Start with the full purchase picture
The home price is only one part of the financial picture. Buyers may also need to consider the down payment, mortgage principal, mortgage default-insurance premium when applicable, closing costs, property taxes and ongoing housing expenses.
Down payment and mortgage principal
Your down payment reduces the amount that must be borrowed. The mortgage principal is generally the amount financed after accounting for the down payment and any permitted financed costs or premiums.
Canadian mortgage-insurance and amortization rules can depend on the size of the down payment, whether you are a first-time buyer, the type of property and the lender’s requirements.
Mortgage term versus amortization
Mortgage term
The term is the period during which a mortgage agreement and its conditions remain in effect. At the end of the term, the mortgage is usually renewed unless the balance is repaid.
Amortization
The amortization is the projected time required to repay the mortgage in full. A longer amortization can reduce regular payments, but it generally increases the total interest paid.
Questions worth asking
- Is the interest rate fixed or variable, and how can the payment change?
- What prepayment privileges and penalties apply?
- What happens if the property closes later than expected?
- Which closing costs and ongoing housing expenses are not included in the mortgage payment?
- What conditions must be satisfied before final approval?
For current federal consumer information, consult the Financial Consumer Agency of Canada. Product terms and eligibility are determined by the lender and applicable rules.