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Understanding mortgages

Learn the basics about different types of home financing options available to the First-time Home Buyers.

Fixed Rate vs. Variable 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.

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Conventional Mortgages vs. High Ratio Mortgages

Conventional Mortgage

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.

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Open vs. Closed Mortgages

Open Mortgage

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.

Closed Mortgage

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).

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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.

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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.

Apply once

• You can access your available credit anytime without having to re-apply¹.
• Pay at your own pace – make payments as low as interest only².
• As your outstanding balance decreases, your available credit increases.

Term Portion

If you choose a Term Portion at set-up, you can borrow up to 80%³. You can put all or a portion of your outstanding balance from the Revolving Portion into a Term Portion (subject to minimum amounts) and establish regular payments at a fixed or variable interest rate for an open or closed prepayment term, depending on the rate you have chosen.

Collateral Charge

With a collateral charge mortgage, TD mortgage customers may be able to 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 higher borrowings and avoid incurring additional costs of registering a new charge on the property.

Here are 2 example scenarios: