Mortgages in Canada

What is a mortgage?

• A loan specifically designed to purchase a home or property.

• Any large loan.

• A short-term loan from a bank or financial institution.

• An investment that grows tax-free.

How much would you typically need for a down-payment on a home?

• No down payment is needed.

• You must have 20% of the house price for a down payment.

• Between 5% and 20% is a typical down payment, although you could put down as much as you wish.

• You are not allowed to pay more than 5% down.

Which of the following could be the current interest rate on a 5 year mortgage?

• 17%

• 3.0 %

• 0.75 %

• 7.2 %

Cindy wants to have 20% down payment before they purchase their home so they don't need to buy CMHC insurance. How much would that be on a $300 000 home?

• $20 000

• $40 000

• $60 000

• $80 000

What is the amortization period for most mortgages in Canada?

• Between 15 and 25 years

• Up to 10 years

• Either 10 or 15 years

• 25 or 30 years.

What happens to your monthly payments when you increase the amortization period.

• Monthly payments go down, but you end up paying more interest.

• Monthly payments go up, but you save money by paying less interest.

• Monthly payments go down, so you pay less interest in total.

• Monthly payments go up, so you pay more for the house in total.

What is an amortization table?

• A chart or spreadsheet showing how much interest and principal is paid off with each payment.

• A table you sit at to discuss your mortgage.

• A program used to calculate monthly payments.

• A chart comparing interest rates at all the different banks.

Which of the following is true about OPEN and CLOSED mortgages.

• An open mortgage allows you to pay-off your mortgage as fast as you wish.

• A closed mortgage sometimes charges a fee if you want to pay off a large portion of your mortgage.

• An open mortgage generally has a higher interest rate.

• All of these answers are true.

A family has a 5 year fixed-rate mortgage at 2.8% with a 20 year amortization period. When will the mortgage be paid off if they make all their payments on time?

• After 5 years

• After 10 years

• After 15 years

• After 20 years

Mortgage payments can easily be calculated using:

• Our standard Annuity Formulas

• A mortgage calculator

• The compound interest formula

• Exponential Equations