Mortgages are big investments that require financial stability and dedication. Start the process on the right foot by familiarizing yourself with different types of mortgages and rates, and learn helpful facts that will prepare you to be a responsible home buyer.

Types of mortgages

Closed mortgages: Closed mortgages have prepayment options of up to 20% of the original mortgage amount. If you decide to pay out, renegotiate or refinance before the end of the term of a closed mortgage, prepayment costs will be applied.

Open mortgages: An open mortgage can be repaid at any time throughout the term, either in full or partially without any prepayment costs. Provides flexibility until you are ready to lock into a closed term.

Convertible mortgages: A convertible mortgage is similar to a closed mortgage, but gives you the option of converting to a longer term, closed mortgage at any time without prepayment costs. With this option you can make an annual prepayment up to 10% of the original mortgage amount.

Types of mortgage interest rates

Fixed rate mortgages: A fixed interest rate remains the same throughout the entire term. This option allows your payment to remain constant so you know exactly how much you will pay every month and what amount you will have paid off at the end of the term.

Variable rate mortgages: A variable interest rate will fluctuate with the bank Prime rate throughout the mortgage term. This impacts the amount of principal that you pay off each month as your mortgage payment will remain constant.

Mortgage amortization and mortgage term

Amortization period: The estimated number of years it will take you to pay off your mortgage. Amortization periods are often 15, 20, or 25 years long.

Mortgage term: A mortgage is usually amortized over a long period, made up of shorter mortgage terms. Your term is your current contract to pay your mortgage under the terms you’ve negotiated with your lender. After the term expires, the mortgage can be renegotiated.

Mortgage down payment options

Conventional mortgages: The down payment is at least 20% of the purchase price.

High-ratio mortgages: The down payment is less than 20% of the purchase price. You are required to have at least a 5% down payment when buying a house. High-ratio mortgages must be insured by a third party such as the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada or Canada Guaranty and require you to pay an insurance premium.

Mortgage payment options

Mortgage payments can be made weekly, bi-weekly, semi-monthly and monthly.


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