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Canadians will have a harder time buying a home due to the federal government’s numerous mortgage rule changes over the past couple years. Here’s a quick overview of all the changes, important dates, and how they have impacted the housing market

  

Mortgage Term

A mortgage term is the length of time you are committed to a mortgage rate, lender and conditions set out by that lender.
A mortgage term can vary in length, from 6 months to 10 years, with the most popular term in Canada being 5 years.

How to Choose a Mortgage Term

Choosing the right mortgage term depends on your financial situation, your short-term and long-term goals, and your tolerance for risk.

A longer term can help you lock in a good interest rate for a lengthier period of time, whereas a shorter term can give you more flexibility but offers less protection should interest rates rise in the near future.

One thing to keep in mind is that the mortgage term you choose will directly affect your interest rate. Historically, shorter terms have lower interest rate.

The longer term, the more protected you are from interest rate fluctuations, and there is a premium you must pay your lender for that.

When browsing real estate listings for a new home, the first step is to figure out how much you can afford. Affordability is based on the household income of the applicants purchasing the house, the personal monthly expenses of those applicants (car payments, credit expenses, etc.), and the expenses associated with owning a home (property taxes, condo fees, and heating costs). The calculator below will show you the maximum purchase price that you can qualify for.

You also need to determine if you have enough cash resources to purchase a home. The cash required is derived from the down payment put towards the purchase price, as well as the closing costs that must be incurred to complete the purchase. Ratehub.ca can help you estimate these closing costs with first tab under our affordability calculator.