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MORTGAGE INFORMATION

WHAT IS A MORTGAGE?

A mortgage is a very large loan in order for you to buy a home. If you do not have the full asking price of the home in your bank account, then you will need to take out a mortgage and pay it back each month over a set number of years. Some mortgages are 10 years, while others can be 25 years. 

Rates can vary quite a bit depending on who your mortgage lender is and their associated terms. Shopping around is a smart move when you are looking for financial help for the largest purchase you’ll likely ever make. If you are unsure where to start the hunt, I have a list of trusted and reliable lenders I am happy to share with you. 

keys on mortgage papers with toy red house

WHAT IS THE DIFFERENCE BETWEEN A FIXED-RATE AND VARIABLE-RATE MORTGAGE?

A fixed-rate mortgage contains monthly payments that do not change over time. The interest rate stays the same. A variable-rate mortgage contains monthly payments that can go up or down depending on the lender’s prime interest rate. 

A fixed rate mortgage has the benefit of predictable monthly payments, which can make it easier for budgeting and financial planning. The downside is that if the lender’s prime interest rate falls below the rate you have locked in, then you are paying more than you should. This is a safer option and often has a slightly higher interest rate than a variable rate mortgage.

A variable rate mortgage has the benefit of potentially reducing the amount of interest you pay with each payment. The downside is that if the interest rate skyrockets, there is nothing you can do except pay your mortgage payment or risk losing your home. This is a riskier option, which may start off with a lower interest rate compared to a fixed rate mortgage.

couple working real estate professional on fixed rate mortgage

WHAT IS MORTGAGE LOAN INSURANCE & DO I NEED IT?

Mortgage loan insurance is required for any down payments that are less than 20% of the purchase price. This is insurance for your mortgage lender, not you. They are lending you a larger amount of money so in order to protect them, they require you to have insurance. So, if your down payment is less than 20% then you need mortgage loan insurance.

MORTGAGE RESOURCES

On our website, we have a mortgage calculator you can use to estimate what your mortgage payments will look like. The Government of Canada has additional mortgage resources including terms, preapprovals, qualifications, and more.

MLS® property information is provided under copyright© by the Vancouver Island Real Estate Board and Victoria Real Estate Board. The information is from sources deemed reliable, but should not be relied upon without independent verification.