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Another option: a combined mortgage and high interest account
1 As at October 25, 2018, the Manulife One base rate is 4.45% and the annual interest rate is 4.45%. Both are variable rates, calculated on the daily closing balance and charged monthly. The monthly administration fee is $16.95 ($9.95 for seniors). Rates and fees are subject to change.
2 For the Manulife Bank Select fixed rate, interest is compounded semi-annually, not in advance. For the Manulife Bank Select variable rate, interest is compounded monthly, not in advance.
Getting mortgage pre-approval should be your first step when buying a home. A pre-approval lets you know how much the bank is willing to lend and gives you an idea of your estimated monthly payments. This allows you to focus your search on homes within your approved price range and make an offer without worrying about whether you’ll be able to get financing.
You can buy a home with as little as 5% of the total purchase price of the new home, which means you can borrow up to 95% of the value of the home. The amount of your down payment will determine what kind of mortgage you qualify for.
- If you have a down payment of less than 20%: you’ll need a high ratio mortgage. With this type of mortgage, you’ll need to purchase mortgage default insurance. The cost of default insurance can be added to your mortgage or paid in a one-time payment.
- If you have a down payment of 20% or more: you can have a conventional mortgage. With a conventional mortgage, there’s no need to purchase mortgage default insurance.
Your amortization is the length of time it will take you to pay off your entire mortgage at your current interest rate and payment. Your amortization will change over time as you renew at different interest rates, with different payment amounts.
As an example: You might have a five-year, fixed-rate mortgage with an amortization of 25 years. This means the life of the mortgage (amortization) is 25 years and your interest rate and payments are guaranteed for the five-year term. After five years you’ll have 20 years left on the life of your mortgage and you can renew the interest rate for another term, for example another five years.