Mortgage FAQs

What's the difference between Closed and Open, Fixed and Variable Mortgages? Expand/Collapse

Closed Mortgages

A closed term mortgage usually offers a lower interest rate than an open mortgage, offering more security. 

Open Mortgages

An open mortgage gives you the choice to pay your mortgage off whenever you like, without penalty. Open mortgages can have: Fixed rates for terms of 6 months or one year; during the term the interest rate doesn’t change allowing you to budget your finances effectively Variable rates for terms of 3 years; during the term the interest rate can rise and fall with the Prime rate however this option will allow you to take advantage of a low interest rate environment. 

Fixed Mortgages

Be certain about your monthly payments. With a fixed rate mortgage, you get the advantage of predictable payments for terms from 6 months to 10 years. This means you'll always know what your payments will be. 

Variable Mortgages

With a variable rate mortgage your interest rate fluctuates with the Prime rate. So, a variable rate mortgage is ideal when interest rates are dropping. If interest rates go up so will your costs of borrowing. The good news is, Alterna's variable rate closed mortgages have conversion options available.

How much can I afford to spend? Expand/Collapse

Your Downpayment

By making a downpayment of 20% of the purchase price, you will be applying for a conventional mortgage. This will typically eliminate the need for you to get mortgage default insurance, provided by the Canadian Mortgage and Housing Corporation(CMHC) or Sagen Financial. In some instances mortgage default insurance will be required even though you have more than 20% down payment. For more information, speak to an Alterna representative.

If you make a downpayment that is less than 20% of the purchase price, it's called a high ratio mortgage. This kind of mortgage must be insured through a mortgage default insurance provider such as CMHC or Sagen Financial. Depending on the size of the downpayment, you'll be charged an insurance premium, which is a percentage of the mortgage amount. For your convenience, you can add this premium to your mortgage and pay for it as part of your regular mortgage payments.

For more details on CMHC or Sagen Financial high ratio mortgage requirements, please refer to their websites.

Your Monthly Payments

For your financial protection, you should spend no more than about 32% of your gross annual income on housing. This means that if your family's gross annual income is $40,000, you should pay approximately $12,000 a year or $1,000 a month for:

  • Mortgage and Interest
  • Property Taxes
  • Utilities
  • Half of any condominium fees that apply

You should also consider other financial liabilities you may have, such as payments on personal loans and credit cards, plus child care expenses or support payments. You'll be much more secure if these payments, along with your housing expenses, add up to less than 40% of your gross annual income.

Pre-approval takes the guesswork out of house hunting

The knowledgeable mortgage professionals at Alterna can tell you exactly how much you can borrow, before you start looking at homes. They will look at your downpayment and the monthly payments you can afford, in order to provide you with this important number.

Once you have your mortgage pre-approval, you'll be ready to house hunt with confidence and make an offer quickly if the perfect place comes along.

What government help is available for first-time homebuyers? Expand/Collapse

Saving for a downpayment can be made easier through the federal Home Buyers' Plan (HBP). The HBP lets you withdraw, without immediate penalty, up to $35,000 of your Registered Retirement Savings Plan (RRSP) for use as part of the downpayment on a qualifying residence. Then you pay back into your RRSPs over a 15 year period. To qualify, neither you nor your spouse can have owned a home in the last five years.

It is important to note that some RRSPs, such as locked-in or group RRSPs, do not allow you to withdraw funds. Make sure to ask your RRSP issuer for more information about the types of RRSPs you have—and whether or not withdrawals can be made to participate in the HBP.

Launching September 2, 2019, the Federal government will be launching a new First-Time home buyers incentive. The incentive is worth up to 5% for the purchase of an existing home and up to 10% for a new build. To qualify, household’s incomes must be less than $120,000 and neither you nor your spouse can have owned a house in the year of acquisition or in any of the four proceeding years. The amount of an insured mortgage and the CMHC incentive is capped at $480,000 meaning the maximum home price someone could purchase with a 15% down payment is $565,000.

Homeowners do not have to pay interest on the incentive, but money must be paid back after 25 years or when the property is sold, whichever comes first. The government will share in the upside or downside of any change in property value.

Savings add up over time

This is for illustrative purposes only, and calculations assume a mortgage rate of 3.09%.





House Price



Down Payment



Cost of mortgage insurance



Size of mortgage



Monthly Payment



Monthly Savings



Annual Savings



Savings over 25 years



How do I choose the right mortgage? Expand/Collapse

You can choose from a number of mortgage options, fixed or variable, open or closed, to meet your needs and lifestyle. Our homebuying specialists can assist you along the way.

Building your homebuying team Expand/Collapse

Once you are ready to look, it's time to assemble a team of professionals who will work with you. The mortgage professionals at Alterna are ready to help you choose the right mortgage and provide you with a mortgage pre-approval—to get you started on your house hunt.

Realtor: Although you can purchase without a realtor, it is a good idea to enlist the services of an agent who will provide objective advice. With a good understanding of your needs, an agent can help you compare a number of properties.

Home inspector: A clean bill of health from a qualified home inspector can provide a great deal of comfort when buying a home. Be sure to use a reputable inspector and ask for references.

Lawyer: When you make an offer on a home, you'll want a lawyer to review it in detail and ensure it contains all the necessary information.

Anticipating your closing costs Expand/Collapse

Know what to expect well in advance of the day of closing. You'll need to budget for:

CMHC or Sagen Financial insurance premiums: These will apply if you take a high ratio mortgage.

Land transfer taxes: The provincial government levies this one-time tax when you buy a home, which could amount to about $2,000 on a $250,000 home (be sure to ask your lawyer for details as they apply to your situation). If you are a first-time homebuyer of a newly constructed home you may be entitled to a rebate.

Legal fees: You are responsible for paying the lawyer's fees and disbursements.

Fire insurance: You are required to take fire insurance effective the time you legally take possession of your new home. Other insurance requirements may also apply.