Answers to 10 Most Frequently Asked Mortgage-Related Questions

Through comprehensive online research, we have identified the ten most frequently asked mortgage-related questions. Below, we provide clear and informative answers to each.

If your specific inquiry is not addressed, please do not hesitate to contact us — we would be pleased to assist you.

Are mortgage rates going down in Canada?

Variable mortgage rates are expected to continue to decrease. On January 29th, the Bank of Canada cut its policy rate by another 0.25% and another quarter of a percent cut is expected in March.

Fixed rates, on another hand, are closely linked with government bond yields, which are influenced by various economic indicators such as inflation rates, economic growth and central bank policies. Bond yields can also be affected by investor sentiment and risk appetite. That being said, the general consensus is that fixed rates are also expected to decline.

Are mortgage payments tax deductible in Canada?

In Canada, the standard guideline is that interest expenses are tax deductible when funds are borrowed for investment purposes. Therefore, if the purpose of the mortgage is for an investment, the interest portion should be tax deductible.

Also, if a portion of your home is used for business purposes, you may be eligible to deduct a corresponding percentage of your mortgage interest on your taxes.

Can mortgages be paid by credit card?

Yes, you can pay rent or a mortgage with a credit card in Canada, but it’s not a common practice. It often requires extra steps and workarounds, making it less straightforward.

The simplest way to make a mortgage payment with a credit card is by using a third-party service, such as PaySimply or Plastiq, naturally, for a fee.

Another option for paying your mortgage with a credit card is a cash advance. This allows you to withdraw cash from an ATM or bank using your credit card. However, cash advances have significant downsides, including high fees and steep interest rates.

How mortgage brokers get paid?

In Canada, mortgage brokers are typically paid by lenders through commissions, usually a percentage of the mortgage amount. Some lenders also offer trailer fees and bonuses for high-volume brokers.

In rare cases, borrowers may pay fees, especially for private or alternative mortgages (typically from 1% to 3%).

Brokers may also earn commissions on renewals and refinances, though at lower rates.

What mortgage can I afford?

Mortgage affordability in Canada depends on income, debt, down payment, and expenses.

Lenders follow these key guidelines:

• GDS Ratio: Housing costs (mortgage, taxes, heating, and 50% of condo fees) should not exceed 39% of gross income.

• TDS Ratio: Total housing and debt payments should stay within 44% of gross income.

A typical mortgage limit is about 4.5 times annual income (e.g., $100,000 income ≈ $450,000 mortgage).

For multiple properties, qualification is more complex, factoring in rental income, debt, and down payment requirements.

Where does the mortgage word come from?

The word “mortgage” comes from the Old French “mort gage”, meaning “dead pledge” (mort = dead, gage = pledge).

First used in the 12th century, it described a pledge that became void once repaid or resulted in property loss if unpaid.

Originating in medieval England, mortgages were conditional transfers, where repayment returned ownership, while default led to forfeiture. Though evolved, the core concept of a secured loan tied to property remains unchanged.

Which mortgage payment frequency is the best?

The best mortgage payment frequency depends on your financial goals and cash flow.

If you want lower interest cost and a faster mortgage payoff, choose accelerated bi-weekly or accelerated weekly payment.

If you prefer simple budgeting, go with monthly or bi-weekly payments.

If you would like to align with a specific pay schedule, choose from monthly, semi-monthly, bi-weekly or weekly.

Which mortgage term is best?

The best mortgage term depends on your goals, risk tolerance, and interest rate outlook.

Fixed vs. Variable Rate?

Fixed terms offer stable payments and are good for predictability.

Variable terms typically offer lower initial rate but can fluctuate. They are historically cheaper, but riskier.

Which Term is Best?

If you prefer stability, look for a 5-year fixed term or longer.

If you are expecting the rates to drop, consider short, fixed terms (1-3 years) or variable.

If you are planning to move or refinance soon, consider short terms, to avoid penalties.

Who determines mortgage rates?

In Canada, mortgage rates are set by banks and lenders and are influenced by various factors, including Bank of Canada’s policy rate, bond yields, lenders’ operating costs, credit history, risk of default, etc.

Variable mortgage rates are determined by the Bank of Canada (BoC) and commercial banks, with the BoC’s policy rate serving as the primary influencing factor.

Why mortgage broker versus bank?

Deciding between a mortgage broker and a bank depends on your financial needs and preference for flexibility or convenience.

For lower rates and more options, choose a mortgage broker, as they work with multiple lenders and offer a variety of mortgage products.

For a simpler process and existing relationship benefits, a bank may be the better choice.

For complex financial situations, a mortgage broker can provide access to specialized programs that your bank may not offer.