Navigating Mortgage Decisions: Finding the Right Amortization and Term for Your Situation

Tracy Head • October 7, 2024

When I am working with clients on their mortgage approvals there are several decisions they need to make. The questions differ a bit based on whether we are working on a purchase, a refinance, or a straight renewal.

We talk about amortization, term, and the specific mortgage product. These questions differ a bit based on what we are doing and the clients’ specific situation. Amortization refers to the total length of time required to pay your mortgage in full. Term refers

to the length of time you choose to lock into a specific rate.

Some of the decisions can be scripted if you are purchasing with less than twenty per cent down and your mortgage requires default insurance. These rules have recently changed (again situation specific) but length of term is up to the individual client.

Historically many people choose five year terms because lenders offer lower rates for this term. Over the last two years I’ve had far more people opt to pay a slightly higher interest rate and choose a three year term, gambling that rates will be lower then.

Over the last year specifically as home prices have risen at the same time as the cost of living has escalated I’ve had different conversations with clients about the amortization they choose. With the recent announcement of changes coming to maximum amortizations for new builds and first time home buyers it will be interesting to see how these discussions change over the

next few months.

For clients who were working on refinances or purchases with over twenty per cent down we had the option of extending to a thirty year amortization.

Some clients are resistant to stretching out the length of their mortgage and for solid reasons. Our parents’ generation was all about getting their mortgages paid off as soon as possible. This is obviously the choice that made the most sense and was more achievable for them and has been ingrained in many of us.

Our current reality is that home prices and cost of living have skyrocketed while wages have not kept pace. I’ve heard the argument that our parents were not enjoying a life style that included $6 coffees every day. Fair enough.

However, I have clients that live very frugally and are still struggling. Life happens. Divorce or separation happen. Devastating accidents or illness happen. Childcare bills escalate. Jobs are lost. Stuff happens.

Particularly when I am working with clients that are consolidating or buying at a significantly higher price point we have a thorough discussion comparing the difference in monthly payments for (usually) a twenty-five amortization versus a thirty year amortization.

Signing for a shorter amortization makes better sense for your long-term financial plan. However, if the higher payment causes you stress month after month and you end up in the same boat again a few years down the road the long term benefit is not there.

Every lender offers several ways to make extra payments against the principal of your mortgage. Interest rates will likely be different every time you renew your mortgage. Your income and bills change over time.

I will always be an advocate for paying your mortgage off sooner but many of my conversations with clients are pretty raw about the reality of making your payments every month.

The positive news is that rates have been trending down over the last month which will help provide a bit of relief. The better news is that by making thoughtful decisions around your choices for amortization and term you may help reduce your overall stress level.

< Older Post Newer Post >

Tracy Head

Mortgage Broker

GET STARTED

Purchase Plus Improvements

By Tracy Head • March 19, 2026

Hammer, Nails… and a Mortgage That Sees Potential Over the years I’ve noticed a pattern: buyers fall into two camps. The “this house is perfect” crowd… and the “this could be perfect if we just fix a few things” crowd. Today, we’re talking about the second group—and one of the most underused tools in the Canadian mortgage world: the purchase plus improvements mortgage. What Is It (and Why Should You Care)? A purchase plus improvements mortgage lets you roll renovation costs into your mortgage at the time of purchase. Instead of draining your savings—or worse, putting renovations on a high-interest line of credit—you finance those upgrades at your mortgage rate. In plain English: you buy the house and fix it up, all in one tidy package. You get to enjoy the renovations while you live in your home, rather than scrambling to renovate or update when you are getting ready to sell. Lenders like this because you're increasing the value of the home. You should like it because you're borrowing at (usually) the cheapest rate you'll ever get. Let’s say you’ve found a home priced at $700,000. It’s solid—but a little tired. You want to: Upgrade a dated bathroom Replace an aging furnace Put on a new roof Total improvement budget: $40,000 With a purchase plus improvements mortgage, your financing is based on the “as-improved” value, meaning: Purchase price: $700,000 Improvements: $40,000 Total financed value: $740,000 Because the purchase price exceeds $500,000, the minimum down payment in Canada is not 5% flat. It’s calculated as: 5% on the first $500,000 = $25,000 10% on the remaining $240,000 = $20,000 Minimum required down payment: $49,000 Mortgage Before Insurance Total value: $740,000 Down payment: $49,000 Base mortgage: $691,000 Adding the CMHC Insurance Premium Because your down payment is under 20%, mortgage default insurance applies. At this loan-to-value (roughly 93.4%), the CMHC premium is 4%. CMHC premium: $691,000 × 4% ≈ $27,640 This premium is typically added to the mortgage, not paid upfront. Total mortgage after insurance: ≈ $712,421 What Does That Payment Look Like? Now let’s plug that into real numbers: Mortgage: $712,421 Rate: 3.99% Amortization: 25 years Estimated monthly payment: ≈ $3,750–$3,760/month (call it $3,755/month for coffee-shop accuracy). Why This Still Makes Sense Here’s where people sometimes hesitate: “Wait—I’m paying insurance and financing renovations?” Yes. And in most cases, it still works in your favour. Because: You’re financing renovations at 3.99%, not 8–10%+ You’re improving the home’s value immediately You’re avoiding the markup baked into fully renovated homes In other words, you’re not just spending money—you’re strategically improving the value of your new home. How It Actually Works Behind the Scenes Here’s the part most buyers don’t realize: You submit quotes for the renovations upfront The lender approves the total (purchase + improvements) The purchase closes as usual The renovation funds are held back by your lawyer You complete the work Funds are released once the work is verified It’s a bit of paperwork—but compared to juggling contractors and separate financing? It’s a win. Why I Recommend This More Often Than You’d Think After years in this business, I can tell you this - the “perfect home” usually comes with a premium price tag. But the “almost perfect” home? That’s where the opportunity is. With a purchase plus improvements mortgage, you can sometimes: Buy in a better neighborhood Customize the home to your taste Avoid bidding wars on fully renovated properties Finance upgrades at mortgage rates (instead of 8–10%+ elsewhere) If you’re considering this route, here’s my advice: Get detailed quotes (not ballpark guesses) Plan for a buffer—renovations love surprises Work with a broker early (this is not a last-minute add-on) And most importantly: don’t be scared of a home that needs work. Some of the best purchases I’ve seen over the years started with the phrase, “Well… it’s not perfect, but…” Final Thought A purchase plus improvements mortgage isn’t just financing—it’s strategy. It’s the difference between settling for someone else’s vision… and building your own, from day one. And in a market like Canada’s, that kind of flexibility isn’t just nice to have—it’s powerful.

So Your Mortgage Is Approved

By Tracy Head • March 6, 2026

So Your Mortgage Is Approved… Now Don’t Break It By the time a buyer gets the call that their mortgage has been approved, the reaction is usually somewhere between relief and a sudden urge to celebrate like they’ve just won the Stanley Cup. After weeks of paperwork, bank statements, document requests, and answering questions about that mysterious $73 e-transfer from your cousin, you’ve made it to the home stretch. But here’s the thing many buyers don’t realize: a mortgage approval isn’t the finish line. It’s more like the last lap before the ribbon. And in this final stretch, there are a few things that can still trip you up if you’re not careful. As a mortgage broker who has watched this happen more times than I care to admit, allow me to offer a friendly list of things you absolutely should not do between mortgage approval and possession day. 1. Do Not Finance a New Car (Even If It Smells Amazing) You might think, “What better way to celebrate a new house than with a new truck in the driveway?” The lender disagrees. Taking on new debt before your mortgage funds can change your debt ratios, which were carefully calculated to get you approved in the first place. I once had a client proudly tell me about the brand-new SUV they bought the week before closing. Unfortunately, the lender was less impressed. Celebrate later. The house comes first. The new car can wait. 2. Do Not Quit Your Job to ‘Follow Your Passion’ I’m a big supporter of people chasing their dreams. But if your dream involves leaving your stable salaried position to start a kombucha brewing company three days before your mortgage funds… perhaps give that dream a couple more weeks. Lenders like stability. A sudden career change can send underwriting departments into mild panic mode. 3. Do Not Open New Credit Cards for Furniture, Appliances, or “Just in Case” It’s very tempting. You walk into a furniture store, see the perfect sectional, and suddenly there’s a cheerful salesperson offering “12 months no payments!” It sounds harmless, but that new credit line can affect your credit score and your debt calculations. Also, you may be shocked to learn this: the house will still accept furniture purchases after you own it. 4. Do Not Move Money Around Like You’re Running an Offshore Hedge Fund During the mortgage process, lenders carefully verify where your down payment and funds are coming from. If large, unexplained deposits suddenly start bouncing between accounts, it can raise questions. Questions lead to paperwork. Paperwork leads to stress. Stress leads to calling your mortgage broker at 9:45 p.m. Keep things simple and predictable until the deal is done. 5. Do Not Co-Sign a Loan for Someone Else You may be the generous type. A friend or family member might ask you to co-sign for a car or a line of credit. As noble as that is, lenders will treat that new obligation as your debt too. Even if your cousin promises they’ll “definitely make the payments.” Your lender prefers promises backed by math. 6. Do Not Miss Any Bill Payments Your credit report was likely pulled during the approval process, and lenders sometimes check again before funding the mortgage. A missed payment can ding your credit score at the worst possible moment. In other words, now is the time to be the most financially responsible version of yourself. The Bottom Line Once your mortgage is approved, the best strategy is surprisingly simple: keep everything exactly the same until your home officially closes. Same job. Same credit habits. Same bank accounts. Think of it like carrying a tray of drinks across a crowded room. You’re almost there—now is not the time to start dancing. The good news? Once the keys are in your hand and the deal is finalized, you’re free to celebrate however you like. Buy the couch. Paint the walls. Host the housewarming party. Just maybe hold off on the kombucha startup for a week or two.