Annual Income

This is the combined annual income for you and your co-borrower. Include all income before taxes, including base salary, commissions, bonuses, overtime, tips, rental income, investment income, alimony, child support, etc.

Down Payment

The typical rule of thumb is to pay 20 percent of the home's price as your down payment, although some mortgage loans require as little as 5 percent down. Your down payment reduces the total amount of your mortgage loan, so the more money you put down, the lower your payments will be - or the more expensive a house you can buy.

Other Monthly Debts

Include all monthly debt payments for of you and your co-borrower, including: minimum monthly required credit card payments, car payments, student loan payments, alimony/child support payments, any house payments (rent or mortgage) other than the new mortgage you are seeking, rental property maintenance, and other personal loans with periodic payments.

Do NOT include: credit card balances you pay off in full each month, existing house payments (rent or mortgage) that will become obsolete as a result of the new mortgage you're seeking, or the new mortgage you're seeking.

Loan Term

Your loan program can affect your interest rate and monthly payments. Some common loan terms are 1 Year, 3 Years and 5 Years with loan ammortizations at 25 or 30 years.

Loan Type

There are two common types of mortgages in Canada - Variable Mortgage and Fixed Mortgage.

Variable Mortgages
1. Definition: A variable mortgage rate fluctuates with the market interest rate, known as the 'prime rate'. This means your mortgage payments can vary throughout the term.
2. Interest Rate: The rate is usually quoted as "prime minus" a certain percentage, e.g., prime - 0.5%. This means the rate is 0.5% lower than the market's prime rate.
3. Payment Flexibility:
    * Adjustable-Rate Mortgages (ARMs): The monthly payment amount can change as interest rates fluctuate.
    * Fixed Payment Variable Rate Mortgages: The monthly payment remains constant, but the proportion of payment going towards interest versus principal can vary.
4. Benefits:
    * Historically, variable rates have proven cheaper over time.
    * Greater flexibility to refinance or pay off the mortgage without hefty penalties.
5. Risks:
    * Uncertainty in monthly payment amounts (if it’s an ARM).
    * Potential for higher payments if interest rates rise significantly.
6. Suitability: Best for those who can manage the risk of fluctuating payments and are looking to save on interest costs in the long term.

Fixed Mortgages

1. Definition: A fixed mortgage rate means the interest rate is locked in and does not change for the term of the mortgage.
2. Interest Rate: The rate is established at the beginning and remains constant throughout the term, regardless of market conditions.
3. Payment Consistency:
    * The monthly payment amount (principal and interest) remains the same.
    * Easier to budget and plan financials as the payment is predictable.
4. Benefits:
    * Financial predictability and stability.
    * Immunity to rising interest rates, offering peace of mind.
5. Risks:
    * Typically, higher interest rates compared to variable rates.
    * Higher penalties for refinancing or breaking the mortgage before the end of its term.
6. Suitability: Ideal for those who prefer consistent payments for budgeting or cannot risk an increase in interest rates.

Choosing Between Variable and Fixed

The decision between a variable and fixed mortgage depends on:
* Risk Tolerance: Comfort with the possibility of rising rates (variable) versus the need for stability (fixed).
* Financial Situation: The ability to manage potentially fluctuating payments.
* Market Outlook: Expectations about where interest rates are headed in the future.
* Long-term Plans: Duration you plan to stay in the home and the likelihood of refinancing.

Other Considerations

* Mortgage Terms: The length of time the mortgage agreement is in effect, typically ranging from 1 to 5 years, but can be longer.
* Amortization Period: The total time it takes to pay off the mortgage in full, often 25 or 30 years in Canada.
Conclusion
Ultimately, the choice between a variable and fixed mortgage in Canada should align with your personal financial situation, risk tolerance, and future plans. It's often beneficial to consult with a financial advisor or mortgage broker to make an informed decision tailored to your specific needs.

Interest Rate

This field is pre-filled with the current average mortgage rate. Your actual rate will vary based on factors like credit score and down payment.

Property Tax

The mortgage payment calculator includes estimated property taxes based on the home's value. You can edit this in the advanced options.

Home Insurance

Home insurance or homeowners insurance is typically required by lenders, depending on the loan program. You can edit this number in the mortgage calculator advanced options.

STRATA Fees

A Strata Fee is an amount of money that must be paid monthly by owners of stratafied residential properties, and Strata management company collect these fees to assist with maintaining and improving properties in the association.

Debt-to-Income (DTI)

Your DTI is expressed as a percentage and is your total "minimum" monthly debt divided by your gross monthly income. The conventional limit for DTI is 36% of your monthly income, but this could be as high as 41% for FHA loans. A DTI of 20% or below is considered excellent.