Connolly Capital
mortgage Solutions

Buying a house is a big investment, so it's important to have a good idea of how much down payment you'll need before you start the process. In Canada, the minimum down payment to purchase a rental property is 20%. These funds must be from personal sources and cannot be gifted from family members.

For purchase prices under 1,500,000 the minimum down payment amount is tiered. Lenders and the mortgage default insurers require 5% down on the first $500,000 of purchase price and 10% down on the amount above $500,000 capped at $1,499,999.

When you are purchasing a home in Canada (at any lending institution) with less than 20% down payment, the mortgage is considered higher risk. In the event of power of sale or foreclosure there is less equity available in the property. Due to this fact, the mortgage must be insured through a Mortgage Default Insurance Company. In Canada there are three companies who offer this insurance; Canada Guaranty, CMHC & Sagen. The premiums for this insurance depend on the down payment. With 5% down payment, the insurance premium is more expensive than that of 15% down payment. This insurance premium is also added to the mortgage amount on day one, therefore; interest is incurred on the premium amount.

Interest rates are constantly changing, and hard to quote without knowing the specifics of the mortgage in question. There are several interest rate categories including Conventional, Insured, Insurable. Insured and Insurable rates are securitized and come with favourable pricing, while being capped at a 25 year amortization. Conventional rates can be amortized over 30 years but incur slightly higher rates. 

Our brokerage works with the major banks (TD Canada Trust, Bank of Nova Scotia, Equitable Bank, Canadian Western). Many monoline lenders including (First National, MCAP, RMG, CMLS). Alternate lenders (Home Trust, Excalibur, XMC). Credit Unions (Duca, Meridian, First Ontario).

1. Term is the amount of time your interest rate is secured with your current lender. The most common term in Canada is 5 years. At the end of the term, your mortgage is up for renewal and converts into an open term. You can choose another term with your current lender, pay off the mortgage in full or switch to a new lender for no penalty. 
2. Amortization is the amount of time it will take to pay off your mortgage to $0. Conventional mortgages are capped at 30 years (bank side) and 35 years (alternate lending side) while insured mortgages are capped at 25 years for repeat buyers (30 years if you are a first time home buyer). Lenders provide pre-payment privileges to reduce your mortgage amortization during the term 

When a purchase transaction is closing before that of a sale transaction, a bridge loan is issued to make up the shortfall. The bridge loan cannot exceed more than 90% of the home’s sales equity and includes the down payment & closing costs incurred by the borrower. It is important to note that in order to receive a bridge loan, you must have a firm purchase agreement, a firm sale agreement and take a mortgage product on the subject purchase property.

1. Mortgage brokers and mortgage agents do not work for one specific lender. In our channel we can shop your file and take advantage of various products, procedures and rates using 22+ lending institutions. 
2. Bankers have a narrower product shelf as they will be required to sell their institutions product line.  

1. Variable rate mortgages receive a discount off of the Prime Lending rate set by the bank of Canada. If the Prime Lending rate is changed, your equivalent rate will also change. Variable rate’s can be converted to a fixed rate at anytime during the term. In the event of mortgage payout, the penalty to break a variable rate mortgage is the equivalent to 3 months of interest costs. 
2. A fixed rate is guaranteed for the life of the term. If there are fluctuations in the Prime Lending rate or economy, your mortgage rate and payment will remain unaffected. Fixed rate mortgage comes with higher penalties in the even the mortgage needs to be paid out and closed, as the calculation is based on IRD (Interest Rate Differential)  

Closing through a lawyer is mandatory in Ontario. The lawyer is responsible for handling the disbursements, issuing title insurance, registering the mortgage charge and ensuring the property properly changes hands. 

1. Land transfer tax is standardized for all areas in Ontario. The provincial levy is generally calculated as 2% of the purchase (less $3,525). If you are a first time home buyer, you also receive an additional $4,000 rebate
2. In Toronto, this levy is doubled, and first time buyers receive an additional $4,475 in rebates.