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Ghummaz Bhatti

Mortgage 101: A Guide for First-Time Homebuyers in Ottawa

The prospect of buying a home can be exciting, but it can also be overwhelming, especially for first-time homebuyers. One of the most significant decisions you’ll make when buying a house is choosing the right mortgage. Here are seven common mortgage questions that every first-time homebuyer in Ottawa should ask.

1. What is a Mortgage?

A mortgage is a loan that helps you buy a home. It is a legal contract between you and a lender where the lender agrees to provide the funds to purchase the property, and you agree to repay the loan with interest over a set period.

2. How Much Can I Borrow?

The amount you can borrow depends on several factors, such as your income, credit score, and debt-to-income ratio. Typically, lenders use the Gross Debt Service Ratio (GDS) and Total Debt Service Ratio (TDS) to determine how much you can afford. GDS measures your housing expenses (mortgage payments, property taxes, and heating costs) as a percentage of your income, while TDS measures your total debt payments (including housing expenses, car payments, and credit card bills) as a percentage of your income. In general, your GDS should not exceed 32% of your gross income, while your TDS should not exceed 40%.

3. What is the Downpayment Requirement?

The downpayment is the amount of money you need to put towards the purchase price of the home. In Canada, the minimum downpayment is 5% of the home’s purchase price, but if you put down less than 20%, you will be required to pay mortgage default insurance. The insurance protects the lender in case you default on the loan.

4. What is the Interest Rate?

The interest rate is the amount of money charged by the lender for borrowing the funds. It is expressed as a percentage of the loan amount and can be fixed or variable. Fixed interest rates remain the same throughout the mortgage term, while variable interest rates can fluctuate based on market conditions.

5. What is the Mortgage Term?

The mortgage term is the length of time that you agree to repay the loan. In Canada, the most common mortgage term is five years, but it can range from six months to ten years. At the end of the term, you can either renew the mortgage or pay it off in full.

6. What is the Amortization Period?

The amortization period is the length of time it takes to repay the entire mortgage. It can range from 10 to 30 years, and the longer the period, the lower your monthly payments. However, a longer amortization period means you will pay more interest over the life of the loan.

7. What is Mortgage Default Insurance?

Mortgage default insurance is required if you put down less than 20% of the home’s purchase price. It protects the lender in case you default on the loan, and the cost is based on a percentage of the loan amount. In Canada, the three mortgage default insurance providers are Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada, and Canada Guaranty Mortgage Insurance Company.


Buying a home is one of the most significant investments you’ll make, so it’s essential to understand the mortgage process. By asking these seven common mortgage questions, first-time homebuyers in Ottawa can gain a better understanding of their mortgage options, budget, and overall financial situation. Be sure to consult with a mortgage professional to help guide you through the process and answer any additional questions you may have.

Don’t let the complexities of the mortgage process overwhelm you. Let the experts at Ottawa Mortgage Services guide you through every step of the way. Our experienced mortgage agents in Ottawa specialize in helping first-time homebuyers, self-employed individuals, and commercial clients find the right mortgage solution for their unique needs. Contact us today to schedule a consultation and take the first step towards securing your dream home.

Contact Ottawa Mortgage Services to learn more

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