Essential Tips for Getting a Mortgage in Quebec
Dernière mise à jour : 17 août
Shopping for a property, renewing your mortgage, or thinking about refinancing can quickly bring up a lot of questions.
Should you choose a fixed or variable rate? How much can you realistically borrow? How much should you put down? What should you look at besides the interest rate?
The reality is that a mortgage is about much more than the advertised rate. The term, amortization, repayment conditions, penalties, your financial situation, and your future plans can all influence which option makes the most sense for you.
Here are the main things I recommend looking at before choosing your financing.
1. Start with your situation, not the rate
One of the first questions I often hear is: “What’s the best mortgage rate right now?”
The rate is obviously important, but it is only one part of the picture.
Before looking at available products, it is important to understand your situation, including:
your income;
your debts and financial obligations;
your down payment;
your credit profile;
the property you want to buy;
your ability to handle changes in your payment;
your plans for the next few years.
Two people buying a property at the same price can need completely different mortgage solutions.
The goal is to find financing that fits your situation, not simply to choose a product because the rate looks attractive.
2. Understand the difference between fixed and variable rates
Fixed rate
With a fixed-rate mortgage, your interest rate remains the same for the length of the term.
This can be a good option if stability and predictable payments are important to you.
That said, it is also important to look at the conditions of the mortgage, including prepayment privileges and the penalty that could apply if you repay the mortgage before the end of the term.
Variable rate
With a variable-rate mortgage, the rate you pay changes based on the lender’s prime rate and the adjustment set out in your mortgage agreement.
Depending on the product, a change in rates may affect your payment amount or change how much of your payment goes toward principal and interest.
A variable rate can make sense for some borrowers, but you need to be comfortable with the possibility of rate fluctuations.
Before choosing, I prefer to look at your budget, your comfort level with changing rates, and your medium-term plans.
There is no option that is automatically better for everyone.
3. Look at whether the mortgage is open or closed
The interest rate is not the only important feature of a mortgage.
An open mortgage generally offers more flexibility if you want to repay the mortgage before maturity without a penalty, although its conditions may differ from those of a closed mortgage.
A closed mortgage usually comes with restrictions on early repayment. However, it may still include prepayment privileges that allow you, for example, to increase certain payments or make lump-sum payments within the lender’s rules.
If you think you may sell, refinance, or repay a large portion of your mortgage before the end of the term, these conditions can be just as important as the rate.
4. Review your credit profile
Your credit history is one of the elements that may be considered when you apply for financing.
But I prefer not to reduce a mortgage file to one credit score.
Lenders may look at several factors, including your payment history, balances, types of credit, length of credit history, and recent credit activity.
The criteria can also vary from one lender to another.
Before submitting an application, it is worth reviewing your situation and, if there are areas that could be improved, seeing what can reasonably be done before the file is submitted.
5. Calculate your borrowing capacity realistically
The amount a lender is prepared to finance and the amount you personally feel comfortable paying are not necessarily the same thing.
When reviewing a mortgage application, lenders use debt-service ratios that take into account your income and different financial obligations.
But your personal budget should also reflect real life, including:
municipal and school taxes;
heating;
insurance;
condo fees, if applicable;
property maintenance;
other debts;
family expenses;
savings;
unexpected costs.
I would rather look at what is realistic for you than simply focus on the maximum amount a lender may be willing to approve.
6. Understand the impact of your down payment
Your down payment directly affects the amount you need to finance and the loan-to-value ratio of the transaction.
Depending on the size of your down payment, the price of the property, and the rules that apply to the file, mortgage loan insurance may also be required.
This insurance protects the lender in the event of default. When a premium applies, it may generally be added to the mortgage amount, depending on the financing structure.
The source of your down payment will also need to be documented.
Before seriously shopping for a property, it is useful to know not only how much you have saved, but also what type of financing that down payment may allow.
7. Use pre-approval as a tool, not a guarantee
A mortgage pre-approval can be very useful before you begin shopping for a property.
It can help assess your financial situation and give you a clearer idea of the financing you may qualify for.
That gives you a much more realistic starting point for your budget.
Depending on the lender and the product, a pre-approval may also allow you to hold a rate for a certain period.
However, a pre-approval is not a final mortgage approval.
The final financing decision will also depend on factors such as the property you choose, the value recognized by the lender, and whether all of the lender’s conditions are satisfied.
That distinction is important to understand before making an offer on a property.
8. Don’t compare rates alone
Two mortgages with similar rates can have very different conditions.
When I compare options, I look at things such as:
the interest rate;
the term;
the amortization;
the payment;
prepayment privileges;
potential penalties;
mortgage portability;
product flexibility;
applicable fees;
lender-specific conditions.
A slightly different rate can sometimes come with conditions that are much better suited, or much less suited, to your situation.
That is why I prefer to look at the mortgage as a whole.
9. Prepare your documents early
A well-prepared file generally makes the mortgage review process easier.
Depending on your situation and the lender, different documents may be required to verify things such as your identity, income, assets, debts, and down payment.
For example:
proof of employment or income;
pay stubs;
notices of assessment or tax documents, depending on the type of income;
bank statements;
documents showing the source of the down payment;
information about your debts;
documents related to the property.
A self-employed borrower, salaried employee, real estate investor, or commission-based worker may not need to document income in the same way.
That is why I like to review the required documents early in the process.
10. Plan for the other costs of buying a property
Your down payment is not the only amount you need to plan for when buying a property.
Your budget may also need to include costs such as:
notary fees;
inspection costs;
appraisal fees, when required;
land transfer duties;
tax adjustments;
insurance;
moving costs;
repairs or expenses after the purchase.
The idea is to avoid putting all of your available cash into the down payment and then realizing that several other expenses arrive at the same time.
11. Check which programs may apply to you
If you are buying your first property, certain government or tax programs may be part of your overall strategy.
The Home Buyers’ Plan and the First Home Savings Account are two examples.
Eligibility rules, withdrawal limits, and program conditions can change over time.
I therefore recommend checking the rules that apply at the time of your transaction and speaking with the appropriate professional when tax-related questions are involved.
12. Think about what could happen during your mortgage term
A mortgage may stay with you for several years, but your life can change long before the mortgage reaches maturity.
Ask yourself a few questions:
Could you sell the property?
Are you planning renovations?
Could you receive a large amount of money that you may want to apply toward the mortgage?
Could you buy another property?
Might you need to refinance?
Could your family or employment situation change?
You cannot predict everything. But thinking about these possibilities can help determine how much flexibility you may need in your mortgage.
So, which mortgage should you choose?
There is no single mortgage that is automatically right for everyone.
A fixed rate can make sense for one person and be less suitable for another. The same applies to a variable rate, amortization, term, or choice of lender.
That is where my role comes in.
You explain your situation, your project, and what matters most to you. From there, I analyze the available options and explain the advantages, disadvantages, and important conditions you should pay attention to.
You do not need to understand all the mortgage terminology before calling me.
We can look at your project together and see what makes sense for your situation.
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