Step 4 - Arranging your mortgage loan

Define your objectives for paying back the loan.

You need to ask yourself whether you want to:

  • have low payments so you can better balance your budget
  • pay the least possible interest
  • have the option to pay off your loan in 15 rather than 25 years
  • have the ability to share payments with your co-borrower in a way that respects your individual budgets and preferences
  • get the best interest rate on the market

Types of loans

  • Fixed-rate loan: the interest rate stays the same until the end of the term.
  • Variable-rate loan: the interest rate varies according to the prime rate.
  • Yearly rate resetter loan: the rate is revised annually and includes a pre-established rate discount.

Hybrid mortgage loans

By combining different types of mortgages and diversifying their payment terms, you can get a more personalized solution that suits your borrowing needs.

Example

  • Property value: $293,000
  • Down payment: $30,000
  • Loan amount: $263,000
Comparative table with 3 rows and 3 columns
Hybrid mortgage Amount Interest rate1
5-year fixed-rate loan (50%) $131,500 3.85%
Yearly rate resetter loan (50%) $131,500 2.89%
Average rate: 3.37%

Advantages

  • Rate stability of a fixed-rate loan
  • Low interest rate of a variable-rate loan
  • Combined interest rate that matches your profile and needs

Solution for start-up costs

The solution for start-up costs can provide you up to $10,000 to help you cover the cost of buying a home (welcome tax, inspection fees, the lawyer’s fees, etc.). Your mortgage rate will be increased slightly to cover the amount you borrow.

Loan Insurance

Loan insurance helps protect your ability to maintain your payments, depending on the type of financing you have chosen.

2 coverages provided

  • Life insurance will pay off the insured balance of your loan in the event of your death. That way, your loved ones won’t be saddled with debt.
  • Disability insurance lets you maintain your standard of living if an accident or illness occurs by helping you pay back you loan, based on the percentage of insurance selected.

Will your disability insurance be enough?

When deciding whether or not you have enough disability insurance, consider your ability to maintain your payments if an accident or illness prevents you from working for a while. Don’t forget that you also have to cover your other financial obligations (groceries, taxes, electricity, medication, etc.).

Even if you already have disability insurance, it generally only covers two-thirds of your current salary.

Home insurance

In addition to essential basic protections (fire, theft and vandalism), all-risk protection from Desjardins also covers you against most accidental events that may cause damage to your property, even if you are held liable.

You can also add optional coverage to meet your specific needs.

Tips for paying off your mortgage faster

  1. Choose the weekly payment option and pay a little more each week. You will enjoy substantial long-term savings and reduce the amortization period.
    Example for a $200,000 loan (25 years, 5-year term, at 4%)
    Payment method Amount Amortization Interest charges
    Monthly $1,052.05/month 25 years $115,615
    Standard weekly $242.13/week 25 years $114,769
    Accelerated weekly
    (monthly divided by 4)
    $263.13/week 21.8 years $98,389
    In this example, you reduce your amortization period by 3.2 years and save $17,226.
  2. Increase your regular payments up to double the initial payment, once a year (or once a term if the term is less than 1 year).
  3. Pay up to 15% of the initial loan every year (or once a term if the term is less than one year).
  4. Combine several mortgage loans: since the interest rates on variable-rate products are very low, adjust your payments to match fixed-rate payment levels so you’ll pay down your mortgage even faster.
  1. These rates do not necessarily reflect promotions in effect. In the case of loans for a fixed amount, the annual percentage rate (APR) is equal to the posted interest rate, assuming that there are no additional charges applicable to the loan. Should there be such charges, the APR might be different.