you'll need mortgage default insurance (CMHC, Sagen, or Canada Guaranty). While this adds to your cost, insured mortgages often qualify for lower interest rates because they carry less risk for lenders.
Frequently Asked Questions
What credit score do I need for a mortgage?
Most lenders require a minimum credit score of 600-680 for conventional mortgages. However, some alternative lenders may work with lower scores. A higher credit score typically qualifies you for better rates.
How much can I borrow?
Your borrowing capacity depends on your income, debts, down payment, and the current interest rate. Use our Affordability Calculator to get an estimate. Generally, your total housing costs shouldn't exceed 32% of your gross income (GDS ratio).
What's the difference between pre-qualification and pre-approval?
Pre-qualification is an informal estimate based on self-reported information. Pre-approval is a formal process where the lender verifies your income, credit, and employment. Pre-approval gives you a rate hold and more certainty when making offers.
Can I pay off my mortgage early?
Most closed mortgages allow annual prepayments of 10-20% of the original principal without penalty. You can also increase your regular payments. Paying off the entire mortgage early may incur a prepayment penalty.
What documents do I need for a mortgage application?
Typically you'll need: government-issued ID, proof of income (pay stubs, T4s, NOA), employment letter, bank statements, and details of your assets and debts. Self-employed borrowers may need additional documentation.
Have More Questions?
Our mortgage experts are here to help. Get personalized advice for your unique situation.