Financial Literacy Newsletter – July 2024

Housing costs on your mind?
Managing your mortgage

Banner - Financial Literacy Newsletter - July 2024

A few words from FCAC

It’s July and summer is now in full swing! We hope that over the next couple of months, you will have time to slow down and relax with family and friends. That being said, if you’re one of the tens of thousands of Canadians who buys and sells homes or renews mortgages during the summer, this kind of R&R may not be possible. The journey to homeownership can be demanding. The wide range of mortgage products and their complexity can leave you feeling overwhelmed.

That’s why we have chosen “Housing costs on your mind? Managing your mortgage” as the theme for this issue. Our goal is to provide you with information and tools that will help you find a mortgage product that is the right fit for you, whether you are a first-time home buyer, renewing your mortgage, or having a hard time making payments.

Making good mortgage decisions involves much more than finding the lowest interest rate on offer. Mortgages include many options and features that you should consider before signing on the dotted line. Take our quiz to see how well you know the different mortgage options available to you.

According to the Canada Mortgage and Housing Corporation, 2.2 million Canadians will renew their mortgages in 2024 and 2025, at much higher interest rates. You may be one of these Canadians and your needs and circumstances may have changed since you first chose your mortgage. It’s important to remember that you have options when you go through the process of renewing your mortgage. Read our 5 tips that will help you renew a mortgage that meets your needs now.

If you are interested in making changes to your mortgage and your renewal is not coming up any time soon, read our article about what’s involved in breaking a mortgage contract. It will help you weigh the costs, risks, benefits and limitations of negotiating a new mortgage contract or switching lenders.

A big thank you to our contributors for sharing their knowledge and expertise so you can better manage your mortgage in challenging times. The Office of the Superintendent of Financial Institutions shares everything you need to know about qualifying for a mortgage, sometimes referred to as a “stress test.” Credit Canada looks at the pros and cons of consolidating all your debts into a mortgage. Mortgage Professionals Canada describes how a licensed mortgage professional can help you navigate mortgage lenders and products to find the one that is right for you. And if you are looking for help to buy or sell your home, The Canadian Real Estate Association describes the advantages of hiring a real estate agent with REALTOR® designation.

Please help us spread the word about the Financial Literacy Newsletter and share it with your network. Follow us on Facebook, X (formerly Twitter), Instagram, YouTube and LinkedIn.

Enjoy your summer and happy reading!

Quiz: Test your knowledge of mortgage options

 By: Financial Consumer Agency of Canada

Buying a home is one of the most significant financial commitments you can make in your lifetime. When you shop for a mortgage, your lender or mortgage broker will provide you with options. Understanding these options and their costs and benefits will help you choose the mortgage that best suits your needs.

How well do you know the different mortgage options available to you?

1. Your mortgage term determines:

  1. The length of time it takes you to pay back your entire mortgage
  2. The length of time your mortgage contract is in effect
  3. The length of time it takes you to pay off your interest
  4. All of the above
Answer to question 1

Answer: B

Your mortgage term is the length of time your mortgage contract is in effect. This consists of everything your mortgage contract outlines, including the interest rate. Terms can range from just a few months to 5 years or longer.

At the end of each term, you must renew your mortgage if you can’t pay the remaining balance in full. You’ll most likely require multiple terms to repay your mortgage.

The length of your mortgage term has an impact on:

  • your interest rate and the type of interest you can get (fixed or variable)
  • the penalties you would have to pay if you break your mortgage contract before the end of your term
  • how soon you have to renew your mortgage agreement

Learn more about mortgage terms.

2. The different interest rate options your lender may offer include:

  1. Fixed interest rate
  2. Variable interest rate with variable payments
  3. Variable interest rate with fixed payments
  4. Hybrid interest rate
  5. All of the above
Answer to question 2

Answer: E

When you apply for a mortgage, your lender may offer different interest options.

A fixed interest rate stays the same for the entire term of your mortgage. Fixed interest rates are usually higher than variable interest rates. With a fixed interest rate, your payments will stay the same for the entire term of your mortgage.

A variable interest rate can increase and decrease during the term. Typically, the interest rate is lower with a variable interest rate than with a fixed interest rate.

A hybrid or combination mortgage has both fixed and variable interest rates. Part of your mortgage has a fixed interest rate, and the other part has a variable interest rate. The fixed portion gives you partial protection in case interest rates go up. The variable portion provides partial benefits if rates fall.

Learn more about types of mortgage interest rates.

3. A variable interest rate with a fixed payment may be a riskier mortgage option than you expect, because:

  1. You can’t predict what the interest rate will be
  2. You can’t change your payment amounts
  3. When interest rates rise you could end up in a situation where none of your payment goes toward paying down the principal
  4. All of the above
Answer to question 3

Answer: C

With a variable interest rate, your payments stay the same for the duration of your term. Lenders call this a fixed payment with a variable interest rate.

A variable interest rate mortgage with fixed payments may be riskier than you expect. When interest rates rise, more of each payment automatically goes toward interest costs rather than toward paying your principal.

You could end up in a situation where none of your payment goes toward paying down the principal. Instead of paying down your mortgage, the total amount you owe on your mortgage will increase. You may have to contribute more capital to avoid problems renewing your mortgage. Acting early is important to prevent the situation from getting worse. If you have a variable interest rate mortgage with fixed payments, contact your financial institution as soon as possible to discuss your options.

Learn about trigger rates on mortgages with variable interest rates and fixed payments.

4. A prepayment privilege is a condition of your mortgage that:

  1. Allows you to increase your regular payments by a certain percentage
  2. Defines the minimum and maximum amount that you are allowed to prepay before the end of your term
  3. Defines the amount you can put toward your mortgage on top of your regular payments, without having to pay a penalty
  4. Varies from lender to lender
  5. All of the above
Answer to question 4

Answer: E

A prepayment privilege is the amount you can put toward your mortgage on top of your regular payments, without having to pay a prepayment penalty.

Your prepayment privileges allow you to:

  • increase your regular payments by a certain percentage
  • make lump-sum payments up to a certain amount or percentage of the original mortgage amount

Prepayment privileges vary from lender to lender. Check the terms and conditions of your mortgage contract to find out:

  • if your lender allows you to make prepayments
  • when your lender allows you to make prepayments
  • if there's a minimum or a maximum amount that you’re allowed to prepay
  • what fees or penalties apply
  • if there are other conditions

Most lenders limit the prepayment amount that is allowed per year. Typically, you can’t carry a prepayment amount from one year to the next. This means you usually can’t add the amount you didn’t use in previous years to the current year.

Learn more about prepayment privileges.

5. An open mortgage is a flexible mortgage option you may want to consider if:

  1. You think you may want to sell your house before your mortgage term is over
  2. You think you may have enough money to pay off your mortgage early
  3. You think you may want to contribute more than your prepayment privilege allows
  4. All of the above
Answer to question 5

Answer: D

There are a few differences between open and closed mortgages. The main difference is the flexibility you have in making extra payments or paying off your mortgage completely.

An open mortgage allows more flexibility if you plan on putting extra money toward your mortgage. The interest rate is usually higher than on a closed mortgage with a comparable term length.

An open mortgage may be a good choice for you if you:

  • plan to pay off your mortgage soon
  • plan to sell your home in the near future
  • think you may have extra money to put toward your mortgage from time to time

Learn more about mortgage prepayment penalties.

5 tips to renew a mortgage that meets your needs now

By: Financial Consumer Agency of Canada

You may be one of the millions of Canadians who will renew their mortgage in the coming year in a much higher interest rate environment. This is a good time to review your mortgage needs and make sure you have the right mortgage product. It is important to remember that you have options when you renew your mortgage. Here are 5 tips that can help you renew a mortgage that meets your needs now.

Tip #1: Review your mortgage needs

Before you renew your mortgage, take the time to review your mortgage needs and make sure you have the right product.

To help you find the right mortgage, consider whether:

If your lender is a federally regulated bank, they must offer and sell you products and services that are appropriate for you, based on your circumstances and financial needs. They also must tell you if they’ve assessed that a product or service isn’t appropriate for you. Take the time to describe your financial situation to ensure you get the right product. Don't hesitate to ask questions and make sure you understand the mortgage you have or want.

Tip #2: Shop around

You don’t have to renew your mortgage with the same lender. You can move your mortgage to another lender if their conditions better suit your needs. Start shopping around a few months before the end of your term. Contact various lenders and mortgage brokers to check if they offer mortgage options that would work better for you. Don’t wait until you receive the renewal letter from your lender.

Use FCAC’s free Mortgage Calculator to see what your payments could be with a different lender.

Tip #3: Negotiate a better interest rate

Negotiate with your current lender. You may qualify for a discounted interest rate that is lower than the rate quoted in your renewal letter. Tell your lender about offers you received from other financial institutions or mortgage brokers. You may need to provide proof of the offers you receive. Make sure you have this information on hand.

If you don’t take action, your mortgage term may be automatically renewed. This means you may not get the best interest rate and conditions. If your lender plans on automatically renewing your mortgage, it will say so in the renewal statement.

Learn more about interest on mortgages.

Tip #4: Switch to another lender

You may decide to switch your current mortgage to another lender for a loan of the same amount. If this is the case, the new lender will need to approve your mortgage application. The new lender may use different criteria than your original lender to decide if you qualify for a mortgage.

Make sure you find out the costs of changing lenders, such as:

Ask if your new mortgage lender is willing to pay for some or all your costs to switch.

You may have to pay a new mortgage loan insurance premium when you switch lenders.

You may have to pay fees if your mortgage is registered with a collateral charge.

Learn about collateral charge mortgages.

Tip #5: Learn about your mortgage-relief options

FCAC expects federally regulated institution to help you if you're struggling to pay your mortgage due to exceptional circumstances. If you’re at risk of defaulting on your mortgage and you’re renewing your mortgage, your bank is expected to:

Learn more about paying your mortgage when experiencing financial difficulties.

What to consider before breaking a mortgage contract

By: Financial Consumer Agency of Canada

There may be many reasons why you find yourself in a mortgage contract that is no longer right for you, including:

If you want to make changes to your contract before the end of your term, you can renegotiate your mortgage contract. This is also known as breaking your mortgage contract.

Cost to break your mortgage contract

The cost to break your mortgage contract depends on whether you have an open or closed mortgage. An open mortgage allows you to break the contract without paying a prepayment penalty.

If you break your closed mortgage contract, you normally pay a prepayment penalty. This fee can cost thousands of dollars.

Learn more about open and closed contracts.

Before breaking your mortgage contract, find out if you’ll have to pay:

Break your mortgage contract to change lenders

You may decide to change lenders because another lender offers you a lower interest rate. If you have an insured mortgage, you are not required to pass a “stress test” when switching lenders at mortgage renewal. (A stress test is designed to prove to the lender that you can afford payments at a qualifying interest rate. This rate is typically higher than the actual rate in your mortgage contract.)

Make sure the benefits of breaking your mortgage contract will save you money once you include all the fees. Compare the costs and benefits of breaking your mortgage contract with options such as:

Learn more about the blend-and-extend option.

Note that you’ll usually have to pay fees when you set up a new mortgage. Lenders may be willing to pay some or all the fees. If this is the case, your costs to renegotiate your mortgage with a new lender will be lower.

Contact your financial institutions to calculate the costs of your available options.

Learn more about breaking your mortgage contract.

Learn more about choosing a financial institution.

How to resolve a problem with your bank

By: Financial Consumer Agency of Canada

If you have a problem with a federally regulated financial institution, you have the right to file a complaint. You can do so by using your institution’s complaint-handling process. This includes if you have a complaint about your mortgage product and services you received.

Learn more about mortgages and your rights.

Federally regulated financial institutions are required to have a complaint-handling process in place.

Use the complaint-handling search tool to learn about your bank’s process.

If your bank does not resolve your complaint to your satisfaction, you have the right to escalate the complaint to an external complaints body.

Download the step-by-step process for how to escalate a complaint with your bank to an external complaints body.

A few words from our collaborators

Qualifying for a mortgage

By: The Office of the Superintendent of Financial Institutions

When a borrower applies for a mortgage loan, they must qualify at a higher interest rate than the actual rate they’ve agreed to with their lender. This is the minimum qualifying rate (MQR), sometimes called a stress test.

What is the MQR?

When applying for a new mortgage, borrowers need to qualify at whichever interest rate is higher:

Renewing mortgage loans

When it comes time to renew, borrowers are welcome to shop around and renew with the same or another lender:

When it comes to mortgages, it is important for borrowers to pass the MQR, whether the economy is going great or feeling tough. During the recent interest rate hikes and increased cost of living, most Canadians were able to continue to pay their mortgages. Default rates, while on the rise, continue to be low compared with historical levels.

Setting the MQR

To make sure the MQR is at the right level for the current financial market, we review it every year. To do the review, we gather a lot of information:

OSFI’s role

The MQR also supports a well-functioning financial system. Mortgage loans make up a large portion of the lending that banks do. If borrowers can’t repay their loans, it could affect the whole system.

Our work touches many areas. We oversee more than 400 financial institutions and 1,200 pension plans.

We regulate and supervise lenders and insurers to make sure they manage a range of risks they face, in particular the risk of financial loss. Strong institutions help support a strong economy.

Learn more about mortgage lending risks.

Learn more about the Office of the Superintendent of Financial Institutions.

The bottom line on consolidating debt into your mortgage

By: Credit Canada

Consolidating debt into your mortgage may seem like a solution to ease the burden of multiple debts and high interest rates. However, it's essential to understand the process and its implications before making a decision.

Debt consolidation is the practice of taking multiple sources of debt and combining them into a single account. When it comes to consolidating debt into a mortgage, this often means rolling high-interest debts (such as credit card debt, payday loans, and other non-mortgage balances) into a new mortgage set at a new, lower interest rate.

There can be many benefits to using mortgage consolidation, including potentially lower interest rates, simplified payments, and improved cash flow, allowing you to save money and manage your finances more efficiently. But it also has its downsides, such as the risk of depleting home equity and the potential to rack up more debt.

If you're considering consolidating your debt into your mortgage, here are the steps you should consider:

  1. Evaluate Your Financial Situation: Start by assessing your debts and home equity. Understanding your financial standing will help determine if consolidation is the right choice for you.
  2. Research Mortgage Products: Explore various mortgage options to find the one that best suits your needs, considering factors like interest rates and repayment terms. Take your time to compare offerings from different lenders. Exploring alternatives such as a Home Equity Line of Credit (HELOC) or a Debt Consolidation Loan may also be viable options.
  3. Consult a Mortgage Advisor: If you’re unsure which product is right for you or want advice on debt consolidation, speak to a mortgage advisor or financial professional who can provide valuable insights tailored to your situation.
  4. Apply for a New Mortgage or Refinance: Follow the lender's instructions carefully and provide all necessary documentation for the application process. Be prepared for a thorough review of your financial history.
  5. Use the new funds wisely: Upon consolidating your debts, allocate the funds strategically. Consider building an emergency fund, investing in retirement savings, or tackling any remaining debts not included in the consolidation.

Ultimately, the best debt relief strategy depends on your unique financial situation. If you need guidance and support with budgeting, debt repayment or any other credit inquiries, Credit Canada offers free credit counselling services from certified credit counsellors to support you through various debt-relief channels.

Contact one of our certified non-profit credit counsellors today.

Find me a broker: Unlocking the dream of homeownership

By: Mortgage Professionals Canada

Buying a home can be a stressful and overwhelming process, but it doesn’t have to be. With a mortgage professional you receive personalized financial advice from an industry expert and gain access to a vast network of lenders, providing you with a variety of options to find the best fit for your financial needs. Mortgage Professionals Canada (MPC) has the largest member base of mortgage professionals, representing over 15,000 members nationwide composed of mortgage brokers and agents, banks, lenders, insurers, and service providers. That’s why we’ve launched our national multilingual campaign, “Find Me A Broker” to make it easier for buyers to connect with a local broker in their area.

Applying for a mortgage is more than just finding a low-interest rate; it's about navigating a complex financial landscape. Mortgage professionals undergo rigorous education to obtain licenses to practice in mortgages, ensuring they grasp the intricacies of mortgage agreements and their implications for homeowners. Their goal is not only to secure competitive loan options but also to protect consumers from predatory practices.

By choosing a licensed mortgage professional, homebuyers gain access to tailored financial advice and transparency throughout the process, empowering them to make informed decisions that align with their financial goals and safeguard their interests. These professionals serve as personalized guides, explaining the nuances of different mortgage products and the implications of various conditions. They take the time to understand clients' financial goals, credit history, and lifestyle, offering a customized approach that creates a seamless path to homeownership through education. This approach helps clients find the best possible rates and mortgage products that fit their specific financial needs and circumstances.

One of the benefits of using a mortgage professional is their thorough understanding of the mortgage market, providing invaluable advice on mortgage products and lenders. Unlike bank loan officers who are limited to their institution’s own products, mortgage professionals have access to a wide array of loans from multiple lenders. They do the research, comparison, and negotiation on your behalf, saving you time and ensuring you get the best possible solution. This personalized approach can result in significant savings over the life of your loan.

Securing a mortgage can be a time-consuming process, involving a lot of paperwork and coordination with various parties. Mortgage professionals help you with all the documents you need and can collect them on your behalf, to handling logistical details and liaising with lenders, lawyers, and real estate agents. This saves you a significant amount of time and helps reduce the stress associated with mortgage applications.

Mortgage professionals aren’t just there to assist you at the outset of securing a loan; they’re also there for you when your mortgage comes up for renewal, providing you the same exceptional customized experience throughout your entire home loan journey.

Forty-five percent of first-time home buyers in Canada choose a mortgage professional to secure their mortgage. Mortgage professionals simplify the home buying process by providing you expertise, saving you time and potentially money by guiding you throughout the entire mortgage journey.

Whether someone’s a first-time homebuyer or a seasoned property investor, MPC is proud to be the industry that provides consumers with choice when making the most important financial decision of their lives. To secure your dream home, be sure to use "Find Me A Broker" for all your mortgage needs.

The difference between a REALTOR® and a real estate agent

By: The Canadian Real Estate Association

Most Canadians understand when it comes to buying or selling a home, it’s much easier to have an expert by their side. But how do you choose who to work with? What’s the difference between a real estate agent and a REALTOR®? Here’s what you need to know.

What is a REALTOR®?

“Being a REALTOR® is more than a job title—it’s a privilege,” says Rob Reynar, Director of Industry Development at the Canadian Real Estate Association (CREA). “It signifies membership with CREA through a local real estate board or provincial association and represents a standard of practice based on the REALTOR® Code of Ethics. Once you get a real estate license, you must adhere to standards set by regulators in various parts of the country. But the REALTOR®Code goes above and beyond that standard: it reaches into things like knowledge base, service levels, and ethical conduct.”

REALTOR® is a trademarked term identifying the real estate brokerage and related professional services provided by members of CREA. If an agent isn’t a member of CREA, they can’t use the term REALTOR®. When you see that designation, you should feel confident in your choice of real estate professional.

The advantages of working with a REALTOR®


REALTORS® are knowledgeable about housing trends, current market conditions, and developments in the real estate industry. They commit to continually update their professional education through training workshops and courses, adds Reynar, noting REALTORS® have access to services, networks, a knowledge base, and advocacy that non-members do not, including legal and compliance materials on federal legislation related to real estate, for example Anti-Money Laundering (FINTRAC), Privacy (PIPEDA), Anti-Spam (CASL), Competition, etc. and other compliance material specific to CREA members such as the REALTOR® Code of Ethics and Trademarks.

REALTORS® can also achieve special designations based on experience, specialties, and professionalism. There are dozens of designations available, allowing you to find a REALTOR® to best match your needs, including:


There are also resources available to REALTORS® to help with the physical sale and purchase of your home, which can lead to a much smoother experience.

For example, real estate agents who are not REALTORS® don’t have access to resources such as local real estate board MLS® Systems, which are co-operative selling systems that contain detailed information, specialized search tools, and analytics about cities, neighbourhoods, and streets—all designed to match buyers with the properties they’re looking for.

REALTORS® also have access to:

 The REALTOR® Association Community

REALTORS®, are part of a massive professional network—CREA is one of Canada’s largest single-industry associations.

“Our membership includes more than 160,000 real estate brokers and agents right across the country,” Reynar says. “Our collective voice has a huge impact when we’re advocating for governments to enact policies that support housing and homeownership.”

How can a REALTOR® help you?

Your REALTOR® is with you at every step of the home buying or selling journey, helping you with one of the biggest financial decisions you’ll make.

“It’s about working with you through the complicated process of buying and selling,” explains Reynar. “They’re able to advocate on your behalf during negotiations. REALTORS® also have access to a network of industry professionals like home inspectors, contractors, lawyers, and financing specialists.”

While most of us spend time online researching potential properties or trying to figure out pricing, Reynar notes it’s best not to go at it alone.

“It’s critical that consumers align themselves with a REALTOR® to help guide them through that buying or selling process and help them make informed decisions.”

If you’re thinking of buying or selling, talk to a local REALTOR® to see how their fees and services align with your needs and goals. Use the Find a REALTOR® feature to get started.

You may also be interested in reading…

This article was powered by the Living Room blog. Owned and operated by the Canadian Real Estate Association (CREA), provides up-to-date and reliable information that makes finding your dream property easy and enjoyable.

What’s new

Learning resources and tools

Struggling to pay your mortgage?

FCAC expects federally regulated financial institutions to help you if you're struggling to pay your mortgage due to exceptional circumstances.

Learn more about paying your mortgage when experiencing financial difficulties.

Renting an apartment or house

If you are about to rent an apartment or house, use FCAC’s resources to help you plan. Knowing the costs of renting ahead of time will help you prepare a realistic budget.

Learn more about what to consider before you rent a home.

Interested in improving your math skills?

ABC Life Literacy’s ABC Everyday Numbers is a free financial literacy and math program for adult learners.

Learn about the ABC Everyday Numbers program.

Discover how small changes to your budget can save you money

Credit Canada’s new budget tool lets you select the items you want to cut out of your budget (lunch out, wine, etc.) and then calculates how much you will save.

Try out the Credit Canada Budget Calculator.

New quiz: Understanding your finances is in your best interest

Quebec’s Autorité des marchés financiers (AMF) launched a new online quiz (in French only) named Mieux comprendre vos finances, ça vous parle? (“Does understanding your finances better sound good to you?”). The interactive quiz allows you to access information tailored to your specific financial profile.

Take the Mieux comprendre vos finances, ça vous parle? quiz.

Video series to better understand the economy and financial planning

Savoir Média and the Institut Québécois de planification financière (IQPF) developed a 10-part video series (in French only) called Format économique. Topics include the history of money, debt, financial institutions, savings, retirement and more.

Visit Format économique.

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