History

• Since the inception of the Canada Mortgage and Housing Corporation in 1946, owning a new home financed by an approved lender or bank has become attainable by the average consumer. Before this, homebuyers needed to save a minimum 25 percent down payment on a new home before any lender would approve a mortgage.
  
  

Types of Mortgages

• Canadian mortgages fall under two different categories: conventional and high-ratio. A conventional mortgage means a minimum down payment of more than 25 percent must be provided at time of closing. A high-ratio mortgage only requires a down payment between 5 percent and 25 percent thanks to the regulations put forth by the Canada Mortgage and Housing Corporation.
  
  

Rates

• There are two basic kinds of rates: A fixed rate can be locked in and the payment remains the same regardless if interest rates change. A variable rate is based on Canadian prime rates. These will fluctuate throughout a term and, if the rate drops, more of the payment will go to the principal instead of the interest.
  
  

Penalties

• Breaking a mortgage can result in penalties depending on if the buyer has signed an open mortgage or a closed mortgage. An open mortgage means there are no penalties if terminated before the end of the contract. A closed mortgage usually requires either three months of interest to be paid or an interest rate differential between the existing rate and the current rate. Penalties are determined by the lender.