Mortgage FAQ

A mortgage is a loan used to purchase real property, where the property itself serves as collateral. You borrow money from a lender to buy the home, then repay it over an agreed period (the amortization) through regular payments that cover both principal and interest. In Canada, most mortgages are set up with a term (1–10 years) and a much longer amortization (typically 25 years).

The term is how long your current mortgage contract lasts — typically 1 to 10 years. At the end of the term, you renew or refinance. The amortization is the total repayment period — usually 25 years. Most people renew their mortgage several times before it’s paid off.

Think of it this way: the term is like a lease for your mortgage contract. The amortization is how long it would take to fully pay off the loan if everything stayed the same.

Down payment minimums in Canada (as of 2024):

• Under $500,000: 5% minimum
• $500,000 to $999,999: 5% on the first $500,000 + 10% on the balance
• $1,000,000+: 20% minimum (not eligible for default insurance)

If your down payment is less than 20%, your mortgage is classified as “high-ratio” and requires CMHC mortgage default insurance. Bonnie can show you exactly how this affects your payment.

Most major lenders require a minimum credit score of 680 for a standard insured mortgage. A score of 720+ typically qualifies you for better rates. That said, your credit score is just one piece of the qualification puzzle — income stability, debt ratios, down payment size, and employment history all matter too.

If your score is below 680, Bonnie can advise on the fastest path to improving it before applying.

The federal mortgage stress test requires all mortgage applicants to qualify at the higher of either the Bank of Canada’s posted qualifying rate or your actual contract rate + 2%. This ensures you could still afford your payments if interest rates increased.

Practically speaking, this reduces your maximum borrowing power. Bonnie can tell you exactly what you qualify for under the stress test — and what strategies (like adjusting your amortization or down payment) can improve that number.

A mortgage specialist is a bank employee. They are salaried professionals who offer mortgage products from their employing institution. Their compensation doesn’t change based on which product you choose, so there’s no commission pressure in the recommendation.

A mortgage broker is self-employed. They have access to multiple lenders and earn a commission from whatever lender funds your mortgage. While brokers can compare multiple institutions, their income is tied to placing loans — which can create incentives that don’t always align perfectly with yours.

Bonnie is a mortgage specialist — a direct bank employee. She can access exclusive bank programs, rate holds, and product exceptions not always available through the broker channel.

No. There are no broker fees, origination fees, or finder’s fees when you work with Bonnie. Her compensation comes from the bank she works for — not from you. Your mortgage cost is your mortgage cost, nothing added.

Not necessarily — and this is one of the most common misconceptions in the mortgage industry. Bank-employed specialists have direct access to rate holds, promotional pricing, and product exceptions that aren’t always available through the broker channel. Brokers can access many lenders, but they can also receive volume incentives from certain lenders that may subtly influence recommendations.

With Bonnie, you get the bank’s best available rate from a specialist whose only job is to match you to the right product — not to hit a volume target with a preferred lender.

A branch banker handles many financial products — accounts, credit cards, loans, and mortgages. A mortgage specialist deals exclusively in mortgages. That specialization means deeper product knowledge, faster processing, and more experience with complex situations like self-employment, rental income, or unusual property types.

Bonnie also brings 25+ years of lending experience, which means she’s encountered almost every scenario — and knows how to structure applications that get approved.

There’s no universally right answer — it depends on your risk tolerance, financial goals, and how long you plan to stay in the home.

• Fixed rate: Your rate and payment are locked in for the term. More predictable. Better for buyers who want certainty or are stretching their budget.
• Variable rate: Your rate fluctuates with prime. Historically, variable rates have resulted in lower total interest paid over the long run — but not always, and the monthly payment can change.

Bonnie can model both scenarios with your actual numbers so you can make an informed decision, not just a gut call.

Beyond your down payment, budget approximately 1.5%–4% of the purchase price for closing costs. Common items include:

• Property Transfer Tax: 1% on the first $200K, 2% on $200K–$2M, 3% above $2M. First-time buyers may qualify for an exemption.
• Legal/notary fees: $1,000–$2,500 typically
• Home inspection: $400–$700
• CMHC insurance premium (if applicable — often rolled into the mortgage)
• Title insurance, appraisal, adjustments: Varies

Bonnie will give you a complete breakdown so there are no surprises on closing day.

A prepayment privilege is your right to make extra payments toward your mortgage principal without triggering a penalty. Most closed mortgages allow annual prepayments of 10%–20% of the original balance, plus the ability to increase your regular payment by a set percentage each year.

This matters because even modest extra payments can shave years off your amortization and save thousands in interest. Bonnie can show you the math on different prepayment scenarios for your situation.

A prepayment penalty is charged when you break your mortgage before the term ends — either to sell, refinance, or pay it off early beyond your allowed prepayment privilege.

For variable rate mortgages, the penalty is typically 3 months’ interest. For fixed rate mortgages, it’s the greater of 3 months’ interest or the Interest Rate Differential (IRD) — which can be substantial when rates have dropped since you signed. Always ask Bonnie what the estimated penalty would be before breaking a fixed mortgage.

A pre-approval is a formal written commitment from a lender confirming how much they’re willing to lend you, at what rate, for how long. Unlike a pre-qualification (which is an estimate), a pre-approval involves a full credit check and income verification.

In a competitive market like Kelowna, a pre-approval is essential. It tells sellers and realtors you’re a serious buyer, and it typically locks in a rate for 90–120 days — protecting you if rates rise while you shop.

With complete documentation, Bonnie can typically issue a pre-approval within 24–48 hours. The key is having everything ready before you apply: recent pay stubs, T4s, NOAs, bank statements showing your down payment, and ID. Bonnie will give you a specific checklist so nothing gets missed.

Yes, a pre-approval involves a hard credit inquiry, which can temporarily lower your score by a few points. However, mortgage-related inquiries within a short window (typically 14–45 days) are usually treated as a single inquiry by credit bureaus, since it’s understood you’re rate-shopping for one loan.

The impact is small and temporary. Don’t let it stop you from getting pre-approved before making an offer.

Most pre-approvals lock in a rate for 90 to 120 days from the date of issue. If you haven’t found a property and removed conditions within that window, Bonnie can often renew the pre-approval with an updated credit check. Rate holds protect you if rates rise — and if rates fall before closing, you typically get the lower rate.

Refinancing means replacing your existing mortgage with a new one — typically to access better terms, a lower rate, or to tap into your home’s equity. You can refinance with your current lender at renewal, or switch lenders mid-term (though mid-term switches usually involve a prepayment penalty).

Common reasons to refinance: lowering your interest rate, accessing equity for renovations or debt consolidation, extending your amortization to lower monthly payments, or shortening it to pay off faster.

Consider refinancing when:

• Your term is coming up for renewal (the safest time — no penalty)
• Rates have dropped significantly since you signed (calculate if savings outweigh the penalty)
• You need access to significant equity (renovation, investment, debt consolidation)
• Your financial situation has changed (income, family, retirement planning)
• You want to switch from variable to fixed or vice versa

Bonnie can run a break-even analysis to determine whether refinancing mid-term makes financial sense in your specific situation.

In Canada, you can refinance up to 80% of your home’s appraised value. If your home is worth $800,000 and you owe $450,000, you could potentially access up to $190,000 in equity ($640,000 maximum mortgage minus your current $450,000 balance). An appraisal is required to confirm current value.

A closed mortgage restricts early repayment beyond your prepayment privilege. Breaking it early triggers a penalty. In exchange, closed mortgages offer lower rates.

An open mortgage can be paid off in part or in full at any time without penalty — and can be refinanced or renegotiated freely. The trade-off is a higher rate. Open mortgages suit buyers who expect to sell or refinance soon, or who have a large sum incoming (inheritance, business sale) that they plan to use to pay down the mortgage.

A convertible mortgage lets you lock into a longer closed term at any point during the existing term, without penalty. It’s a good option if you want short-term flexibility with the ability to convert to a fixed closed mortgage if rates start rising — giving you the best of both worlds, depending on timing.

A variable flex mortgage gives you a variable interest rate (tied to prime) with added prepayment flexibility — typically up to 20% of the original principal annually, without penalty. If prime drops, more of your payment goes to principal. If it rises, more goes to interest. The rate changes, but your payment amount stays fixed — until you hit a trigger rate threshold.

CMHC (Canada Mortgage and Housing Corporation) default insurance is required when your down payment is less than 20%. The premium ranges from 0.6%–4% of the mortgage amount, depending on your down payment percentage. It’s usually added to the mortgage balance rather than paid upfront.

Despite the cost, CMHC-insured mortgages typically qualify for lower interest rates than uninsured mortgages — so the insurance premium can sometimes be offset by a better rate.

A Home Equity Line of Credit (HELOC) is a revolving credit facility secured against your home’s equity. Think of it like a credit card with a very high limit and a much lower interest rate — because your home backs it.

You borrow what you need, when you need it, and pay interest only on what you’ve actually drawn. As you repay the balance, it becomes available again. HELOCs typically carry variable rates tied to prime.

You can borrow up to 65% of your home’s appraised value via a HELOC (in Canada, the total secured credit including your mortgage cannot exceed 80% of the value). So if your home is worth $900,000 and you owe $500,000, your HELOC limit could be up to $220,000 ($720,000 maximum combined − $500,000 mortgage balance).

• Home renovations (often increases property value, building equity)
• Consolidating high-interest credit card or consumer debt
• Down payment on an investment or vacation property
• Emergency financial buffer / income smoothing
• Funding education costs

Because the rate is much lower than credit cards or personal loans, a HELOC is one of the most cost-effective borrowing tools available to homeowners. Just remember — it’s secured against your home.

For employed applicants:

• 2 pieces of government-issued photo ID
• Recent pay stubs (last 30 days)
• T4s or T1 Generals for the last 2 years
• Letter of employment confirming position, salary, and start date
• 3 months’ bank statements confirming down payment source

For self-employed applicants:

• T1 Generals and NOAs for the last 2 years
• Business financial statements (if incorporated)
• Proof of HST/GST registration
• Corporate tax returns (if applicable)

View the complete documentation list →

A pre-approval takes 24–48 hours with full documents. A fully underwritten mortgage approval (after an accepted offer on a property) typically takes 5–10 business days. Bonnie can often expedite this through the bank’s advanced underwriting system. From approved to funded, Bonnie targets a 3-week timeline in most cases.

Yes — though the documentation process is more involved. Lenders typically look at your 2-year average declared income from your T1 Generals and NOAs. If your declared income appears low (common for incorporated business owners who reinvest profits), there are programs designed for self-employed borrowers that use different income verification methods.

Bonnie has significant experience with self-employed mortgage applications and knows how to structure them for the best outcome.

The major Canadian banks offer consistent rates across the country — your location doesn’t change the posted rate. However, your qualifying amount is affected by local property values, which are higher in Kelowna than in many BC communities. This can affect how much CMHC insurance applies, what stress test threshold you’re working against, and what mortgage products make the most sense for your situation.

Yes, though the rules are different from a primary residence mortgage. Short-term rental income (Airbnb) is treated differently than long-term rental income by lenders — some don’t use it for qualification at all. The Kelowna/West Kelowna area has specific zoning bylaws around short-term rentals that also affect lender appetite for certain properties.

Bonnie has financed investment properties in the Okanagan and understands how to structure these applications correctly from the start.

No — Bonnie can assist clients purchasing or refinancing anywhere in BC where the bank operates. She works with clients throughout the Okanagan, including West Kelowna, Lake Country, Vernon, Penticton, and surrounding communities. Much of the process happens by phone, email, and digital document exchange, so physical proximity isn’t a limitation.