Amortization: This is the life of your mortgage. Making regular payments, your amortization is how many years it will take to pay off your mortgage. As of March 18th, 2011, the maximum amortization is 30 years.
Term: The term is length of your mortgage agreement/contract. This is the period of time you & the bank agree to a specific rate, payment (fluctuates with variable) & options. Unless you are planning on moving or selling in under 5 years, most people choose 5 years. First time buyers usually choose 25-30 year amortizations.
Down Payment: The amount of equity you put into the property at the time of purchase. Currently, the minimum down payment is 5%. For down payments between 5-20%, you are required to purchase mortgage insurance (see below).
Mortgage Insurance (aka: CMHC): Mortgage insurance is required for down payments between 5-20% and amortizations longer than 25 years. This amount is typically added to the mortgage & paid off over time. View the premiums here.
Options: Mortgage options are just as important as having a competitive rate. In many cases, having the right options can save you much more than having the lowest rate. Elements such as lump-sum payments, increased payments, double up payments, etc. are the tools that enable you to become mortgage free, faster. Refer to my “Mortgage Strategies” section for information on how to utilize your mortgage options.
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