Learn the basics about different types of
mortgages available to the first time home buyers.
Fixed Rate Mortgages vs. Variable Interest Rate Mortgages
Fixed Rate Mortgage
Your interest rate will not change throughout
the entire term of your mortgage.
Variable Rate Mortgage
Your interest rate may fluctuate from time to time because it changes when the TD Mortgage Prime Rate changes.
Conventional Mortgages vs. High Ratio Mortgages
If your down payment is greater than 20% of the purchase price or valuation of the property, you may qualify for a conventional mortgage. That means you are not required to pay for mortgage default insurance.
High Ratio Mortgage
If your down payment is less than 20% of the purchase price or valuation of the property, your mortgage must be insured against payment default by a mortgage insurer, such as the Canada Mortgage and Housing Corporation (CMHC) or Genworth Canada.
Open Mortgages vs. Closed Mortgages
An open mortgage allows you to pay any amount toward your mortgage at any time, without having to pay any prepayment compensation for doing so.
A closed mortgage requires you to make set payments at set times and pay prepayment compensation if you want to pay more, renegotiate, refinance or transfer your mortgage before the end of your term (subject to any prepayment privileges you may have).
Additional Mortgage Information
Term of Mortgage and Mortgage Amortization Period
Term of Mortgage
Mortgages are available in a variety of terms. The term is the length of your current mortgage agreement. Typically, terms range from 6 months to 10 years. When a term expires, the balance you owe on your mortgage can be repaid, or a renewal of the mortgage may be offered by the bank at the then current interest rates.
Mortgage Amortization Period
Amortization period is the length of time it takes to pay your mortgage, assuming the same interest rate and payment amount. A common amortization period is 25 years but there are other alternatives. Shortening your amortization period can help you reduce your overall cost of borrowing but it will also increase your monthly payments. So, you should talk to a TD Mortgage Specialist about your options.
Home equity line of credit
TD Home Equity FlexLine
As a first-time home buyer, you may qualify for a TD Home Equity FlexLine as part of your financing solution if you are planning to make a down payment in excess of 20%. A TD Home Equity FlexLine gives you access to ongoing credit, up to your available credit limit, and provides a number of no-cost flexible payment options.
- You can access your available credit anytime without having to re-apply.1
- Pay at your own pace – make payments as low as interest only.2
- As your outstanding balance decreases, your available credit increases.
- With a Fixed Rate Advantage Option you can borrow up to 80%3
- A Fixed Rate Advantage Option allows you to lock all or a portion of your outstanding balance into a fixed interest rate for a closed term of one to five years
- Protect yourself from rate increases and establish regular fixed payments (subject to minimum amounts)
With a collateral charge mortgage, TD mortgage customers can switch from a mortgage loan to a TD Home Equity FlexLine in the future without incurring any new registration fees. In addition, where they choose to register the collateral charge for a higher amount than their current loan agreement (to a maximum of 125% of the current property value), they may be able to reuse the existing collateral charge for future borrowings and avoid incurring additional costs of registering a new charge on the property.
Current Property Value: $200,000
Current Outstanding Mortgage Principal Amount: $100,000
Collateral Charge Registered Amount: $200,000
In November 2011, Ryan took out a TD mortgage loan as noted above. In 2013, he decides to renovate his home and wants to borrow an extra $50,000; however, instead of the mortgage loan Ryan is interested in switching to a TD Home Equity FlexLine. At the time that Ryan first took this mortgage loan, he requested the collateral charge to be registered for full property value of $200,000 and there have been no changes on title since the collateral charge was registered. As a result, provided Ryan qualifies and the property value supports the new request; he can switch from a mortgage to a TD Home Equity FlexLine and reuse the collateral charge to secure the TD Home Equity FlexLine, eliminating any Solicitor/In-House Registration fees.
Note: Prepayment compensation costs are still applicable.
With the flexibility of a collateral charge, both Abby & Ryan can take advantage of all flexible features of a TD mortgage loan as well as save money in the future if their financing needs change.
- 1. Subject to the terms of your TD Home Equity FlexLine agreement.
- 2. Available only on variable rate portion.
- 3. Subject to the value of your property and any prior charges or liens. Up to 65% can be taken as revolving credit.