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Choosing the right mortgage in Canada 
Choosing the right mortgage in Canada for your situation is becoming more difficult eachday. With so many choices in the market, it is very easy to be confused by the types of mortgages, variety of mortgage rates and repayment options, let alone the inevitable ‘expert advice’ you get from friends and family during the process.To confuse things even further the rules and regulations in the mortgage market arestarting to change more often with the introduction of new, more innovative products. Afew years back, two of these innovations were the 0% deposit and the 40 year mortgage.These were supposed to help first time buyers get on the property ladder by making that first purchase more affordable, however, the Canadian Government got spooked by the UShousing crisis and has decided to try and remove these products from the market bystopping to insure these ‘riskier’ products through the Canadian Housing and Development Corporation (CMHC) effective October 15, 2008.With all these changes how can Canadians choose the right mortgage? We’ve outlined a fewkey steps below to help with this process.
Net worth calculation
The first step to getting a mortgage is establishing one’s net worth, which is the amount left after over liabilities are deducted from assets. Prudent home buyers would ensure that their monthly housing costs are lower than half the gross monthly income of the household.These costs include the principal, interest, taxes and heating expenses, collectively knownas ‘PITH’.
 
You should also consider the entire monthly debt, such as housing cost, credit cardpayments and other debts like car loans.
Documentation
The next step is to get all your documentation ready such as personal identification, job andsalary details from employers, sources of income, information on bank accounts, loans anddebts, proof of financial assets, sources and amount of down payment and proof of strongcredit rating.
Choosing your lender
Now that you are armed with all your documentation you can start looking for mortgagelenders. Many people start by comparing mortgage rates using your local newspaper (oreven more conveniently!) a website such as RatetSupermarket.ca.That will give you a good idea of the market and then you can make decisions on the best way to proceed.2 good places to start are:1. Speak to a mortgage broker - they are experts in the field, have access to all the majorlenders (even your own bank) and if you have a difficult credit situation, many have accessto private lenders who specialize in funding these types of cases. Best of all their servicesare free! They are paid a commission by the lender if they arrange a mortgage.2. Your current lender or your bank - if you’re a first time buyer, it’s always a good idea tospeak to your own bank, just make sure to get a few quotes as well.If you’re refinancing then your current lender is obviously a good place to start as well.
Choose a mortgage & mortgage rate
Next, its time to decide on a mortgage and mortgage rate that’s best for your situation andits best to sit down with a broker or financial advisor to help you with this decision.
Mortgage rates
There are two main types of mortgage rates - fixed and variable. With fixed interest ratemortgages, the rate of interest stays the same throughout the tenure while in variableinterest rate mortgages the rate fluctuates according to the prime lending rate. This choicereally comes down to the economic landscape and whether interest rates are expected toincrease or decrease in the short and long term.
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