Owning a home and managing your mortgage
Use our tools and resources to ensure you’re getting the most out of home ownership.
Tips and resources to help you manage your mortgage like a pro
The following considerations can help you to save money when financing a home. They can provide for greater economic stability in the event of financial challenges down the road. Examples of this would be lower income levels, increased monthly expenses and/or higher interest rates.
Mortgage fraud
The promise of “easy money in real estate” can be hard to resist. Consumers who knowingly misrepresent information could find themselves becoming accomplices to mortgage fraud.
Mortgage fraud is the deliberate misrepresentation of information to obtain mortgage financing that would not have been granted if the truth had been known.
Mortgage fraud includes:
- misstating your work position, your income or the length of time you’ve held your job
- stating you’re a full-time salaried employee if you are not
- misrepresenting the amount or source of your down payment
- claiming a rented property is owner-occupied
- not disclosing other mortgages or debts
- omitting information to inflate the value of the property
- adding purchasers’ names on the mortgage application who will do not intend to take responsibility for the mortgage
- acting as or using a “straw buyer” – a person whose good credit is used to get a mortgage for someone else
Borrowers who misrepresent information and straw buyers who allow a property to be purchased in their name are committing mortgage fraud and will be liable for any financial shortfall in the event of default. They may also be held criminally responsible for their misrepresentation.
Protect yourself
Never deliberately misrepresent information when applying for a mortgage. In addition:
- Don’t add your name to another person’s mortgage unless you plan to make payments on it.
- Don’t sign papers until you understand them. If necessary, seek legal advice or have them translated.
- If you make a deposit on a home, don’t give it directly to the seller. Make sure it is held “in trust” by the seller’s realty company or a lawyer/notary.
- Before you buy a property, get its sales history through the land titles office or consider having it inspected and appraised. Check with a lawyer to see if anyone other than the seller has a financial interest in it or if there are any outstanding liens or tax arrears.
- Always know who you are doing business with. Deal with licensed or accredited mortgage and real estate professionals.
- Get independent advice from a lawyer/notary. Talk to them about title insurance or alternative methods of protection.
Be wary of anyone who approaches you with an offer to make “easy money” in real estate. If a deal sounds too good to be true, it probably is.
Report fraud
If you suspect that you’ve been the victim of mortgage fraud, contact your local police department. Or contact the Canadian Anti-Fraud Centre.
Toll-free phone: 1-888-495-8501
Mortgage planning tips
Whether you are buying a home or refinancing an existing home, it is important to make informed housing finance decisions that will help make homeownership viable and affordable over the long term.
By planning your mortgage out in advance, you’ll save money and be better prepared to deal with any financial setbacks.
Borrow less than you’re allowed
Mortgage professionals use 2 rules to decide how much they’ll lend you:
- Your housing costs shouldn’t be more than 32% of your gross income. Housing costs include mortgage principal and interest, taxes, heating expenses and half of your condo fees.
Find out the home-related costs you can afford each month. Calculate your gross debt service ratio. - Your total debt (for housing, cars and credit cards) shouldn’t be more than 40% of your gross income.
Find out the maximum debt load you can carry each month. Calculate your total debt service ratio.
But borrowing this maximum amount can be risky. If your income drops, your expenses increase or interest rates rise, you may have trouble making your payments. Take on a smaller mortgage so that your housing costs stay within your means.
Estimate the maximum mortgage you can afford with our mortgage affordability calculator.
Figure out how much you’ll pay and how often you’ll make payments with our mortgage payment calculator.
Compare your income and expenses to see how a mortgage will fit into your budget with our household budget calculator.
Think about how higher interest rates would affect your payments
An increase in the interest rate will increase your future monthly payments. For example, if interest rates rise from 5% to 7%, renewing a $250,000 mortgage will cost an extra $300 per month.
Pay off your mortgage faster
Try to pay more each month:
- Increase your regular payment amount. Pay $675 rather than $652, for example.
- Make lump sum payments to your mortgage principal. An extra $1,000 here and there can make a big difference.
- Make accelerated payments. Instead of making 2 payments per month (24 per year), make payments every two weeks (26 per year).
- Speak to your mortgage professional about other options.
By paying more now, you’ll save money in the long run and you’ll build a financial cushion.
Seek help right away if you can’t make your payments
Your lender can help you deal with financial setbacks. Don’t wait. Let them know if you’re having financial issues.
Plan and manage your mortgage
Take the time to plan and review your mortgage options, terms and conditions and prepare yourself for managing your mortgage.
Whether you are buying a home or refinancing an existing home, it is important to make informed housing finance decisions. Take the time to plan and review your mortgage options, terms and conditions and prepare yourself for managing your mortgage.
Mortgage Planning Tips
Use these tips to help you to save money and provide for greater economic stability in the event of financial challenges down the road.
Homebuying Calculators
Easy to use mortgage tools to help you establish your financial situation, determine how much house you can afford and the maximum price that you should be considering.
Your Credit Report
Here are some simple steps you can take to maintain a good credit score and history and improve your chances of being approved for a mortgage.
Your Home Value
Determining a property’s value is an essential step in the mortgage application process. You can help by providing precise and accurate information about your property to your Mortgage Professional.
Mortgage Fraud
Find out how to protect yourself when purchasing or refinancing a home.
Dealing-with-Mortgage-Payment-Difficulties
Learn how you can work with your lender to find the best solution for your mortgage payment problems.
Related CMHC Information
- Check-if-You-are-Financially-Ready-to-Own-a-Home
- Which Home is Right for You?
- Home Renovation Financing Options
- CMHC Mortgage Loan Insurance
Related Links
Your credit report
A good credit report and credit score are important factors in determining whether or not you will be approved for a mortgage. Here are some simple steps you can take to maintain a good credit history and improve your chances of being approved.
Build a good credit history and you’ll improve your chances of being approved for a mortgage.
What is a credit score?
Your credit score is one of the factors lenders use when they consider you for a mortgage. It’s a number that signals your financial health at a specific time. It also gives information about your financial past, and how consistently you pay off your bills and debts.
Check your credit score
Find your credit score through one of Canada’s credit-reporting agencies:
For a fee, they will provide you with an online copy of your credit score as well as a credit report. Your credit report is a detailed summary of your credit history, employment history and personal financial information. They can also send you a free copy of your credit report by mail.
If you find errors in your report, contact the credit-reporting agency and the organization responsible for the mistake right away.
Build your credit score
Begin building a credit history as early as possible. To start, apply for a credit card, then use it responsibly.
Improve your credit score
Show potential lenders that you can manage credit well:
- Pay your bills in full and on time. If you can’t pay the full amount, pay at least the required minimum shown on your monthly statement.
- Pay off your loans, credit cards and lines of credit as quickly as possible.
- Stay within the limits on your credit cards. Keep your balances as low as possible.
- Don’t apply for more credit cards or loans than you can comfortably manage.
For more information, download the Financial Consumer Agency of Canada’s workshop on understanding your credit report and score.
Your home value
Whether you are purchasing a home or looking to refinance, determining a property’s value is an essential step in the mortgage application process.
Property value is key to determining the amount of the mortgage you’ll be offered.
How home value is measured
A home’s value is based on its features. These include square footage, location, age, quality and number of bedrooms and bathrooms.
A property’s value isn’t fixed. It’s a snapshot of what it’s worth in the current market in relation to what similar properties are selling for. Renovations will affect a home’s value. So will changes to the neighbourhood and in the housing market.
What you need to do
When you apply for a mortgage, your lender will ask you questions about the property. You’ll also need to give details about any renovation costs you plan to add to your mortgage.
Collect the information you’ll need in order to answer accurately by using our .
Professional home appraisal
The Appraisal Institute of Canada could help you or your lender during that process. Their guide (PDF) outlines all the steps to follow in order to perform a detailed assessment of your home.
Get the amount you need
If your home appraisal doesn’t support the mortgage amount you want, talk to your lender and real estate agent. They can help you explore your options.
