Understanding Canadian Mortgage Terms

As an American that may wish to becomes a home owner, either for a vacation home or to become a permanent resident, there are a few terms to familiarize yourself with. These basic qualities of a Canadian mortgage will be important to understand once you're ready to buy and will make life much easier when you go through the process.

Down Payments

In Canada you can place a down payment on a home as small as 5% of the cost of the home you are buying, making it easy if you're low on cash currently. Just remember that any down payment that amounts to less than 20% will require you to purchase no default insurance along with your mortgage, which is nice to have anyway just in case.

Amortization

On average your amortization terms will usually come around 25 years. If you wish to extend that, however, you can go high as 30 if you so choose.

Mortgage Types

There are many types of mortgages that you can apply for in Canada to fit your unique needs and desires. Some these types include fixed mortgages as well as those with variables. We also have opened and closed mortgages and you may select your term.

Mortgage Terms

A mortgage term almost always comes to about five years. In some cases, however, they can range from 1-25. A term typically dictates how long it is you will be locked into your mortgage type, interest rates, etc. At the end of your term, you can choose a new option or simply opt to have things stay the same.

Guaranteed Mortgage Rates

When you are pre-approved for your mortgage here you can ensure that your rate stays locked in a guaranteed without a doubt. These are usually for shorter amounts of time typically ranging from 60-120 days. It all depends on the lender.

Interest and Taxes

In the United States, there are provisions in the tax code that allow you to deduct the interest on your mortgage rates from your overall income in your tax returns. In Canada, unfortunately, this is not the case.