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Understanding mortgages

Learn the basics so you can choose the mortgage that's right for you. Contact us with your questions, to get pre-approved or to apply.

What's a mortgage?

A mortgage is a loan you take out to buy a home. You repay it over several years and the amount you borrow is called the principal. You pay interest, which is calculated using a certain rate. The mortgage is secured by your property.

There are different kinds of mortgages. We can help you choose the one that's best for you.

Features

Learn the basics so you can make the right choice.

Select the feature you want or scroll down to find out more.


Open and closed mortgages

With an open mortgage, you can increase your payments and pay it off without limit or penalties. But, you might be subject to penalties if you receive certain promotions and prepay your mortgage.

The interest rate is usually higher on open mortgages than on closed mortgages.

With a closed mortgage, you can pay your mortgage in part or in full before the term ends, but you'll have to pay a prepayment charge. However, you may increase the payments (up to double) indicated in your original agreement and pay up to 15% of the initial mortgage amount each year without any prepayment charges.

Examples

  • If your initial mortgage payments are $900 a month, you can double them and pay $1,800 until the end of your term.
  • If your initial mortgage is $500,000, you can pay up to $75,000 each year on top of your regular payments. However, you can’t transfer this right to another year and pay $150,000 in a lump sum.

Fixed, variable and adjustable interest rates

Fixed rate: Interest rate remains the same until the end of the term

Variable rate: Interest rate fluctuates with our prime rate

Annually adjustable rate (Yearly Rate Resetter): Interest rate remains fixed for 12 months and is revised each year based on the 1 year closed fixed-rate (plus or minus a spread)


Term

The term is the duration of your loan agreement. The conditions of your mortgage apply during the whole term. We offer terms from 6 months to 10 years, depending on the rate.

At the end of the term, you either pay the remaining balance in full or renew your mortgage. If you renew it, you may choose new conditions to suit your circumstances.


Amortization

The amortization period is the length of time it takes to pay off your mortgage in full and is usually 25 years. A longer amortization period means your payments will be lower but you'll pay more interest.


Mortgage payments

Your mortgage payments are the scheduled amounts you pay your caisse. They reduce the interest first, then the principal. They also apply to your loan insurance, if you chose to take it.

With a fixed-rate mortgage, your payments stay fixed until the end of the term.

With a variable-rate mortgage, your payments stay fixed until the end of the term. But, the portions of your payments that pay the interest and principal change with the rate.

  • If the rate increases, you'll pay more interest and less on the principal. The outstanding balance will be higher than expected at the end of the term.
  • If the rate decreases, you'll pay less interest and more on the principal, so you’ll pay off your mortgage more quickly. The outstanding balance will be lower than expected at the end of the term.

With an adjustable-rate mortgage, your rate is revised annually. Payments remain equal for 12 months and are then revised on the anniversary of the mortgage.


Payment frequency

When you apply for a mortgage, you choose how often you want to make payments. You might choose to sync your payments with your salary to keep things simple.

Frequency options:

  • Once a month
  • Every 2 weeks
  • Once a week

Good to know

If you want to pay down your mortgage faster and pay less interest, you can make accelerated payments weekly or every 2 weeks. The amount of your payments will be a little higher but you'll be making the equivalent of one extra monthly payment each year, which will reduce your amortization.

Example

Let’s say you take out a $300,000 mortgage with a $75,000 down payment. Your rate is fixed at 5.29%1 which you keep for 25 years, the amortization of your mortgage.

Since you want to make weekly payments, you have 2 options:

  • $413.47 a week
  • $448.67 (accelerated payments) weekly

By choosing weekly accelerated payments, you’ll reduce your amortization by 3.7 years and save $40,737.25.

Examples

Promotion

5-year closed fixed-rate mortgage

5.69%2

Rate fluctuation

None, the rate stays the same throughout the term.

Mortgage payments

Equal until the end of the term3

Prepayment

  • Option to prepay up to 15% of the initial mortgage amount each year without prepayment charges. If you don't make prepayments, you can't transfer them to the next year.
  • Option to increase the payments (up to double) indicated in your original agreement without any prepayment charges.

Choose this one if you:

  • Prefer low risk and don’t want your interest rate to change
  • Don’t want your budget to change
  • Want your payments to be regular so you can focus on other projects
  • Plan to keep your property for at least 5 years
Promotion

5-year closed reduced variable rate mortgage

6.50%2

Rate fluctuation

Your rate is based on the Desjardins prime rate plus or minus a spread guaranteed for the term. Your rate may increase or decrease with each change in the Desjardins prime rate.

You can convert your protected variable rate to a fixed rate anytime without any prepayment charges and under certain conditions.

Examples

Guaranteed rate spread: -0.70%

Fluctuation 1

Prime rate: 3.75%

Personalized rate: 3.05%

Fluctuation 2

Prime rate: 2.95%

Personalized rate: 2.25%

Term

5 years

Mortgage payments

Equal until the end of the term3

Prepayment

  • Option to prepay up to 15% of the initial mortgage amount each year without prepayment charges. If you don't make prepayments, you can't transfer them to the next year.
  • Option to increase the payments (up to double) indicated in your original agreement without any prepayment charges.

Choose this one if you:

  • Are comfortable with significant rate fluctuations and have a flexible budget
  • Have advanced financial knowledge
  • Want to pay as little interest and as much of your principle as possible when rates drop
  • Plan to keep your property for at least 5 years

Apply for a mortgage

We're here to help you find the mortgage that's best for your needs. Have us call you when it’s convenient and avoid waiting on hold.

Start by getting pre-approved

Get pre-approved to show you're a serious buyer and see how much you could borrow. No commitment is required, and you'll guarantee your rate for a fixed period.

Manage your mortgage online

Log in to AccèsD or go to the Home section of the Desjardins mobile services app for all your home-related needs.

  • Get advice and tools to help you buy your first home.
  • See details about your mortgage: balance, interest rate, term, upcoming payments
  • Make a prepayment
  • Renew your mortgage

Download the Desjardins mobile services app

Personalize your mortgage with a Versatile Line of Credit

With a Versatile Line of Credit, you can separate your mortgage financing into several loans to suit your needs. Each loan tied to your line of credit has its terms and several advantages.

Frequently Asked Questions

What’s the difference between fixed and variable mortgage rates?

Choosing between a fixed and variable rate will depend on your situation, budget and tolerance to rate fluctuations.

A fixed rate is recommended if you don't want your budget to change.

A variable rate might be for you if you have good financial knowledge, want to reduce your interest costs and don't mind rate fluctuations.

Contact us to find out which option is best for you.

How do I qualify for a mortgage?

We take several things into consideration when you apply for a mortgage:

  • Annual income before taxes
  • Monthly expenses like heating, taxes and other recurring costs
  • Debts such as outstanding credit card balances, car loans and personal loans
  • Down payment

We also use a mortgage stress test to evaluate your capacity to pay your mortgage if interest rates rise. We simulate your payments using a fictional interest rate that's higher than the one in effect.

What documents do I need to apply for a mortgage?

If you're buying a home

  • Proof of income (pay stub, federal notice of assessment, etc.)
  • Investment statements
  • Purchase offer for your new home
  • Copies of the municipal and school taxes
  • Copy of the listing, if the purchase is being made with an agent
  • Your buyer's proof of financing, if you already own a home
  • Current leases and statements of income and expenses, if you're buying an income property

If you're building a home

  • Proof of income (pay stub, federal notice of assessment, etc.)
  • Investment statements
  • Contractor plans, specifications and estimates
  • Copy of the building permit
  • Copy of the preliminary contract

We may ask for more documents, depending on your situation.

How do I pay off my mortgage faster?

To pay off your mortgage faster, consider making accelerated payments. You'll make the equivalent of one extra monthly payment a year, and you'll reduce your amortization period.

With a closed mortgage

You can pay up to double the original amount of your payments or prepay up to 15% of your initial mortgage each year without prepayment charges.

For example:

  • If your initial payment is $900, you can increase it to up to $1,800 for the entire term.
  • If your initial mortgage is $500,000, you can pay up to $75,000 each year on top of your regular payments. However, you can’t transfer this right to another year and pay $150,000 in a lump sum.

With an open mortgage

You can increase your payments and make unlimited accelerated payments without prepayment charges. However, some offers (such as a cash back) may still require you to pay prepayment charges if you prepay your loan.

Don’t forget insurance

Loan Insurance

Protect your mortgage for peace of mind in the event of death or disability.

Discover Loan Insurance

Home insurance

Protect your home and belongings from common risks.

Discover Home Insurance
These rates are subject to change without notice. They may be personalized and vary with several criteria such as your financial profile or your project.

Rates may differ if your amortization is over 25 years. Contact an advisor for more information.

These interest rates are recommended by the Fédération des caisses Desjardins du Québec to all its caisses.
This calculation is for information purposes only and to represent potential savings. This rate doesn’t reflect promotions in effect and is for illustration purposes only. The rate and conditions of the mortgage used for this calculation don't reflect the current offer and will vary until the end of the amortization. You must meet the eligibility criteria to receive the promotion. Your payments may be modified in certain situations provided in your agreement.