Frequently Asked Questions
Straight answers to the questions we hear most.
How much down payment do I actually need?
Canada uses a tiered minimum down payment based on the purchase price — the minimum percentage rises as the price of the home goes up, and once you’re at 20% or more you no longer need mortgage default insurance. The exact thresholds are adjusted from time to time, so confirm current numbers with a lender before assuming.
Fixed or variable — which is better?
Neither is universally better. It depends on your tolerance for payment changes, how long you plan to keep the mortgage, and your own read on where rates are headed. Both are covered in more detail in our Rates & Market Trends articles.
What is the mortgage stress test, and does it apply to me?
It applies to nearly all mortgage applicants in Canada. You need to qualify at a higher rate than you’ll actually pay, as a buffer in case rates rise — which can lower how much you’re approved for compared to the rate you’re quoted.
What actually happens at renewal?
Your term ends and you sign a new agreement — with your current lender or a different one. Your existing lender may send a renewal offer that isn’t their most competitive rate, so it’s worth comparing before signing.
Can I break my mortgage before the term ends?
Usually, yes — but it comes with a prepayment penalty. Fixed-rate penalties are typically calculated using an interest rate differential and can be substantial; variable-rate penalties are often a flatter, smaller charge.
What’s the difference between amortization and term?
Amortization is the total time to pay off the mortgage (often 25–30 years). Term is the length of your current agreement with a lender (often 1–5 years) — you’ll go through several terms over one amortization.
Do I need 20% down to avoid mortgage default insurance?
Yes. Putting down less than 20% of the purchase price generally means mortgage default insurance (like CMHC) is required, with the premium usually added to your loan amount.
What is private lending, and when do people use it?
Private lending is financing from an individual or private company rather than a bank. It’s typically short-term and higher-cost, used by borrowers who don’t currently qualify with a traditional lender — self-employed applicants, bruised credit, or unique properties, for example.