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Understand the basics of mortgages.

Understanding how mortgages work is a smart first step, whether you're buying your first home or your next one. At Assiniboine Credit Union, we believe in empowering our members with the knowledge and guidance they need to make informed decisions.

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What is a mortgage?

A mortgage is a loan that helps you buy a home, using the property as collateral. Over time, you repay the loan through scheduled payments that cover both the loan amount (principal) and interest.

How it works:

  • You borrow money from a lender (like Assiniboine Credit Union) to buy a home
  • You make regular payments over a set period of time (amortization)
  • The home acts as collateral/security for the loan

The mortgage process

  1. Assess your budget and get a pre-approval (optional but recommended)
    • Review your income, expenses, and savings.
    • Use a mortgage affordability calculator to estimate how much you can borrow.
    • Apply for a mortgage pre-approval to understand your borrowing power, lock-in a rate*.
  2. House hunting and making an offer
    • Explore properties that meet your needs and are within your budget.
    • Once you find the right home, you’ll make an offer, which may include conditions like financing approval and a home inspection.
  3. Mortgage application
    • Submit a mortgage application with financial details, including your income, debts and credit history.
    • Your application will be reviewed and an appraisal may be required to confirm the property’s value.
  4. Finalized mortgage agreement
    • Once approved, you’ll review and sign a mortgage commitment, outlining the terms of your loan, including interest rate, payment schedule and any conditions.
  5. Prepare for closing
    • Work with a lawyer or notary to complete the legal paperwork.
    • Pay closing costs, such as legal fees, land transfer taxes and home insurance.
    • Your mortgage is officially funded, and ownership of the home is transferred to you.
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ACU's handy mortgage document checklist

Review our mortgage document checklist to ensure you all the documentation required for the mortgage approval process with Assiniboine Credit Union.

Open ACU mortgage document checklist PDF
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Are you a first time homebuyer?

Read first time home-buyer information

Key mortgage terms to know

Before diving into mortgage options, it's helpful to understand some mortgage terms:

Mortgage basics

  • Mortgage: a loan used to buy a home, where the property serves as collateral/security
  • Principal: the amount borrowed before interest is added
  • Interest: the cost of borrowing money, expressed as a percentage of the loan amount
  • Amortization period: the total time it takes to pay off your mortgage (example: 25 years)
  • Mortgage term: the length of time your mortgage contract is in effect (example: 5 years)

Mortgage rates and payments

  • Fixed rate: interest rate stays the same for the duration of your mortgage term
  • Variable rate: interest rate can fluctuate over the duration of your mortgage term based on market conditions
  • Open mortgage: allows you to make extra payments or pay off the mortgage early, without penalty
  • Closed mortgage: generally has a lower interest rate then open mortgages, but extra payments and early repayment are limited
  • Prepayment/additional payment option: the ability to make additional payments either regularly or one-time to reduce your mortgage principal faster

Home buying and mortgage approval

  • Debt-to-income ratio (DTI): measure of your total monthly debt payment compared to your gross monthly income (includes mortgage payments, car loans, credit card payments, student loans and other debts)
  • Debt-to-service ratio (DSR): measure of your gross income spent on housing costs (including mortgage payment, property taxes, heating costs and 50% of condo fees-if applicable)
  • Loan-to-value (LTV) ratio: the percentage of the home’s value being financed with a mortgage
  • Mortgage default insurance: required for down payments under 20%, protecting the lender if a borrower defaults
  • Mortgage pre-approval: the lender calculates, in advance, how much mortgage the borrower can afford, and pre-approves them for that amount
  • Mortgage stress test: a financial test to ensure you can afford payments if interest rates go up

Mortgage refinancing and renewals

  • Mortgage renewal: the process of extending your mortgage at the end of its term, with new or existing terms
  • Mortgage refinancing: replacing your existing mortgage with a new one, often to get a lower rate or access home equity
  • Home equity: the difference between your home’s market value and the principal owing on your mortgage
  • Home equity line of credit (HELOC): a revolving credit line secured by your home’s equity

Choosing the right mortgage structure depends on your financial situation and goals.

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Mortgage affordability and the stress test

Before a mortgage is approved, your ability to make payments using a “mortgage stress test” is assessed. This ensures you can still afford your mortgage should rates increase. 

Factors

  • Your income and employment status
  • Debt-to-income ratio
  • Credit history
  • Down payment amount

Check out ACU's mortgage calculator

Get a rough estimate of what you can afford based on your income, expenses and potential mortgage payments. It’s a great first step in planning for your home purchase.

Mortgage costs beyond the loan

Closing costs typically average between 1.5% and 4% of the home’s purchase price. You usually pay these costs by the time the sale is completed, or “closes,” so it’s important to factor these costs into your financial plan when saving to buy a home.

Here are some examples of closing costs you may encounter:

  • Legal costs: lawyers' fees and disbursements
  • Homeowners insurance: covers losses and damages to an individual's residence. Having home insurance in place is a condition of getting a mortgage
  • Land transfer tax: a provincial government one-time fee, based on a percentage of the purchase price of the property, to transfer ownership to your name
  • Property tax: annual municipal tax to fund public services. Upon purchase, you will be responsible for paying the taxes for the portion of the year in which you own the property
  • New build GST: the federal Goods and Service Tax (GST) is applied to the purchase price of newly built houses and condos. You may be eligible for a partial GST/HST New Housing Rebate.
  • Inspection fees: for a professional home inspection, which is usually a required by the lender
  • Appraisal fees: for a professional to confirm the market value of the property
  • Survey certificate: a drawing that shows the property lines and building locations
  • Mortgage insurance: protects a mortgage lender if you are unable to meet the contractual obligations of the mortgage. If your down payment is less than 20% of the purchase price, mortgage insurance is required
  • Title insurance: protects property owners and lenders against loss if the property’s title (ownership) is challenged
  • Moving costs: professional moving company or do-it-yourself rentals and packing supplies

Mortgage costs beyond the loan

Closing costs typically average between 1.5% and 4% of the home’s purchase price. You usually pay these costs by the time the sale is completed, or “closes,” so it’s important to factor these costs into your financial plan when saving to buy a home.

Here are some examples of closing costs you may encounter:

  • Legal costs: lawyers' fees and disbursements
  • Homeowners insurance: covers losses and damages to an individual's residence. Having home insurance in place is a condition of getting a mortgage
  • Land transfer tax: a provincial government one-time fee, based on a percentage of the purchase price of the property, to transfer ownership to your name
  • Property tax: annual municipal tax to fund public services. Upon purchase, you will be responsible for paying the taxes for the portion of the year in which you own the property
  • New build GST: the federal Goods and Service Tax (GST) is applied to the purchase price of newly built houses and condos. You may be eligible for a partial GST/HST New Housing Rebate.
  • Inspection fees: for a professional home inspection, which is usually a required by the lender
  • Appraisal fees: for a professional to confirm the market value of the property
  • Survey certificate: a drawing that shows the property lines and building locations
  • Mortgage insurance: protects a mortgage lender if you are unable to meet the contractual obligations of the mortgage. If your down payment is less than 20% of the purchase price, mortgage insurance is required
  • Title insurance: protects property owners and lenders against loss if the property’s title (ownership) is challenged
  • Moving costs: professional moving company or do-it-yourself rentals and packing supplies

Standard Charge Mortgage Terms

The following Standard Charge Mortgage Terms (SCMT) are included in every mortgage which refers to this set of terms by its name and filing number, as provided in The Real Property Act.

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Choosing the right mortgage

While most mortgages follow a similar structure, the right one for you depends on your budget, risk tolerance and long-term goals. Understanding the basics is just the first step. Whether you're buying your first home, renewing or refinancing, having the right financial partner makes all the difference.

At Assiniboine Credit Union, we take a values-driven approach to banking—putting people and communities first. We offer expert advice, flexible options and support, tailored to your needs, so you can make informed decisions with confidence. Let’s find the mortgage that fits your life today and your goals for tomorrow.

Have questions? We're here to help.

Whether you're looking for more information or need guidance on your next financial move, our team is ready to support you. Reach out and let us know how we can assist.

Contact us

Assiniboine Credit Union offers a 120-day rate guarantee on new mortgages and a 90-day rate guarantee on mortgage renewals and refinances.