A home for your firsts

A mortgage payment is the amount of money you pay towards your mortgage — typically on a biweekly or monthly basis. Mortgage payments are made up of mortgage principal and interest.

The principal is the amount you borrow (mortgage amount). For example, if you have a $30,000,000 mortgage, the principal is $30,000,000. The lender charges interest on your principal, adding to the amount you owe.

When you start paying your mortgage, a larger portion of your payment goes towards interest. As you pay down your mortgage, the interest portion decreases so more of your payment goes towards paying off your principal.

The mortgage amortization period is the actual number of years (mortgage length) it will take to repay a mortgage loan in full, based on the interest rate for your current mortgage term.

This may go beyond the term of the mortgage contract. The mortgage term refers to the period of time over which the interest rate, payment, and other mortgage conditions are set.

With a shorter mortgage amortization period, you’ll pay off your mortgage faster, but your mortgage payments will likely be higher. Also, with a shorter mortgage amortization period at the same interest rate, you may pay less interest over the length of your mortgage.

Mortgage insurance is mandatory when buying a home.

When you get a mortgage, you agree to make regular payments to repay the loan. Mortgage insurance protects the lender if you stop making payments on time or in full. If you default, the insurer can take legal action and enforce payment. They also pay the lender if there’s a shortfall once the property is sold and expenses are paid. If this happens, you’re still responsible for the shortfall on the mortgage. This means the lender or mortgage insurer can take legal action against you for any money you owe.

Your Personal Banking Officer can give you advice on how to buy your first home, invest in an income property, or leverage your home equity for a big expense.