Life in BC
A plain-language introduction to how mortgages generally work in Canada, written for people financing a home here for the first time.
Start here
A mortgage is a loan secured against a property. You borrow to buy the home, the lender registers an interest in the title, and you repay over many years. Almost everything else — pre-approval, amortization, fixed versus variable — is detail about how much you borrow, how long you take, and how the interest behaves along the way.
The overview
A pre-approval is a lender's early view of what you could borrow, based on the income, debts and documents you provide. It usually holds a rate for a limited period. It is not a final commitment: when you find a property, the lender reviews that property and your updated situation before formally approving.
Your down payment is the part of the purchase price you pay yourself. Minimum requirements, and whether mortgage default insurance applies, are set by federal rules and by the lender. The Canada Mortgage and Housing Corporation publishes current requirements — confirm them there rather than assuming.
Lenders verify who you are, what you earn and what you owe. Expect requests for identification, proof of income, employment confirmation, bank statements and the source of your down payment. Newcomers are often asked for additional documentation, and requirements differ between lenders and programs.
With a fixed-rate mortgage the interest rate stays the same for the term, so payments are predictable. With a variable-rate mortgage the rate moves with the lender's prime rate, which can change what you pay or how much of each payment goes to principal. Neither is automatically better — it depends on your budget and how much fluctuation you can absorb.
Amortization is the total time to pay the loan off completely; a term is the shorter contract period after which you renew. A longer amortization lowers each payment but increases total interest. Payment frequency — monthly, biweekly, accelerated biweekly — changes how quickly the balance drops.
Two mortgages with the same rate can behave very differently. Prepayment privileges, penalty calculations if you break early, portability if you move, renewal terms and whether the mortgage is collateral-charged all matter. Ask for these in writing and compare them alongside the rate.
If you have limited Canadian credit history, some lenders offer programs designed for newcomers with different documentation requirements. Eligibility varies by lender and by your immigration status, so this is worth discussing early rather than at the offer stage.
Vocabulary
Sequence
A general order most people follow. Your situation may differ.
Budgeting
We do not publish specific prices, rates or fees. Amounts depend on your situation and should be quoted by the provider or confirmed with the official source.
Learn from others
Be prepared
Bring these to any meeting. Good professionals welcome them.
“Are you a mortgage broker or a lender representative, and who regulates you?”
“What documentation will you need from me as a newcomer?”
“How is the penalty calculated if I need to break this mortgage early?”
“What are the prepayment privileges, and is the mortgage portable?”
“What could change between pre-approval and final approval?”
“What total monthly cost — not just the mortgage payment — should I plan for?”
Where this comes from
Last updated: August 2026
Please confirm before relying on it
Rules, programs, amounts and costs change over time. Always confirm current details with the official source before making a decision.
This page is general education, not legal, tax, financial, mortgage or real-estate advice.
Keep going
SettleInBC does not provide mortgage advice. If you would like an introduction to an independently licensed mortgage professional, we may help coordinate that after you tell us what you need and give your consent to be contacted. You will always choose whether to proceed.
