Understanding Canadian Mortgages: Myths vs. Facts

In the ever-changing world of Canadian real estate, there's often confusion about mortgages. Whether you're thinking about buying a home for the first time or considering refinancing, it's important to separate fact from fiction. Let’s debunk some common myths about Canadian mortgages, giving you the facts you need to make informed decisions about your finances.

Myth 1: Only first-time home buyers can put 5% down

Fact: All buyers are able to put 5% down to purchase an owner-occupied property. While it's always good to have a larger down payment, many lenders offer mortgages with smaller down payment options. The only time you will ever be required to put 20% down or more on a property is if you’re purchasing an investment property.

Myth 2: Fixed-Rate is the best option, period.

Fact: Choosing between a fixed-rate and a variable-rate mortgage depends on your money goals and how much risk you're comfortable with. Fixed-rate mortgages give you steady payments, while historically variable rates have saved homeowners money in the long run. Understanding your own financial goals can help you make the right choice.

Myth 3: Refinancing Always Saves Money

Fact: Refinancing your mortgage can be helpful, but it doesn't always mean you'll save money. You have to think about the costs of refinancing, like closing fees and penalties. And you need to consider how it'll affect your mortgage in the long run and whether it fits with your money goals.

Myth 4: Just Looking at Mortgage Rates Tells You What You Can Afford

Fact: Mortgage rates are a big part of what you can afford, but they're not the only thing to think about. There are other costs like property taxes, insurance, and maintenance fees that add to what you'll pay for your home. Thinking about all these costs together helps you understand what you can really afford.

Myth 5: Paying Off Your Mortgage Early Always Saves Money

Fact: It's true that paying off your mortgage early can save you money on interest, but it might not be the best choice for everyone. You should think about other money goals you have, like saving for retirement or your kids' education. Sometimes, putting money toward those things is a better idea in the long run.

Understanding the truth about mortgages is important when you're buying a home or refinancing. With the right information, you can make smart choices about your mortgage. Whether you're a first-time homebuyer or you're thinking about refinancing, talking to a mortgage expert is the best way to make informed decisions. If you’re looking for advice on your personal finances, I would love to help!