What is a Mortgage?
A mortgage is a loan used to purchase a home. In Canada, the property you buy serves as collateral for the loan. This means the lender has the right to take possession of the property if you fail to repay the loan as agreed.
Key points about Canadian mortgages:
Term and Amortization: While the mortgage term (the length of the initial contract) is typically 5 years, or less, in Canada, the amortization period (the total time to repay the loan) can extend up to 25 or even 30 years.
Repayment: You typically make monthly payments that cover both the principal (the amount borrowed) and interest. There are often pre-payment privileges that allow you to pay more than the minimum.
Down payment: A down payment is usually required, though government-backed mortgage insurance can be obtained for down payments as low as 5%.
Mortgage types: Common mortgage types include fixed-rate, variable-rate, open, and closed mortgages.
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