A mortgage is a long-term loan that is used for the purpose of buying a home. For most Canadians, the mortgage on their home is their single largest monthly expense and largest lifetime debt. Consequently, making the right choices when it comes to your mortgage can save you thousands of dollars and can have a significant impact on your financial plan.

The average price of a home in Canada is rising every year, especially in large cities such as Toronto and Vancouver. Very few first-time homebuyers have the cash to buy a home, so they use mortgages.

A mortgage is a secured loan. The house is used as collateral against the mortgage. If you're purchasing the property with a partner or a spouse, that person’s income will be included in the calculation (credit history will also be considered).

In Canada, there are two types of mortgages: conventional and high-ratio. Most federally regulated lending institutions face government restrictions, which limit them to providing mortgages for amounts up to 80% of the value of the home or at least a 20% down payment. The remainder is borrowed against the property and repaid over a certain period known as the amortization period.