Mortgage Program [Conventional Mortgage]

Hello everyone,

This is Henry Mortgage who talks about the good information on a mortgage in Canada.

I will tell you about the mortgage programs that Henry Mortgage provides you to help you purchase your dram house. Today, I will basically explain about the conventional mortgage which is the very basic concept that you should learn about.

1) Down payment: at least 20% of a house price

The conventional mortgage is that you need to make a down payment of at least 20% of the purchased house price. If it is below 20%, it is called a high ratio mortgage which I will talk about later through another post soon.

2) GDS 39% & TDS 44%

When the underwriters review mortgage documents, they consider the applicant's income and liabilities. The ratios of these two factors are GDS (Gross Debt Service) and TDS (Total Debt Service). The conventional percentages of GDS and TDS are 39% and 44%. I will explain about this in more detail later.

3) Amortization: 25 years or 30 years

The typical amortization periods that the bank provides are 25 years or 30 years. I personally suggest 30 years amortization because you can lower a mortgage monthly payment.

4) Mortgage rate: variable or fixed

This is an important thing that you are mostly interested in. You can choose a variable or fixed rate. The range of a contract time for a fixed rate is 1 year to 5 years generally. For a variable rate, you can pick 3 years or 5 years.

5) Term: open or closed

There is two kinds of terms: open and closed. For an open term, you can pay off a mortgage anytime without a penalty. However, you need to pay for a penalty if you pay off early for a closed term. It is normally 3 months interest.