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Mortgage default insurance is mandatory in Canada for down payments between 5%, the minimum in Canada and 19.99%. Mortgage default insurance, or CMHC insurance, protects lenders if a home owner defaults on their mortgage.
With a fixed mortgage rate, the mortgage rate and payment you make each month will stay constant over your mortgage term. 66% of Canadians choose a fixed mortgage rate.
With a variable mortgage rate, the interest rate you pay will fluctuate with the prime lending rate as set by the Bank of Canada. A variable rate will be quoted as Prime +/- a specificied amount, such a Prime - 0.85%. Though the prime rate will fluctuate, the relationship to prime will stay constant over your term.
The mortgage term is the length of time you commit to the mortgage rate, lender, and associated mortgage terms and conditions. When the term is up, you must renew your mortgage on the remaining principle, at a new rate available at the end of the term.
The term you choose will have a direct effect on your mortgage rate, with short terms historically proven to be lower than long-term mortgage rates. The term acts like a 'reset' button on a mortgage.
When you purchase a house, there are a number of costs you'll need to put cash aside for in addition to your down payment. These costs depend on a number of factors including things like what kind of home you are buying (i.e. house vs. condo) and where the home is located.
Our tool will help you calculate these costs, so you know how much you'll need to save.
When determining the size of home you can afford, it's important to look at the long term horizon. The mortgage rate you pay today could be substantially different from the mortgage rates available when the time comes to renew your mortgage.
The calculation below shows how much of your mortgage principal will be left at the end of the term.
Using this amount, below we calculate the corresponding mortgage payments at a variety of interest rates:
Below is a graph that displays the approximate values of competitive 5-year fixed mortgage rates since 2006.
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