|CMHC||$13,950||CMHC is mandatory for you|
Land Transfer Tax
I am a first-time homebuyer
Your mortgage’s payment frequency is how often you will make mortgage payments.
Your mortgage payment frequency can be:
There are also accelerated payment frequency options:
There are 26 bi-weekly payments in a year. This is because there are 52 weeks in a year. Since a payment is made every two weeks, 52 weeks divided by 2 means that there will be 26 bi-weekly mortgage payments in a year.
= 26 bi-weekly payments in a year
Another way to look at this is to see how often a bi-weekly payment is made. Bi-weekly payments are made every 14 days. Since there are 365 days in a year, 365 days divided by a payment made every 14 days would give us 26 bi-weekly payments every year.
= 26 bi-weekly payments in a year
|Payment Frequency||Payments Per Year||Equivalent to Monthly Payments per Year|
|Monthly||12||12 Monthly Payments|
|Semi-Monthly||24||12 Monthly Payments|
|Bi-Weekly||26||12 Monthly Payments|
|Accelerated Bi-Weekly||26||13 Monthly Payments|
|Weekly||52||12 Monthly Payments|
|Accelerated Weekly||52||13 Monthly Payments|
Semi-monthly mortgage payments are not the same as bi-weekly mortgage payments.
With a semi-monthly mortgage payment, your mortgage payment will be made two times per month. For example, you might make a payment on the 1st of the month, and another payment on the 15th of the month.
Semi-monthly mortgage payments split every month into two. This makes two payments every month. With 12 months in a year, you'll be making 24 semi-monthly mortgage payments every year. You’ll simply divide a regular monthly mortgage payment into two.
Bi-weekly payments do not split months into two. Instead, bi-weekly mortgage payments are made every two weeks, which is considered to be every 14 days. While two bi-weekly payments will be made for 28 days, a month has either 30 days or 31 days, except for February. Over a year, this means that you’ll be making 26 bi-weekly mortgage payments, to account for there being 52 weeks in a year.
Bi-weekly mortgage payments have two extra payments every year, equivalent to one month of mortgage payments, over the amount of payments for a monthly or semi-monthly mortgage payment.
Accelerated bi-weekly and accelerated weekly mortgage payments also gives you the equivalent of an extra monthly mortgage payment every year, but it’s different from non-accelerated bi-weekly and weekly payments in that the mortgage payment amount is not reduced.
Non-accelerated bi-weekly and weekly mortgage payments are based on what a monthly mortgage payment would have been. For non-accelerated bi-weekly, you would calculate the payment by taking the monthly mortgage payment, multiplying it by 12 to get the amount to be paid every year, and then simply dividing it by 26 bi-weekly payments. You’ll still be paying the same total amount every year as you would with a monthly mortgage payment. You’ll simply be paying it over two extra payments, which means each non-accelerated bi-weekly payment is smaller.
The same thing happens with non-accelerated weekly mortgage payments. To calculate it, you'll also multiply the monthly mortgage payment by 12 to get the amount that you'll need to pay per year, and then divide it by 52 weeks. A weekly payment is made every 7 days, and it being non-accelerated means that you will still be paying the equivalent amount of a monthly mortgage payment, just over smaller individual payments.
Accelerated mortgage payments are the payment frequency options that will allow you to pay off your mortgage faster and save you potentially thousands in mortgage interest costs.
With accelerated bi-weekly payments, you'll still make a payment every 14 days (two weeks), which adds up to 26 bi-weekly payments in a year. The part that makes it accelerated is that instead of calculating how much an equivalent monthly mortgage payment would add up to in a year, and then simply dividing it by 26 bi-weekly payments, accelerated bi-weekly payments does the opposite.
To find your accelerated bi-weekly payment amount, you'll divide the monthly mortgage payment by two. Note that there are 12 monthly payments in a year, but bi-weekly payments are equivalent to 13 monthly payments. By not adjusting for the extra monthly payment by taking the total annual amount of a monthly payment frequency, an accelerated bi-weekly frequency gives you an extra monthly payment every year. This pays off your mortgage faster, and shortens your amortization period.
The same calculation is used for accelerated weekly payments. To find your accelerated weekly payment amount, you'll divide a monthly mortgage payment by four.
There isn't a large difference between paying your mortgage weekly or monthly, if we're looking at non-accelerated weekly payments. That's because the total amount paid per year is the exact same for both payment frequencies. You'll just pay a smaller amount with a weekly payment, but you'll be making more frequent payments. The real difference is when you choose accelerated weekly payments. Accelerated payments can shave years off of your amortization, and can save you thousands of dollars.
While it will depend on your specific situation, here are some general guidelines:
Let's compare mortgage payment frequencies by looking at a $500,000 mortgage in Ontario with a 25-year amortization, and assume that it has a fixed mortgage rate of 1.5% for a 5-year term.
The monthly mortgage payment would be $2,000. Now, let’s see how much it would be with semi-monthly, bi-weekly, and weekly mortgage payments.
|Payment Frequency||Payment Formula||Number of Payments per Year||Mortgage Payment Amount||Total Mortgage Payments per Year|
Monthly, semi-monthly, bi-weekly, and weekly all add up to the same amount paid per year, at $24,000 per year. For accelerated payments, you’re paying an extra $2,000 per year, equivalent to an extra monthly mortgage payment. This extra mortgage payment will pay down your mortgage principal faster, meaning that you’ll be able to pay off your mortgage quicker.
This mortgage calculator allows you to choose between monthly and bi-weekly mortgage payments. Selecting between them lets you easily compare how it can affect your mortgage payment, and the amortization schedule below the Canada mortgage calculator will also reflect the payment frequency.
The down payment is the amount you will pay upfront to obtain a mortgage. Making a larger down payment will reduce the amount that you will need to borrow, which means that your mortgage payments will be smaller.
The down payment that you enter into the mortgage calculator will affect the beginning balance of your mortgage. If you choose a down payment that is less than 20%, then the mortgage payment calculator will include the cost of CMHC insurance premiums into your mortgage by adding it to your principal balance.
Your minimum down payment depends on the purchase price of your property.
Yes. If your down payment is below 20% of the purchase price,
For more information, see the section on CMHC insurance below.
A mortgage with a down payment below 20% is known as a high-ratio mortgage mortgage. The term ratio refers to the size of your mortgage loan amount as a percentage of your total purchase price. All high-ratio mortgages require the purchase of CMHC insurance, since they generally carry a higher risk of default.
Your mortgage’s amortization period is the length of time that it will take to pay off your mortgage. A shorter amortization period means that your mortgage will be paid off faster, but your mortgage payments will be larger. Having a longer amortization period means that your mortgage payments will be smaller, but you’ll be paying more in interest.
In the mortgage calculator above, you can enter any amortization period ranging from 1 year to as long as 30 years. Some mortgages in Canada, such as commercial mortgages, allow an amortization of up to 40 years.
Here are some general guidelines for choosing an amortization period for your mortgage:
The term of your mortgage is the length of time that your mortgage contract is valid for. Your mortgage contract includes your mortgage interest rate for the term. At the end of your mortgage term, your mortgage expires. You will need to renew your mortgage for another term or fully pay it off. Your mortgage interest rate will most likely change at renewal.
This mortgage calculator uses the most popular mortgage terms in Canada: the one-year, two-year, three-year, four-year, five-year, and seven-year mortgage terms.
The most common term length in Canada is 5 years, and it generally works well for most borrowers. Lenders will have many different options for term lengths for you to choose from, with mortgage rates varying based on the term length. Longer terms commonly have a higher mortgage rate, while shorter terms have lower mortgage rates.
You will need to either renew or refinance your mortgage at the end of each term, unless you are able to fully pay off your mortgage.
Your mortgage’s interest rate is shown as an annual rate, and it determines how much interest you will pay based on your mortgage’s principal balance.
You’re able to select between variable and fixed mortgage rates in the mortgage calculator above. Changing your mortgage rate type will change the mortgage terms available to you.
Your regular mortgage payments include both principal payments and interest payments. Having a higher interest rate will increase the amount of interest that you will pay on your mortgage. This increases your regular mortgage payments, and makes your mortgage more expensive by increasing its total cost. On the other hand, having a lower mortgage interest rate will reduce your cost of borrowing, which can save you thousands of dollars.
Variable interest rates change based on your lender’s prime rate, which is controlled by your lender. If your lender increases their prime rate, then your variable interest rate will increase.
Lender’s will usually only change prime rates to match movements in the Bank of Canada’s policy interest rate. If the lender’s funding cost increases, such as through the Bank of Canada increasing their policy rate, then the lender will in turn increase variable mortgage rates. Prime rates are generally similar or identical between different lenders, with all Canadian banks currently having a prime rate of 2.45% as of July 2021.
Your variable mortgage rate is priced at a discount or a premium to your lender’s prime rate.
A variable rate lets you benefit from decreases in market interest rates, but it will cost you more if interest rates rise. Fixed rates are a better option if interest rates will rise in the future, but it can lock you in at a higher rate if rates fall in the future.
Of course, it’s not possible to exactly predict future interest rates, but a 2001 study found that variable interest rates outperform fixed interest rates up to 90% of the time between 1950 and 2000. If you’re comfortable with taking on risk, a variable mortgage rate can result in a lower lifetime mortgage cost.
Many mortgage lenders offer flexible mortgage payment options, such as the ability to skip a payment or to defer your mortgage payments. Most of Canada’s major banks allow you to skip a mortgage payment, with the exception of CIBC and National Bank.
Generally, you won't be able to skip mortgage payments for mortgages that are insured. Having a CMHC-insured mortgage means that your amortization cannot go over 25 years. For insured mortgages, you'll need to have made a mortgage prepayment that would be equivalent to the amount that you want to skip for you to be able to skip a mortgage payment in the future.
Lenders also have conditions in order to be able to skip a mortgage payment. Your mortgage must not be in arrears, and your current mortgage balance must not be more than your original mortgage balance at the start of your term.
Skipping a mortgage payment doesn't mean that the lender is giving it to you for free. Skipping a payment just means that you'll be paying it back later. When you skip a mortgage payment, interest that would have been charged would be added to your mortgage balance instead of being paid off. This increases your mortgage balance, which means that you'll be paying interest on your added interest.
If you don’t repay the skipped mortgage amount plus accumulated interest, then you’ll be paying interest on the interest for the rest of your mortgage’s amortization. This could make skipping a mortgage payment a very costly option to take. Fortunately, many lenders allow you to repay your skipped payments without any prepayment penalties.
|RBC||Once Every 12 Months Or If Prepayments Were Made|
|TD||Once Every Calendar Year Or Up to Four Months if Prepayments Were Made|
|BMO||Up to Four Months Every Calendar Year|
|Scotiabank||If Prepayments Were Made|
RBC allows you to skip one month's worth of mortgage payments once every 12 months. If your mortgage payment frequency is not monthly, then they will need to be skipped consecutively. For example, if you have bi-weekly or semi-monthly payments, then you will be able to skip two consecutive mortgage payments every 12 months. For weekly payments, you'll be able to skip four consecutive weekly payments.
If you have made extra mortgage payments in the same term, you'll be able to skip an equivalent amount of mortgage payments. For example, if you've made two double-up payments, equivalent to two extra monthly payments, then you'll be able to skip two months' worth of mortgage payments.
TD lets you skip a monthly payment, or the equivalent of a monthly payment, once every calendar year. TD only allows you to skip a monthly payment four times throughout the life of your mortgage. For example, if your TD mortgage has an amortization period of 25 years, you won't be able to skip payments more than four times with TD over those 25 years.
TD lets you prepay in advance to skip more payments if needed. This "payment vacation" is allowed for up to four months at a time. For example, you've made four months worth of mortgage prepayments towards your TD mortgage. You'll now be able to skip four months of mortgage payments.
BMO lets you skip one months worth of mortgage payments every calendar year. BMO also has a Family Care Option that allows borrowers to skip four mortgage payments per calendar year to take care of your family, such as caring for a new baby or a sick family member.
Self-employed mortgage borrowers are not able to use BMO's Family Care Option. Borrowers that are receiving mortgage disability benefits from their mortgage insurance are also not able to skip mortgage payments.
Scotiabank’s Miss-a-Payment lets you skip mortgage payments if you have already prepaid an equivalent amount. This could be by making a lump-sum mortgage prepayment, by increasing your regular mortgage payments, or by matching a payment.
All of Canada’s major banks allow you to double-up or increase your mortgage payments to pay off your mortgage faster.
|Lender||Allows You to Double Mortgage Payment?||Increase Regular Mortgage Payment Amount By|
RBC lets you make a mortgage prepayment that is up to the amount of your regular mortgage payment during your regular payment date. The minimum amount for Double-Up payments is $100, and goes up to 100% of your regular payment amount. The Double-Up payment is used to pay your mortgage principal balance.
Scotiabank’s Match-a-Payment allows you to double your regular mortgage payment for any payment. You'll also be able to increase your mortgage payment by up to 15% once per year.
You can choose to increase your regular TD mortgage payments by up to 100% once every calendar year, up until the increase is equivalent to 100% of your regular mortgage payment. This allows you to double your regular payments.
BMO allows you to increase your regular mortgage payments by up to 20% once per calendar year, or up to 10% for BMO Smart Fixed Mortgages.
You can double your mortgage payments or increase it up to 100% at any time with CIBC.
National Bank lets you make an additional payment on top of your regular payment, which can be up to 100% of your regular payment amount, on each of your regular payment dates.
Prepaying your mortgage allows you to directly pay down your mortgage principal balance, allowing you to be mortgage-free sooner. Banks and mortgage lenders have limits on the amount of mortgage prepayments that you can pay per year for closed mortgages without being charged prepayment penalties. If you have an open mortgage, you won’t have any prepayment limit or charges.
|Lender||Annual Limit (% of original mortgage amount)|
|CIBC||10% for Fixed Mortgages 20% for Variable Mortgage|
Many mortgage lenders require you to pay property taxes through your lender in your regular mortgage payment, with your lender then paying your municipality. This is because failing to pay your property taxes can lead to your municipality placing a lien on your property, which will be placed in the front-of-the-line before your lender's claim on your home.
If you pay your property taxes through your lender, then your lender will estimate an amount that would need to be paid every month in order to cover the total amount of property taxes for the entire year. If the amount that the lender collected is not enough to cover the actual property tax due, then the lender will advance the due amounts to the municipality and charge you for the shortfall.
Your lender may charge you interest on the amount of any shortfall. The lender may pay you interest if you have overpaid and have a surplus. Property tax bills or property tax notices are required to be sent to your lender, as failing to send it may mean the collected property tax amounts are not accurate.
If your lender pays property tax on your behalf and adds the cost to your mortgage payments, then you will still receive a copy of your municipality's property tax bill, or a mortgage tax bill. Mortgage deferrals or using an option to skip a mortgage payment doesn’t mean that you get to skip your property tax payment or mortgage life insurance premiums too. You will still need to pay your property taxes and insurance premiums, as skipping a mortgage payment only skips the interest and principal payment.
Some lenders allow you to pay property taxes on your own. However, they have the right to ask you to provide evidence that you have paid your property tax.
If paying property taxes on your own, your municipality may have different property tax due dates. Property tax might be paid one a year, or in installments through a tax payment plan. Installments might be monthly or semi-annually.
Missing a mortgage payment, whether you forgot to make a payment, you had insufficient funds in your account, or for other reasons, is something that can happen. A mortgage payment is considered to be late if it's not paid on the date that it is due.
Missing a mortgage payment means that you need to catch-up by making a double payment the next month. Otherwise, you will be one month behind on your mortgage payments and have them all considered to be late.
Your lender will try to contact you if you miss a mortgage payment. They will let you know how your missed payment can be made, such as taking the payment before the next payment due date or doubling the payment at the next payment date.
Depending on your mortgage contract, you might be charged a late payment fee or a non-sufficient funds (NSF) fee.
As long as your mortgage payment hasn't been late for a long period of time, and you pay back the missed payment promptly, then your lender may not report it to the credit bureaus. Even so, missing your mortgage payment by one day is still enough to have it considered to be a late payment. If you miss multiple mortgage payments, your lender can report it, which will negatively affect your credit score and will stay on your credit report for up to six years.
While your mortgage lender might offer features such as being able to skip a mortgage payment or mortgage payment deferrals, you have to select to use this feature beforehand. You cannot simply miss a payment and choose to have a skip-a-payment feature applied retroactively.
These requests also take a few days to be processed. If it's within a few days of your payment date, then your current payment might be processed and only your next payment will be skipped. Lenders will also not allow you to use skip-a-payment options if your mortgage payments are in arrears.
A mortgage statement outlines important information about your mortgage. Mortgage statements are usually an annual statement, with it being sent out by mail between January and March rather than once every month. You may also choose to receive your mortgage statement online.
For example, TD only produces mortgage statements annually in January, while CIBC produces them between January and March. If you have an annual mortgage statement, it will usually be dated December 31. You may also request a mortgage statement to be sent.
Information on a mortgage statement are up to the end of your statement period and include:
Mortgage life insurance is an optional insurance policy that you can purchase from your mortgage lender that protects your mortgage balance. If you pass away, a death benefit will be paid to your mortgage lender to pay off some or all of the mortgage balance. If you get a critical illness, disability, or lose a job, you’ll receive a payout that helps cover some or all of your monthly mortgage payments. In all of these cases, your lender is the one that receives the insurance payouts.
With life insurance, you’re purchasing a policy with a beneficiary that you get to choose. You can also choose to purchase a policy with a certain payout benefit, rather than having it tied to the balance of your mortgage.
Mortgage life insurance premiums are based on the borrower’s age and the balance of their mortgage. Premiums are charged as a certain rate per $1,000 of mortgage balance. Mortgage life insurance in Canada is completely optional. A lender can’t force you to purchase mortgage life insurance, no matter your down payment. However, if you make a down payment less than 20%, your lender can require you to purchase mortgage default insurance.
Mortgage life insurance can be easier to obtain, but having a potential insurance benefit that gradually decreases as you make mortgage payments means that the benefit gets smaller while your insurance premiums stay the same.
Canada’s major banks all allow you to cancel your mortgage life insurance at any time, and to receive a refund if you cancel your plan within the first 30 days. This 30-day free look or 30-day review period is important as it lets you change your mind should you decide that mortgage life insurance isn't right for you.
To cancel, you can call your lender's insurance helpline, complete a form at a branch, or send a written request by mail.
Mortgages with a down payment of less than 20% are required to be insured due to the higher level of risk that they carry. This insurance protects the mortgage lender should you default on the mortgage. Mortgage default insurance does not protect you or help you cover mortgage payments.
The largest provider of mortgage loan insurance in Canada is the Canada Mortgage and Housing Corporation (CMHC), which is owned by the Government of Canada. Some mortgage lenders allow you to go through a private mortgage insurer instead, such as Canada Guaranty or Sagen.
Mortgage default insurance is required for mortgages with a down payment of less than 20% at a federally-regulated mortgage lender, such as at a bank. If you make a down payment that is 20% or larger, then you will not need to get an insured mortgage. Mortgage default insurance premiums are added as a one-time lump-sum onto your mortgage balance at closing, which means that you’ll be paying for it in your mortgage payments over the life of your mortgage.
Unregulated lenders, such as private mortgage lenders, may allow you to get an uninsured mortgage with a down payment that is less than 20%.
The CMHC has eligibility requirements that limit the type of mortgages that can be insured.
CMHC insurance will not cover homes with a cost of $1 million or more.
Mortgages with an amortization period greater than 25 years are also not eligible for CMHC insurance.
You can still get CMHC insurance for mortgages with a down payment larger than 20%.
CMHC insurance premiums are a percentage of your mortgage and are paid by your mortgage lender. Provincial sales tax is added to premiums for mortgages located in Ontario, Quebec, Manitoba. and Sadkatachewan.
Premiums start at 2.4% of the mortgage amount for down payments of 20% or less, going up to 4% for a down payment of 5%. While your mortgage lender will pay the insurance premium, they will usually pass this cost indirectly onto you. However, you may still save money after these premiums through lower mortgage rates that insured mortgages usually have.
To find out how much CMHC insurance would cost for your home, visit our CMHC insurance calculator.
|Down Payment||CMHC Insurance Premium|
|5% - 9.99%||4%|
|10% - 14.99%||3.1%|
|15% - 19.99%||2.8%|
|20% - 24.99%||2.4%|
|25% - 34.99%||1.7%|
|Greater than 35%||0.6%|
Benefits of CMHC Insurance CMHC insurance allows you to make a down payment as low as 5% of the value of the home for homes less than $500,000, or 5% on the first $500,000 and 10% on the remainder for homes over $500,000 and less than $1 million. Since the mortgage is insured, mortgage lenders will often offer lower mortgage rates for insured mortgages.
Whether you’re a Canadian snowbird looking to purchase a second home in Florida or you’re planning on moving to the United States, there are differences between Canadian and U.S. mortgages.
The biggest difference that Canadian borrowers will notice is the difference in mortgage terms. In the U.S., mortgage terms are usually for the entire life of the mortgage. Since U.S. mortgage terms are the same as the mortgage's amortization period, the interest rate will be set for the entire life of the mortgage and will not need to be renegotiated.
Mortgage terms in the U.S. are commonly 30 years, while Canadian amortization periods are usually 25 years. There are adjustable rate mortgages in the U.S. which act as a fixed rate for a certain number of years, and then become a variable rate for the remainder.
Cross-border U.S. mortgage applications take a much longer time to process compared to Canadian mortgages. That's because American mortgages require more documentation and verification.
For Canadians looking to get an American mortgage, you'll need to provide documents such as your Canadian tax returns, proof of Canadian citizenship or U.S. visa, Social Insurance Number or U.S. Social Security Number, proof of assets, and insurance documents.
You can use your Canadian assets and equity in your Canadian home, but they'll be converted to U.S. Dollars when being considered in your application.
U.S. mortgage applications take around 45 to 60 days, while Canadian mortgages take around 5 to 10 days to process.
Mortgage interest can be tax deductible in the U.S. but that's not the case in Canada. Canadian homeowners can still use a tax strategy to make their mortgage interest tax deductible in Canada by using the Smith Maneuver.
Monthly mortgage payments are the most popular option in the U.S., and many lenders do not allow other mortgage payment frequencies. For example, Citibank, US Bank, and TD Bank do not allow bi-weekly mortgage payments. Some lenders that allow biweekly payment plans may charge an additional fee.
Many U.S. mortgage lenders allow you to make additional monthly mortgage payments, but if you’re looking to fully pay off your mortgage, then early mortgage payoffs for U.S. mortgages may come with a mortgage prepayment penalty. However, prepayment penalties are illegal for FHA loans, VA loans, and USDA loans. For lenders that do charge a prepayment penalty, it’s usually only charged if you fully pay off the mortgage within a few years of signing the mortgage loan.
In the United States, mortgage prepayment penalties are only allowed for the first three years of a mortgage loan. The penalty also can't be more than 2% of the mortgage loan balance for the first two years, and the penalty can't be more than 1% in the third year.
There are six states that ban prepayment penalties for all mortgage loans:
Other states that ban prepayment penalties on certain mortgage loan types, such as those with a high interest rate, subprime, or have a certain balance, include:
If a borrower is delinquent on their mortgage loan, an U.S. mortgage lender can choose to file a notice of default, which starts the foreclosure process. This notice of default is sent after there are 90 days of missed payments, with foreclosure starting after 180 days.
Foreclosures and power of sales in the United States work similarly to those in Canada. Some states, such as California and Texas, use non-judicial power of sale, while other states, such as New York and Florida, use judicial foreclosures.
Looking at Canada, power of sale is commonly used in Ontario, while foreclosures are more common in British Columbia, Quebec, and Alberta.
U.S. law requires a mortgage loan to be 120 days past due before foreclosure can begin. In Canada, there is no such law that prevents a lender from starting the foreclosure process before a certain number of missed payments. For example, in Alberta, a foreclosure can start as soon as one missed mortgage payment. In Manitoba, foreclosure can start after one month of missed mortgage payments. Canadian foreclosures usually have a set number of months that the borrower can fully repay the due amount in order to prevent the forced sale of their home. This redemption period is usually six months.
The United States also has a federal foreclosure moratorium in 2021 that prevents foreclosures until July 31, 2021.
Power of sale can start earlier than foreclosures in the United States. In California, power of sale can start as soon as after 4 months of missed mortgage payments.