A mortgage in Canada is a loan secured by your house or other property, so a mortgage generally has the lowest interest rate of any type of loan in Canada. That’s great if you want to use a mortgage as a debt consolidation loan to lower the cost of your monthly borrowing, but it can also be a disadvantage if you can’t repay the mortgage.
Your bank will give you a mortgage, but in many cases it is wise to shop around before you make the final decision.
Many of Canadian mortgage brokers will give you a free quote on a new mortgage, or a refinancing of your existing mortgage. Mortgage brokers can usually negotiate a better price for you than if you go to a bank yourself, because they deal with many different lenders. A mortgage broker is the place to start when looking for a mortgage in Canada.
Here is what you need to know before you apply for a mortgage – in Canada or anywhere else:
First, make a detailed monthly budget. There is no point in getting a mortgage if you can’t afford to pay it back.
Second, write down exactly what you will do with the money you borrow. Most mortgages in Canada are obtained to pay for a new home. However, it is also possible to get a second mortgage as a method of debt consolidation to refinance your existing debts.
Third, make sure you understand exactly what you will be paying. Obviously the interest rate is the most important factor determining the cost of your mortgage, but the amortization period will also determine how much you pay over the life of the mortgage.
Read more mortgage resources to help you find your perfect mortgage in Canada.