5.2 Mortgage basics

In this section:

• 5.2.1 What is a mortgage?
• 5.2.2 Down payment
• 5.2.3 Pre-approval
• 5.2.4 Home Buyers Plan
• 5.2.5 Amortization and term
• 5.2.6 Types of mortgages
• 5.2.7 Interest rates
• 5.2.8 Payment types
• 5.2.9 Fixed or variable interest rates
• 5.2.10 Video: Mortgage basics
• 5.2.11 Quiz: Mortgage terminology
• 5.2.12 Case study: Mortgage costs
• 5.2.13 Your mortgage payment
• 5.2.14 Payment options
• 5.2.15 Case study: Financing a mortgage
• 5.2.16 Summary of key messages

Introduction

Most people will need a mortgage when they decide to buy a home. A mortgage is usually a long-term financial commitment, and the choices you make can affect you for many years. This module will show you how mortgages work and the basic choices you will have to make. You will explore:

• down payments
• the term and amortization period of a mortgage
• the differences between open and closed mortgages
• the differences between fixed and variable rates
• where to get a mortgage
• how to calculate the total costs of a mortgage.

You'll review the basic conditions and language used to describe mortgages and compare some different kinds of mortgages. You’ll use simple financial calculators to estimate your eligibility for a mortgage, and to calculate the costs of a mortgage. By the time you finish this section, you'll be able to estimate the cost you should plan for if you want a mortgage.