Please see information on Home Loans and Mortgages below.


Home Loans and Mortgages

Home loans are also known as mortgages and are an integral element of a home buying process.

What is a mortgage or home loan?

Buying a home is one of the most important purchases for any Canadian that embarks on a home or condo buying process. When most people buy a home they will obtain approval on a mortgage or home loan based on the value of the home in order to secure the asset. Mortgages and home loans are paid back in instalments, over a set period of time, to the full amount of the loan plus the interest. If you fail to make the repayments on your mortgage or home loan then your house will be repossessed so ensure you are fully aware of the terms and conditions of your agreement.

What is a mortgage or home loan term?

A mortgage or home loan term is the length of time that you are committed to with a mortgage or home loan lender and their agreed rate (whether this be fixed or variable) and any conditions set out by the lender. The mortgage term can be variable in length, sometimes as much to 10 years, however the most popular term for a home loan term is 4-5 years. When your mortgage term has expired, if you have not paid off your mortgage in full you can negotiate new terms and interest rates and set a new mortgage term with the same provider or indeed a different provider. Choosing your home loan term is dependent on your individual circumstances and appetite for risk. A longer mortgage term can help you lock in a good interest rate, whereas a short mortgage term gives you more flexibility. Think about when you might sell your property and what you think the interest rates may do over the next few years.

Variable vs. Fixed rate Mortgage?

This is an important decision that you need to make when you are buying a house or condo. You will need to think about how much appetite for risk you have. With a fixed rate mortgage, the rate you pay each month will remain fixed for the duration of your mortgage term so you will know what your monthly outgoings will be. You will be able to budget your monthly repayments and be safe and secure in the knowledge that you can make the repayments. With a variable rate mortgage, the interest rate will change with the prime-lending rate as set by your provider. Although variable rates have historically shown to be less expensive, you must consider the financial uncertainty with this type of loan. If there was a significant rise in the prime rate you may find that your monthly payments will increase to more than you have budgeted for. Think about whether you can make the repayments should the worst happen. If you are not able to make the repayments your house could be repossessed.

What happens if I miss a home loan repayment?

There are always times in your life when you find that you are in financial hardship and you wish you had some extra money. Perhaps you didnít receive your bonus or you have an unexpected bill to pay? If this is the case, many mortgage or home loan providers allow you the option to skip a payment. Do double-check this in your terms and conditions though as not all providers offer this facility. But is it a good idea to skip a mortgage repayment even if I have the option? How desperate are you. If you are in financial crisis then this could provide the temporary relief you are after, however watch out, you will continue to have to pay interest on the money that you have not paid back which could result in more than you think. This is also a short-term solution to your problems, if you miss monthly repayments because you canít keep up with your repayments your home will be repossessed. Seek financial advice if you are concerned.


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