Mortgage education
Mortgage Basics in Canada: Terms Every Buyer Should Know
Before you compare rates or start touring homes, it helps to understand how Canadian mortgages actually work. The ideas are simple, but the jargon can make them feel more complicated than they are.
A mortgage is a loan secured by your property. When you buy a home, you contribute a down payment and borrow the rest from a lender. That borrowed amount is the principal. Over time, you repay the principal plus interest, which is the cost of using the bank's money.
Most Canadian mortgages are broken into two time concepts. The amortization period is the total time it would take to pay off the mortgage if you kept the same payment schedule, often 25 or 30 years. The term is the length of your current rate agreement, usually 1 to 5 years.
You'll usually choose between fixed and variable rates. Fixed rates give you payment stability, while variable rates can move up or down with the Bank of Canada.
Finally, you'll see acronyms like LTV and GDS/TDS on your pre-approval. These help lenders judge affordability and risk.
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