Nothing can bring you more freedom than having your own space called a home. If this is the first time you are considering purchasing a home, then you came to the right place.

Our goal is to provide with enough information that will ultimately help you make the smartest home-buying decisions ever.

First off, what is a mortgage?

A mortgage is a loan applied for the purpose of purchasing a property. The home buyer guarantees to repay the loan in writing and pledges the property serving as collateral for the loan.

So when you think of applying for a mortgage, you also need to know other aspects that will affect the way you manage your personal budgeting in the future, such as amortization.

An amortization is the period of time required for the homebuyer to regularly pay for the mortgage loan. Amortization periods may range from 15-35 years. Typically, the longer you pay, the lower the monthly amortization (loan principal plus interest rates) is, but the higher the interest rates you will actually have to pay.

After you have a rough idea on the mortgage, you will also need to come up with a downpayment, or the cash paid upfront in purchasing a home. This usually comes from personal savings. It generally ranges from 5%-25% of the purchase price.

Whatever you pay for your home becomes your equity. Technically, equity is difference between the price value of the home and the total debts acknowledged against the home. In simple terms, your equity refers to the size of your stake of the home property. It increases as the outstanding mortgage is regularly paid until your loan is reduced to zero.

There are some factors like current market values and improvements to the property that also affect the equit, so it is also noteworthy to ask your broker the viability of the said property as a worthy investment for the future.

Upon the approval of your loan, your lender is the largest stakeholder of your property. With the little equity (down payment) you paid, lenders may require you to apply for mortgage insurance, if the initial equity is less than 20% of the loan amount. It is available from CMHC or a private insurance company. This protects the lenders in cases of payment defaulting on your end.

Now that you have the basics down, let's dive deeper into each step - let's start at the very beginning - the down payment.  

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