The amortization period (length of time it would take to pay off the mortgage) has an enormous effect on the amount of interest paid over the length of the mortgage.
The shortest amortization in Canada is 5 years, and the longest is 55 years.

The longer your amortization period, the more interest you pay. The table below shows how much interest is paid on a $100,000 mortgage at an interest rate of 5%.

There are ways to reduce your amortization and the amount of interest you pay. You can:

•    increase the frequency of your payments
•    increase the amount of your payments
•    pay additional amounts on your payment dates
•    make lump sum payments
•    select a shorter amortization at renewal time

Payment
Mortgage payments are made up of interest and principal. Each payment consists of a smaller amount of interest and a greater amount of principal.
For example: If you take a mortgage of $150,000 with a 25 year amortization, and a 5 year term at 8%, your payments will be $1,144.82 per month. In the first month of your mortgage, that amount will consist of $161.09 as a principal payment and $983.73 in interest.

After 30 months the same payment will consist of $194.71 as a principal payment and $950.11 in interest.
After 60 months (5 years), the same payment will consist of $236.90 as a principal payment and $907.92 in interest.

Mortgage Term
The amortization (the length of a mortgage) is made up of 'terms'. A term is the period of time that you will pay a set interest rate. Length of terms can be from 3 months to 25 years. Your mortgage is renewed at the end of each term and new interest rate is applied.
The longer the term, the higher the interest rate. For example, a 3 year term could be at 6.60%, a 5 year term at 6.75%, and a 10 year term at 7.05%. You are guaranteed that your payments will not change for the length of the term. No one can predict interest rates in the future, and many people prefer the security of longer terms.

Cash Back Mortgage
Several lending institutions offer incentive for as your mortgage lender.
Some lending institutions offer 'cash back' for choosing them. The 'cash back' is usually 3% of the mortgage amount you are borrowing. You can use the cash you receive to pay a credit card debt and by paying down your debt you may qualify for a bigger mortgage, or buy new furniture or make improvement to your new house. But you should also consider the disadvantages:

•    You will pay the full interest rate.
•    The cash cannot be used for down payment.
•    If you pay off the mortgage before the end of the term you will have to repay the cash

Seller Take Back Mortgage
In this case mortgage is arranged between the seller and the buyer of the property. The seller is willing to finance the buyer in order to help him purchase the property. Title to property is transferred to the buyer. 

Switching your Mortgage
The main reason for switching is to get a better fixed interest rate. It is possible to switch the mortgage to another lender at the renewal date. If you have an open mortgage you can switch at anytime). Some lending institutions will allow you to switch your mortgage during the term, but you will have to pay a penalty. 

To switch your mortgage you will have to re-qualify (prove your income and go through a credit check again) for your current mortgage amount. Major lending institutions do not usually charge fees to switch mortgage. Most banks will charge an administration fee for losing the mortgage; however some lending institutions will pay that fee for you to get your business. The fees range from $85 to $250.


Home Buyers Plan (HBP)
The Home Buyers' Plan allows you to withdraw up to $20,000 from your RRSPs' to buy or build a qualifying home. Each of you can withdraw a single amount or make a series of withdrawals throughout the same year, totalling up to $20,000.

You will have 15 years to repay, distributed to yearly payments. If you do not repay the amount due in a year, you will need to include the amount as income on your tax return for that year.