Mortgages
You’ve found the right house. Let’s make it your home.
What is a mortgage?
Since most people don’t have the cash available for a home, a mortgage is a loan that can help cover the balance. When you take out a mortgage you agree to pay back the sum at an agreed interest rate.
Your next property
Plan for retirement with a mortgage that can change with you.
Refinancing your home
Help free up money for renovations or other investments.
What kinds of mortgages are available?
There are 4 basic types of mortgages available with Canada Life. Each has unique features designed to help meet different needs.
| Fixed-rate mortgage | Variable-rate mortgage |
Lock and roll mortgage | Adjustable-rate mortgage | |
|---|---|---|---|---|
| Main features | Set interest rate Fixed payments | Fixed term and changing interest rate Same payment for the length of the term Can be converted to another term with Canada Life at any time |
Interest rates and payments automatically adjust every 6 months | Interest rates and payments automatically adjust every month Minimize your monthly payment |
| Differences | Protected from rising interest rates Fixed payments | Benefit from decreasing rates The portion of the payment amount that goes towards principal versus interest will change as our prime rate changes | Rate is locked in every 6 months Best of both worlds Combines the benefits of a long-term mortgage (5 years) with the benefits of a short-term mortgage rate | Rate is adjusted every month Take advantage of changing interest rates |
| Payment options | Accelerated weekly Accelerated bi-weekly Semi-monthly Monthly | Accelerated weekly Accelerated bi-weekly Semi-monthly Monthly | Accelerated weekly Accelerated bi-weekly Semi-monthly Monthly | Accelerated weekly Accelerated bi-weekly Semi-monthly Monthly |
| Mortgage term | Flexible options up to 10 years | 5 years | 5 years | 5 years |
| Ideal if | You think interest rates will increase over time You like the idea of having predictable payments | You want to take advantage of changing interest rates, but want a fixed payment amount for the entire term of the mortgage | You want a long-term mortgage with the ability to take advantage of short-term rates You’re comfortable with the possibility of semi-annual payment adjustments over the term | You want the lowest available mortgage payment You’re comfortable with your monthly payments changing over the term |
How much can you qualify for?
Your mortgage is determined by a formula that includes these factors:
Household annual income
Includes your household’s gross annual income.
Monthly expenses
Includes heat, property taxes and monthly maintenance fees.
Debts
Includes car payments, personal loans and credit card balances.
Down payment
Money saved for your initial payment on the cost of your home.
Qualifying interest rates
You must pass the stress test, along with meeting other criteria.
How much can you afford?
Try our mortgage affordability calculator to determine your maximum home purchase price.
Mortgage basics
Before we dive deeper into the world of mortgages, let’s go over a few of the key concepts to help you make informed decisions.
Open mortgage
An open mortgage can be repaid in part or full at any time without having to pay a penalty. Because of this flexibility, open mortgage rates tend to be higher than the rates available through closed mortgages. It’s ideal if you’re confident you can pay off your mortgage in the near term.
Closed mortgage
Choosing a closed mortgage means you’re essentially saying that you have no plans to pay off your mortgage in full, or more than prepayment privileges will allow during your mortgage term. A closed mortgage will offer a lower interest rate than an open mortgage, giving you the opportunity to pay less in interest.
Down payment
Your down payment is the amount of upfront money that you put towards the purchase of a home. A larger down payment could mean having a more manageable mortgage. The minimum down payment is 5% but if you can put down 20% or more, you’ll qualify for a conventional mortgage and avoid paying mortgage insurance.
Amortization period
The amortization period, up to 30 years at Canada Life™ on conventional mortgages with a 20% down payment, is the length of time available to you to pay off your mortgage. For high-ratio mortgages, the maximum amortization is 25 years. Longer amortization periods mean lower payments, but they increase the total amount of interest you pay. A shorter amortization period will lead to big interest savings. Plus, you could become mortgage-free sooner.
Mortgage term
The mortgage term is the length of time you commit to a particular type of mortgage. It can range from 6 months to 10 years. You may want to choose a longer-term mortgage when interest rates are low to keep your payments the same. A shorter-term strategy works best if interest rates are either high or falling, so you can renew at a lower rate.
Payment options
Choose monthly, semi-monthly, accelerated bi-weekly or accelerated weekly payments with Canada Life mortgages. Accelerated payments will save you interest over the length of your mortgage, and could mean you’ll be mortgage-free sooner. Also, our prepayment privileges allow you to make lump sum payments towards your principal to build equity in your home faster and substantially reduce interest.
What’s the best payment for you?
Use our mortgage payment calculator to discover which options work best for you.
Want to pay off some or all of your mortgage?
If you have an open mortgage, you can prepay a large amount of your mortgage or renegotiate to take advantage of lower interest rates at any time. It gets a little more complicated if you have a closed mortgage.
Prepayment privileges
Your closed mortgage allows you to pay down 15% of your outstanding principal balance each year, without a prepayment charge.
Making a larger prepayment
You can pay down more than 15% but there’s a charge because you are paying off your mortgage faster than your original contract specified.
Is it worth making a larger prepayment?
In some cases you may benefit from paying the prepayment charge because you could save money in the long run. Our prepayment calculator can help you find out if it’s worth it for you.
