SALT SPRING ISLAND REAL ESTATE
with John Cade

MORTGAGE CALCULATOR 1

MORTGAGE CALCULATOR 2

MORTGAGE CALCULATOR 3

ONLINE CURRENCY CONVERTER

 

MORTGAGES IN CANADA

General Restrictions

In Canada, the federal legislation called "The Bank Act", restricts mortgage lenders from mortgaging a property for more than 75% of the appraised value of a property unless is an insured mortgage.

In general a financial institution will not lend more than 75% of the lowest of either the purchase price or the appraised value unless it is insured. Foreign purchasers are usually restricted to 65% of either of these values. Any mortgage is of course requires that the purchaser qualifies financially.

Insured Mortgages

Canadian purchasers who qualify financially can apply for a CMHC insured mortage (Canadian Housing and Mortgage Corporation). This allows the purchaser to borrow over 75% of the property value by insuring the "High Risk" mortgage against default. This will entail some fees and higher interest rates. Talk to your mortgage provider for details.

CMHC applies to property with houses only, it does not apply to bare land unless a construction loan will be eventually paid out by a CMHC mortgage.

Ammortization vs. Term

In Canada, mortgages are divided into  two choices for length.

The Ammortization Period is the total length of the mortgage over which payements are calculated. 25 years is generally the maximum period.

The Term is the period of time the mortgage holder will gaurantee the interest rate for.

At the end of the term the rate will be adjusted according to negotiations with the lendor. Usually the longer the term, the higher the interest rate. If your crystal ball tells you that rates will go down, take a shorter term or go the other way if they will go up.