What Is a Mortgage in Canada?
What is a mortgage?
A mortgage in Canada is a loan that helps you buy a home without paying the full price upfront. Instead, you borrow money from a lender and pay it back slowly over time.
How does a mortgage work in Canada?
Here is the simple version:
- You choose a home
- You make a down payment
- A lender gives you the remaining amount
- You repay it monthly with interest
Your monthly payment depends on several factors, which you can test using the Mortgage Payment Calculator.
Principal vs interest
Your mortgage payment has two main parts:
- Principal: the amount you borrowed
- Interest: the cost of borrowing
What is amortization?
Amortization is how long it takes to pay off your mortgage. In Canada, most mortgages use a 25-year amortization.
What affects your mortgage payment?
- Mortgage amount
- Interest rate
- Amortization
- Payment frequency
You can compare different scenarios using the Dual Scenario Mortgage Calculator.
Mortgage vs renting (simple view)
When you rent, you pay a landlord. When you have a mortgage, your payments help you build ownership in your home.
However, owning includes extra costs like taxes, insurance, and maintenance. You can estimate these using the Homeownership Cost Calculator.
Closing costs in Canada
Buying a home also includes upfront costs like land transfer tax and legal fees. You can estimate these using the Closing Costs Calculator.
Simple summary
A mortgage in Canada is a loan used to buy a home. You make a down payment, borrow the rest, and repay it over time with interest. Understanding this helps you make better decisions when buying property.
Last updated: April 2026