Mortgages

What is a Mortgage in Canada?

A mortgage in Canada is a loan provided by a lender (usually a bank, credit union, or mortgage company) that helps individuals or families purchase a home or other real estate property. The borrower agrees to repay the loan, plus interest, over an agreed-upon period—typically 25 to 30 years. The property itself is used as collateral, meaning if the borrower fails to make payments, the lender can take possession of the home through foreclosure or power of sale.

Types of Mortgages in Canada

1. Fixed-Rate Mortgage

• Interest rate stays the same for the entire term (e.g., 5 years).

• Offers stability and predictable payments.

• Ideal for those who want consistency in budgeting.

2. Variable-Rate Mortgage (Adjustable)

• Interest rate fluctuates with the Bank of Canada’s prime rate.

• Monthly payments may remain fixed, but interest vs. principal amounts vary.

• Often starts with a lower rate than fixed mortgages.

3. Open Mortgage

• Flexible option that allows prepayments or early repayment without penalty.

• Generally comes with higher interest rates.

• Suitable for short-term plans (e.g., selling the home soon).

4. Closed Mortgage

• Locked-in for a set term with limited prepayment options.

• Lower interest rates than open mortgages.

• Prepayment penalties apply if you break the mortgage early.

5. High-Ratio Mortgage

• Down payment is less than 20%.

• Requires mortgage default insurance (e.g., CMHC insurance).

• Insurance protects the lender, not the borrower.

6. Conventional Mortgage

• Down payment is 20% or more.

• No need for mortgage default insurance.

• Lower risk for the lender.

Mortgage Terms vs. Amortization Period

• Term: The length of time you commit to a mortgage rate and lender (e.g., 1 to 5 years).

• Amortization: The total time it takes to pay off the mortgage (usually up to 25 or 30 years).

At the end of a term, you must renew your mortgage unless it’s fully paid off.

Down Payment Rules in Canada

• 5% minimum down payment for homes under $500,000.

• 5% on the first $500,000 + 10% on any amount above $500,000 for homes priced between $500,000 and $999,999.

• 20% minimum for homes priced at $1 million or more.

• Down payments under 20% require mortgage default insurance from CMHC, Sagen, or Canada Guaranty.

Mortgage Insurance (CMHC Insurance)

• Required for high-ratio mortgages (less than 20% down).

• Cost ranges from 2.8% to 4% of the mortgage amount.

• Can be added to the mortgage principal.

Pre-Approval in Canada

A mortgage pre-approval helps you understand how much you can borrow and locks in an interest rate (usually for 60 to 120 days). It strengthens your position when making an offer on a property.

Factors That Affect Mortgage Approval in Canada

• Credit score (usually 680+ is ideal)

• Income and employment status

• Debt-to-income ratio

• Down payment amount

• Property value and type

First-Time Home Buyer Incentives (Canada)

1. First-Time Home Buyer Incentive (FTHBI)

   • Government shares a portion of your home purchase (5–10%) to reduce mortgage payments.

   • Must repay when you sell or after 25 years.

2. Home Buyers’ Plan (HBP)

   • Withdraw up to $60,000 (as of 2024) from your RRSP, tax-free, to buy your first home.

   • Must repay over 15 years.

3. Land Transfer Tax Rebates

   • Available in Ontario, BC, PEI, and municipal-level (e.g., Toronto).

   • Up to $4,000 in Ontario.

Interest Rates in Canada

• Rates are influenced by the Bank of Canada’s overnight rate.

• Lenders offer posted rates and discounted rates.

• Fixed rates are linked to bond yields, while variable rates follow the prime rate.

Common Canadian Lenders

• Major banks (RBC, TD, Scotiabank, BMO, CIBC)

• Credit unions (Vancity, Meridian, Servus)

• Mortgage brokers and private lenders

Costs Associated with a Mortgage

• Appraisal fee

• Legal fees

• Title insurance

• Home inspection

• Land transfer tax

• Mortgage insurance (if applicable)

Renewal and Refinancing

• At the end of the term, you can renew with the same or a different lender.

• You can refinance your mortgage to access equity, change terms, or consolidate debt.

Tips for Getting the Best Mortgage in Canada

• Shop around or use a mortgage broker.

• Improve your credit score.

• Increase your down payment.

• Consider your risk tolerance (fixed vs. variable).

• Factor in long-term affordability, not just the rate.

Benefits & Why Us

5X Benefits

• Custom plans
• Low interest rates
• Fast approval
• Built-in support
• Scalable terms

8 Reasons to Choose Us

1. Credibility – Trusted by Canadian businesses coast-to-coast
   
2. Trust – Transparent process with no hidden terms
   
3. Flexibility – Multiple financing structures to fit your cash flow
   
4. Speed – Approval in 24 hours or less
   
5. Simplicity – Straightforward paperwork and easy digital application
   
6. Coverage – Nationwide access to lenders & partners
   
7. Continuity – Long-term financing relationships
   
8. Capital Strength – Backed by years of underwriting expertise