Frequently Asked Questions

 Fixed-Rate Mortgage: Enjoy peace of mind with a consistent interest rate throughout your chosen mortgage term, which can range from 6 months to 10 years. This predictability makes budgeting easier. We'll guide you through market trends and your personal risk tolerance to select the ideal term, and even explore accelerated payment plans to save you substantial interest over time 

 Variable-Rate Mortgage: Your interest rate on a variable-rate mortgage is tied directly to the lender's prime rate (e.g., often quoted as prime minus 0.5% or prime plus 1%). As the prime rate shifts, so too will your monthly payments and the total interest you pay. While this type of mortgage offers flexibility, it also carries the risk of increased costs in a rising-rate environment. 

Refinance: Refinancing your home mortgage involves replacing your current loan with a new one under different terms. People often choose to refinance for various reasons, including:

• Lowering your interest rate for reduced monthly payments or a shorter term.
• Consolidating other debts into a single, more manageable mortgage payment.
• Reducing your monthly payment to improve cash flow (though this may extend your term).
• Altering your risk by switching from variable to a fixed rate.
• Accessing equity to free up cash.

It's important to be aware that breaking your existing mortgage contract may incur a prepayment charge, usually based on three months' interest or an interest rate differential. We specialize in calculating these costs against potential savings to advise you on the best path forward.

Prepayment Penalty: When you have a closed mortgage, paying off a significant portion or the entire balance before your term ends, or breaking your mortgage contract, may trigger a "prepayment penalty" (also known as a prepayment charge or breakage cost). This fee compensates the lender for lost interest.

In Canada, these penalties are commonly determined by whichever is greater:

• Three months of interest on the outstanding balance.
• The Interest Rate Differential (IRD), a more complex calculation that compares your current mortgage rate to the lender's current rates for a comparable term.

The amount of this penalty varies widely depending on your lender and mortgage details. Before making any decisions about prepaying or refinancing, allow us to approximate any potential prepayment penalties, so you can weigh the costs against your financial goals.

Renewal: When your current mortgage term ends, your mortgage is up for renewal. This is a crucial time when you can pay off part or all of your mortgage without penalty, or secure a new rate and terms. You can renew with your existing lender or transfer to a new one – often at no cost to you (which we can arrange!). Don't simply accept your bank's first offer; lenders typically offer higher "posted" rates, hoping you won't shop around. We'll help you negotiate for the best possible rate 

Amortization Period: The amortization period represents the full lifespan of your mortgage – the total number of years it will take to pay it down to zero. In Canada, typical amortization periods are 25 years, though some borrowers may qualify for up to 30 years depending on their down payment and whether it's an insured mortgage (e.g., for first-time buyers). It's crucial to understand that while a longer amortization period can reduce your monthly payments, it significantly increases the total interest you'll pay over time. We'll help you find the optimal balance for your financial situation. 

Home Equity Line of Credit (HELOC): A Home Equity Line of Credit, or HELOC, lets you unlock the value you've built in your property. It functions like a flexible credit line, using your home as security, allowing you to borrow and repay funds as needed. Typically, you can access up to 65% of your home's purchase price or appraised value. This makes a HELOC an excellent option for financing home improvements, unexpected expenses, or other significant outlays, with the convenience of an accessible credit facility. 

 Mortgage: A mortgage is a long-term loan provided by a financial institution (like a bank or credit union) to help you finance the purchase of a property, whether it's a house, condo, or other real estate. What makes it a mortgage is that the property itself serves as security for the loan. This legal agreement gives the lender the right to take possession of the property if you fail to meet your repayment obligations. It's the cornerstone of homeownership for most Canadians. 

Open Mortgage: An open mortgage offers maximum flexibility, allowing you to pay off your mortgage in part or in full at any time without incurring a prepayment penalty. While open mortgages typically come with a slightly higher interest rate than closed mortgages, they are ideal if you anticipate making large lump-sum payments, selling your home, or want the freedom to refinance or switch lenders without penalty before your term ends. 

 Closed Mortgage: A closed mortgage is defined by its fixed term, offering borrowers the benefit of predictable payments and often the most attractive interest rates available. The trade-off is a commitment to that term; if you wish to pay off the mortgage completely before it matures, or exceed your predefined prepayment limits, a penalty will typically apply. Many lenders, however, build in convenient prepayment options, such as allowing you to pay down a percentage (e.g., 10-20%) of the original principal each year without penalty. This option is particularly well-suited for homeowners who value consistent budgeting and do not foresee large, unscheduled principal payments during their mortgage term. 

 High-Ratio Mortgage: A mortgage where your down payment is less than 20% of the home's purchase price or appraised value (meaning the loan amount is more than 80%). In Canada, these mortgages are required by law to be insured against default. While this insurance protects the lender, its cost is passed on to the borrower. 

 Conventional Mortgage: A conventional mortgage is a home loan where your down payment is 20% or more of the property's purchase price or appraised value. Unlike high-ratio mortgages, a conventional mortgage does not require mortgage default insurance (like CMHC insurance) because the larger down payment means less risk for the lender. This can save you the cost of the insurance premium. 

Canada Mortgage and Housing Corporation (CMHC): CMHC is Canada's national housing agency, a Crown corporation. Its primary role in mortgages is to provide mortgage loan insurance, which is required for mortgages where you have less than a 20% down payment. These are referred to as "high ratio" mortgages. This insurance protects lenders and allows more Canadians to achieve homeownership with a smaller down payment. CMHC also plays a key role in housing research and promoting affordable housing across the country. 

Credit Bureau / Credit Scoring: Essential to mortgage qualification, your credit profile is managed by Credit Bureaus (such as Equifax and TransUnion here in Canada). These bureaus compile a detailed record of your past borrowing and repayment behaviour. From this data, a numerical Credit Score is generated, which is a snapshot of your creditworthiness. A strong credit score signals to lenders that you are a reliable borrower, directly impacting the mortgage rates and terms available to you. 

 Mortgage Term: Your mortgage term is the duration of your current mortgage agreement, usually between 6 months and 10 years in Canada. For fixed-rate mortgages, your interest rate is locked in for this entire term, providing payment stability. For variable-rate mortgages, while the term remains fixed, your interest rate will fluctuate with the market. At the end of your term, you'll have the opportunity to renew your mortgage or explore new financing options with any lender. 

Prepayment Privileges: While closed mortgages offer stable rates, they aren't entirely inflexible. "Prepayment privileges" are the specific allowances within your mortgage contract that permit you to make additional payments on your principal without triggering a penalty. These typically include:

• Increasing your regular payment: By a set percentage (e.g., 10% to 20%) annually.
• Making lump-sum payments: An annual payment of a certain percentage (e.g., 10% to 20%) of your original mortgage amount.

Leveraging these privileges strategically can significantly reduce your amortization period and the total interest you pay over the life of your mortgage.

Portable Option (Mortgage Portability): This valuable feature, when included in your mortgage, allows you to transfer your existing mortgage (with its current interest rate and terms) from your current home to a new one if you decide to move. It's a significant advantage because it helps you avoid prepayment penalties that would otherwise apply, potentially saving you substantial costs when selling and buying property before your term ends. 

Assumable Option: An assumable mortgage means that a homebuyer can take over the seller's existing mortgage, including its remaining balance, current interest rate, and terms. This can be a significant advantage for a buyer, especially when market interest rates are higher than the seller's rate, potentially offering substantial savings. For sellers, it can be a unique selling point for their property. However, the new buyer must still qualify with the original lender. 

 Closing Date: This is the official date when the ownership of a property is legally transferred from the seller to the buyer. On this day, all final legal and financial transactions are completed, including the mortgage funds being advanced and the keys to your new home being handed over. It's the day you officially become the homeowner. 

 Deposit: An initial sum of money provided by a buyer to the seller, held in trust, to demonstrate serious intent to purchase a property. This amount forms part of your down payment. 

 Co-signer: An individual who signs a mortgage application alongside the primary borrower, agreeing to be equally responsible for the debt. They will be listed on both the mortgage and the property title. A co-signer's income and credit history are used to help the primary borrower qualify for the mortgage, and they are legally obligated to make payments if the primary borrower defaults. 

 Guarantor: A person who formally pledges to cover a mortgage debt should the primary borrower fail to meet their repayment obligations. This is a significant financial commitment. A key difference from a co-signer is that a guarantor's name appears on the mortgage agreement but not on the property's title. Their financial strength helps secure the loan, but they do not gain an ownership interest in the home. 

 Appraisal: An independent, professional assessment of a property's market value, conducted by a licensed appraiser. Lenders require an appraisal to ensure the home's value supports the mortgage amount being requested. This assessment considers factors like the property's condition, size, features, and recent sales of comparable homes in the area. 

 Bridge Financing: A short-term loan that helps you "bridge" the financial gap when you've purchased a new home but haven't yet sold your current one. This temporary financing covers the down payment on your new property until the sale of your existing home closes, ensuring a smooth transition between properties. 

 Prime Rate: This is the benchmark interest rate that Canadian financial institutions, including major banks, use as a basis for pricing variable-interest loans, such as variable-rate mortgages, lines of credit, and some personal loans. The Prime Rate is heavily influenced by the Bank of Canada's key policy interest rate; when the Bank of Canada adjusts its rate, the Prime Rate usually moves in tandem. 

 Principal: In the context of a mortgage, the principal refers to the original amount of money you borrowed to purchase your home. It's the portion of your loan that you are gradually paying back, separate from any interest charges. Each mortgage payment you make contributes towards reducing this principal balance. 

 Home Equity: This refers to the portion of your home's value that you truly own outright. It's calculated by subtracting the outstanding balance of your mortgage (and any other loans secured by the property) from your home's current market value. Your home equity increases as you pay down your mortgage and/or as your property's value appreciates. 

 Second Mortgage: When you need to access a significant amount of the equity built up in your home, but don't want to break your existing first mortgage, a second mortgage can be a strategic option. This is a separate loan secured against your property, supplementary to your primary mortgage. It allows you to borrow additional funds using your home as collateral. While second mortgages typically have higher interest rates due to their subordinate position, they offer a flexible solution for a range of financial goals, from major renovations to debt restructuring, without having to refinance your entire primary mortgage. 

 Switch (Mortgage): A mortgage switch (or transfer) occurs when you move your existing mortgage from one lender to another without changing its terms (like the outstanding balance or amortization period). This typically happens at renewal time and can often be done without legal fees, allowing you to take advantage of better interest rates or features offered by a new financial institution 

 Private Mortgage: These are loans provided by individuals or private companies, rather than traditional banks or large financial institutions. Often used as a short-term solution, private mortgages can be an option for borrowers who may not qualify for conventional financing due to unique financial situations, credit challenges, or properties that don't meet standard lending criteria. They typically come with higher interest rates and fees. 

 Construction Mortgages: If you're planning to build a custom home in Mississauga or extensively renovate an existing property, a construction mortgage is the specialized financing you'll need. Instead of receiving the full loan amount upfront, funds are disbursed in a series of predetermined installments, known as "draws." These draws are released at key milestones during the construction process (e.g., foundation complete, framing, lock-up, completion), contingent on professional inspections that verify the work's progress. 

 Mortgage Discharge: This is the legal process of removing a mortgage from a property's title once the loan has been fully paid off. When your mortgage is discharged, it signifies that the lender no longer has a claim against your home, and you officially own the property free and clear. Your lawyer handles this registration process, and the lender typically charges a small fee for issuing the discharge. 

 Agreement of Purchase and Sale (APS): This is the legally binding contract between a buyer and a seller that outlines all the terms and conditions of a real estate transaction. In Ontario, the APS specifies details like the purchase price, closing date, financing conditions, and any inclusions or exclusions, serving as the foundational document for the entire home buying process.