What is a mortgage?

A mortgage term is a set time frame time you'll make payments towards your mortgage. This period can be as brief as six months or as long as 10 years. Once this period expires, you can renegotiate the terms of your mortgage and re-evaluate your financial plan. Knowing that you’re not locked into your rate forever is good news if you find yourself re-evaluating your goals or finances in a few years.

Mortgage Options

There’s a variety of mortgage terms available based on multiple factors such as income, credit, goals and more. Every broker, bank or lender may offer different terms and interest rates, so choosing the right one can save you time and money over the term. Edison Financial does the comparison work for you, presenting the best options within our network of 50+lenders. Get started with our simple form, no commitment required.

Mortgage Transactions

Purchase

Buying a home is typically done by finding a home and getting a mortgage loan from a lender, which is paid back with additional interest and secured by the home itself. While there are many steps along the way, Edison Financial is here to walk you through the process. Visit our Learning Center or purchase page to download our home buying guide to learn what to expect.

Refinance

Refinancing means renegotiating your existing mortgage loan agreement, often to access the equity in your home, or to take advantage of lower interest rates. Although refinancing does come with fees, your new or blended mortgage rates may be worth any penalties incurred for breaking your contract. Edison can provide a variety of options from over 50 lenders in our network, empowering you to make the best financial decision for your situation. Visit our learning center or refinance page to learn more.

Renewal

In Canada, mortgage renewal is required every 5 years. This can be a great opportunity to renegotiate the terms of your mortgage with your current lender and entertain other options on the market. Many things can change in 5 years, and so can your mortgage rates, especially if your financial situation or the housing market has changed. If you’re curious about other rates that are out there, we would love to help you consider alternatives and can present you the best rates from our 50+ lending partners, no commitment required. Visit our renewal page or learning center to learn more about the renewal process and how Edison Financial can help.

Mortgage Types

• An open mortgage allows Canadians to pay off their mortgage without penalty. Open mortgages allow for renegotiation of the mortgage at any time. However, these mortgages come with higher rates as increased flexibility comes with a price. Penalties may be incurred to break the mortgage.
• Closed mortgages often have lower interest rates but do not offer the same flexibility that an open mortgage does.

Interest Rates

Canadians have the option of using the following mortgage interest rate types:

• Fixed Mortgage - Locks your rate for a fixed mortgage payment term – most commonly for five years at a time.
• Variable Mortgage - Rates are based on the prime rate and can update up to 8 times annually.

To see current mortgage rates for our most popular terms, visit our rates page.

Credit Scores

Having a good credit score will allow you to access multiple options when buying, refinancing, or renewing. Credit scores in Canada average between 300 and 900, but a score of 740+ unlocks the best rates.

Preapproval

Getting a preapproval should be the first step in any mortgage transaction. It provides confidence in your ability to retain financing, proves creditworthiness to sellers when buying a home and reduces timelines for a faster, smoother mortgage process. Preapproval allows you to lock in an interest rate for a certain period and provides a price range while you shop for a new home.

Down Payments

When buying a home, be prepared to pay a 5% down payment of the property value. If you can put 20% down, you can avoid paying high ratio mortgage insurance which is ideal. For down payments less than 20%, you may find some additional financial flexibility by avoiding the high ratio mortgage insurance premium, however, for the vast majority of clients, the cost of CMHC Mortgage Loan Insurance is offset by the savings achieved.

Closing Costs

On average, closing costs range anywhere between 1.5 to 2.5% of your home purchase price to cover land transfer taxes, PST on CMHC premium, home inspection fees, legal fees, appraisal fees, property tax, property insurance, fire insurance, utility hook-ups, etc. If you are buying property in Toronto and other large cities, these costs are typically a bit higher as land transfer and municipality property taxes are added and inflated in these areas.

Mortgage Payment Schedules

Homeowners have the choice of paying their mortgage once every month, twice every month, every two weeks, or every week. This flexibility allows individuals to choose the payment plan that works best for their lifestyle and opens up the potential of becoming mortgage free even faster.

Mortgage Amortization

The longer your term, the lower your monthly payments will be, but you’ll be paying more interest overall. The shorter the term, the higher your monthly payments will be, but you’ll be paying less interest as your mortgage will be paid off faster.

5 Year Fixed Term Amortization Chart*

5 Year Fixed Term	Mortgage amount	Monthly payment	Total Principle Paid	Total interest paid*
Year 1	$384,512	$1,691.88	$12,488.38	$7,814.18
Year 2	$373,701	$1,691.88	$12,777.51	$7,564.43
Year 3	$360,686	$1,691.88	$12,952.91	$7,309.65
Year 4	$347,411	$1,691.88	$13,252.75	$7,050.51
Year 5	$335,146	$1,691.88	$13,517.79	$6,784.77

* Assuming an original purchase amount of $400,000, 5% down payment of $20,000, and a constant annual interest rate of 1.99%.