How Do Mortgages Work?
Mortgages are loans you take out to buy real estate or turn your home equity into cash. Once approved, you repay the loan according to specific terms that include interest rate, payment amount and timeline. These details are set out in the mortgage document. Your lender registers a charge on your property. If you can’t repay the mortgage, your lender can take possession of your property and sell it to collect any money you owe them.

Down Payment Requirements
The down payment typically ranges from 5% to 20% of the property’s total cost.

High Ratio Mortgage Insurance vs. Mortgage Life Insurance

• High Ratio Mortgage Insurance is mandatory for buyers with less than a 20% down payment, safeguarding the lender against defaults. An insurance premium is applicable.
• Mortgage Life Insurance ensures financial protection for your dependents in case of your demise.

Property Taxes and Mortgage Payments
What’s the difference between the mortgage amortization period and the mortgage term? The mortgage amortization period is the length of time it takes to pay off a mortgage, including interest. It may be between 5 and 30 years, depending on how much you can afford to pay. For a new mortgage, the amortization period is usually 25 years. The mortgage term is how long you commit to your mortgage rate, details and conditions with a lender. When a term ends, you pay off the mortgage or renew it for another term if your lender agrees. Terms range from 1 to 10 years, but 4- to 5-year terms are most common.

What’s the difference between the mortgage amortization period and the mortgage term?
The mortgage amortization period is the length of time it takes to pay off a mortgage, including interest. It may be between 5 and 30 years, depending on how much you can afford to pay. For a new mortgage, the amortization period is usually 25 years. The mortgage term is how long you commit to your mortgage rate, details and conditions with a lender. When a term ends, you pay off the mortgage or renew it for another term if your lender agrees. Terms range from 1 to 10 years, but 4- to 5-year terms are most common.

Fixed-Rate vs. Variable-Rate Mortgages

• A fixed-rate mortgage ensures stability throughout its term by keeping both the interest rate and monthly payments constant, providing a safeguard against fluctuations in interest rates. Even if market rates
• A variable-rate mortgage is dynamic, adjusting in response to changes in the Prime Rate as outlined in your mortgage agreement. While your regular payments may remain consistent, the distribution between principal and interest can vary, offering potential savings if interest rates decrease, but allocating more payment to interest if rates increase.

Open vs. Closed Mortgages

• You can prepay an open mortgage, in part or in full, without incurring a prepayment charge. Open mortgages typically feature higher interest rates than closed mortgages but offer flexibility. If rates begin to rise, you can switch to a closed mortgage.
• On the other hand, with a closed mortgage, if you prepay before the mortgage term ends, you’ll face a prepayment charge. For instance, for a fixed-rate closed mortgage, the charge is usually the greater of 3 months interest or the interest rate differential (IRD). In the case of a variable-rate closed mortgage, the charge is typically 3 months of interest. Closed mortgages generally offer better interest rates than open mortgages.

Canceling Mortgage Default Insurance
Mortgage default insurance cannot be canceled once applied.

HELOC vs. Mortgage Loan
A Home Equity Line of Credit (HELOC) differs from a mortgage by offering flexible access to funds up to 65% of your home’s value, without a fixed repayment schedule, whereas a mortgage has a set repayment agreement.

Credit Scores and Mortgages
Your credit score plays a crucial role in mortgage approval, reflecting your financial reliability and history.