Mortgages 101 - Vancity

What makes a mortgage?

There are three key components to every mortgage:

Term

A mortgage term is the length of time covered by your mortgage agreement, which can be anywhere from 6 months to 10 years. Terms can be fixed, closed or open.

Rate

Rates can be fixed or variable. A fixed rate stays the same over your mortgage term, while a variable rate may fluctuate. Your rate will determine your mortgage payment.

Amortization

Amortization is the length of time you can take to pay your mortgage in full, usually 25 to 30 years. Depending on the duration you choose, your amortization may consist of multiple terms.

Part 1

Term options.

Mortgage terms refer to the length of time covered by your mortgage agreement. With a shorter term, your monthly payments will be higher.

Best if you’d like the peace of mind that comes with a fixed rate in a fluctuating market.

Purchase price: No maximum

Term: 6 months to 5 years, 7 years, or 10 years

Best if you’re looking for competitive rates and don’t need to use your home equity.

Purchase price: Less than $1 million

Term: 5 years

Best if you think you’ll be paying off your mortgage in full quickly.

Purchase price: No maximum

Term: 6 months to 3 years, or 5 years

For example

If you expect to receive some cash soon — through an inheritance, a bonus, the sale of your home or other means — an open-term mortgage may be the right fit. But if you prefer to make regular payments over the long term, you’ll probably save more money with a fixed-term mortgage because you’ll pay a lower interest rate.

Part 2

Rate options.

Your mortgage rate will determine your payment.

Best if you’d like a set payment for your entire term.

Interest: Stays the same for the entire term of your mortage, even as the prime rate goes up or down.

Term: Open, fixed or closed. Term lengths vary depending on type.

Best if you’re comfortable with an interest rate that fluctuates over your term.

Interest: Can go up or down over the course of the term. With our variable interest rate (called Homeprime), your payment stays the same, but the amount paid towards your principle could change. We recommend updating your payment to reflect rate changes to keep amortization on track.

Term: Open or fixed for 5 years

Part 3

Amortization options.

The amortization period is the length of time you can take to pay your mortgage in full.

Higher monthly payments, but less interest paid over the life of the mortgage.

Maximum amortization for high-ratio mortgages (where your down payment is less than 20% of your property value)

Lower monthly payments, but more interest paid over the life of the mortgage.

Maximum amortization for conventional mortgages (where your down payment is at least 20% of your property value)

For example

Let’s say you have a mortgage of $350,000 with an interest rate of 4.00%. To keep this example simple, we’ll assume the rate stays the same for the length of your mortgage, but keep in mind that this isn’t likely in a real scenario. With a 25-year amortization, you’d pay only $1,841.07 per month, but your total interest paid over that time would be $202,321.32. With a 20-year amortization, you’d pay $211.86 more per month, but your total interest paid would be just $157,567.44.

Put it all together

Find the right combination.

Explore our product offering based on the term and rate combination that is best for your homebuying needs.

Great if you’d like the option of securing a fixed rate in a fluctuating market.

Purchase price: No maximum

Term: 6 months to 5 years, 7 years, or 10 years

Rate: Fixed or variable

Amortization: Up to 30 years

Other features:

Prepayment privileges Prepay up to 20% of original balance once per mortgage year with no prepayment fee
Property type: Revenue or primary residence
Access to home equity: Yes

Great if you’re looking for competitive rates and don’t need to use your home equity.

Purchase price: Less than $1 million

Term: 5 years

Rate: Fixed

Amortization: Up to 25 years

Other features:

Prepayment privileges: Can be made once per mortgage year with no prepayment fee
Property type: Primary residence only
Access to home equity: No

Great if you think you’ll be paying off your mortgage in full quickly.

Purchase price: No maximum

Term: 6 months to 3 years, or 5 years

Rate: Fixed or variable

Amortization: Up to 30 years

Other features:

Prepayment privileges: Can be made anytime with no prepayment fee
Property type: Revenue or primary residence
Access to home equity: Yes

Now you’re ready to explore the products.

Take the next step.

Interested in a new mortgage or refinancing? Browse our mortgage specialists to connect with someone in your area.

Browse our directory

For general mortgage inquiries or help with renewing your mortgage, book a time that works for you and we’ll give you a call back.

Book a phone appointment

Mortgages 101.

What makes a mortgage?

Term

Rate

Amortization

Term options.

Fixed term

Closed term

Open term

Rate options.

Fixed rate

Variable rate

Amortization options.

Up to 25 years

Up to 30 years

Find the right combination.

Fixed term

Closed term

Open term

Now you’re ready to explore the products.

Take the next step.

Find a specialist near you

Talk through your questions

Tools to help you get on track.

Estimate mortgage payments.

Budget for a mortgage.

Break down the costs of buying a home.

Your mortgage application checklist.

Mortgages 101.

What makes a mortgage?

Term

Rate

Amortization

Term options.

Fixed term

Closed term

Open term

Rate options.

Fixed rate

Variable rate

Amortization options.

Up to 25 years

Up to 30 years

Find the right combination.

Fixed term

Closed term

Open term

Now you’re ready to explore the products.

Fixed-term fixed-rate insured mortgage

Fixed-term fixed-rate

Fixed-term Homeprime

Closed-term fixed-rate

Open-term fixed-rate

Open-term Homeprime

Take the next step.

Find a specialist near you

Talk through your questions

Tools to help you get on track.

Estimate mortgage payments.

Budget for a mortgage.

Break down the costs of buying a home.

Your mortgage application checklist.