A mortgage has different types and can vary with each lender. Still a few components are essential to every mortgage and will be a part of every deal that you go through.

Loan Amount

Loan amount is the total amount of money you will borrow from the lender. This can depend on a number of factors such as your income, down payment, mortgage rates and even the value of the house you want to purchase.

Mortgage Rate

A mortgage rate specifies the interest amount which you will be charged on the loan. It is an important consideration, but finding a deal with the lowest rate is not a complete measure of the value which you will get from it. Other factors are also important. You should compare rates of several lenders before choosing one.

Down Payment

Down payment is the value which you must pay upfront when applying for a mortgage. It is usually expressed as a percent of the total selling price of the house. The down payment must be at least 5% in Canada. Any value less than that will not qualify your for a mortgage.

Monthly Payment

The monthly payment is the amount which you will have to pay every month. Added to other debts, the total value should not account for more than 40% of your income. You will probably want a lower value for this component, but there are some tradeoffs associated such as a higher processing fees or a shorter time period.

A monthly payment is not the only payment option. You can also choose a weekly or a bi-weekly payment schedule which are in fact more advantageous in terms of a lower interest amount.

Term

A mortgage term comprises of the total number of years that will be taken to pay off the mortgage. A length of 15 years or 30 years are common, but many lenders offer mortgages of other terms as well such as 5, 10, 25 or even 50 years. Try to choose a shorter period because you will have to pay less interest and can also get rid of the debt faster. However, longer terms decrease the amount for monthly payments.

Closing Costs

Closing costs are the administrative and legal charges which you will be required to pay. Generally, these include lender fees, home inspection fees, insurance premium, property taxes, land transfer tax and title insurance.