5.2.15 Case study: Financing a mortgage

Kemal and Andrea have found a house and made an offer for $364,000—expensive, but they think it's within their budget. Their mortgage lender has agreed to lend them $339,000, the purchase price less their $25,000 down payment, at an interest rate of 4.5 percent. The lender has asked them to review the mortgage documents and choose the payment terms. "This is hard to sort out," Andrea says. "It's hard to choose among all the options," Kemal agrees. They use the Financial Consumer Agency of Canada's Mortgage Calculator to compare them.

Screenshot of the Mortgage Calculator Tool. Description in the text below.

Kemal and Andrea compare a number of options. They feel that by watching their spending, they can afford the accelerated biweekly payment schedule. "Saving over $33,000 will make up for the difference in our monthly budget," Andrea tells Kemal. And when the five-year term ends, they may be able to afford higher payments to pay off the mortgage faster.

Amortization period

25- year term

20- year term

25-year term






Monthly: $1,876.27 per month

Monthly: $2,137.07 per month

Accelerated biweekly: $938.14 every two weeks

Number of payments




Total interest paid





Kemal and Andrea are planning to spend most of their money, and they may not have left enough for costs such as mortgage default insurance, taxes, legal costs and moving. These can add several thousand dollars to the cost of a new home. Be sure to check for any extra costs that apply when you consider a mortgage.

Lessons Andrea and Kemal learned:

Plan for your own mortgage with the Financial Consumer Agency of Canada's Mortgage Calculator and Mortgage Qualifier Tool. Enter the information for your current mortgage, or for a mortgage you expect to take out. Compare the possible options by choosing different selections from those given and decide which would best suit your needs.

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