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Getting Your First Mortgage
In Canada, the standard mortgage amortization period is 25 years, which is the time required to fully repay the loan. However, payments are typically structured in five-year terms, meaning borrowers must renew their mortgage every five years. While shorter amortization periods allow for quicker repayment, longer periods result in lower monthly payments but higher overall costs due to interest.
Most mortgages come with a five-year term, during which the agreed-upon interest rate remains fixed. At the end of each term, borrowers have the option to renew their mortgage, negotiate new terms, or refinance.
Borrowers can choose between two types of mortgages:
✅ Open Mortgage – Allows early repayment of the loan without penalties, providing greater flexibility.
✅ Closed Mortgage – Limits prepayment options but usually offers a lower interest rate.
To accelerate repayment and reduce interest costs, borrowers can opt for biweekly payments instead of monthly payments. A biweekly schedule means making a half-payment every two weeks, resulting in 26 payments per year instead of 24. This strategy shortens the loan term and reduces total interest costs.
Some mortgages also allow homeowners to build up a cash account. As the principal is paid down, these funds can be accessed for future borrowing without additional fees, effectively acting as a revolving loan.
Most Canadian mortgages are portable, meaning if a homeowner moves before their term ends, they can transfer their mortgage to a new home. If the new property is more expensive, they can take out an additional loan to cover the difference.
Homeowners’ Association (HOA) Fees
Homeowners’ Association (HOA) fees are monthly payments required from homeowners in certain communities, such as condominiums or gated neighborhoods. These fees cover:
✔ Master insurance
✔ Exterior and interior maintenance
✔ Landscaping
✔ Water and sewer services
✔ Garbage collection
HOA fees vary depending on the property and location but are essential for maintaining shared community resources.