Understanding Mortgages
10 min read
A mortgage is a loan secured against your property. Understanding the key terms and options available in Canada will save you thousands of dollars over the life of your loan.
Fixed vs. Variable Rate Mortgages
Fixed rate: Your interest rate is locked for the entire term (e.g. 5 years). Predictable payments — good for risk-averse buyers or rising-rate environments.
Variable rate: Rate fluctuates with the Bank of Canada's prime rate. Has historically been cheaper over time, but payments can rise significantly when rates increase.
Hybrid: Splits your mortgage between fixed and variable portions.
The Mortgage Stress Test
Canadian rules require you to qualify at the higher of: • Your contract rate + 2%, or • 5.25% (the federal minimum qualifying rate)
This ensures you can still afford your mortgage if rates rise. It applies to all federally regulated lenders — even if you put 20%+ down.
Getting Pre-Approved
Pre-approval (not just pre-qualification) shows sellers you're a serious buyer and locks in a rate for 90–120 days. To get pre-approved, you'll need: proof of income (T4s, NOAs), employment letter, bank statements, and a credit check.