Understanding First Mortgages in Canada

Introduction to First Mortgages

A first mortgage is a primary lien on a property. As the primary loan, a first mortgage takes precedence over all other mortgages or liens on a property, including second mortgages. At TheBroker.ca Ltd., we offer a variety of first mortgage options to suit your needs. Whether you’re a first-time homebuyer or an experienced homeowner looking to refinance, understanding the different types of first mortgages can help you make the best decision for your financial situation. In the Canadian mortgage landscape, there are several types of first mortgages available, each with its own set of terms and conditions. These include prime mortgages, alternative mortgages, reverse mortgages, private mortgages, and Home Equity Lines of Credit (HELOCs).

Prime Mortgages

Prime mortgages are offered to borrowers who are considered to be at a low risk of defaulting on their loan. These mortgages come with the most favourable terms, such as the lowest interest rates. Lenders determine whether a borrower qualifies for a prime mortgage based on several factors, including their credit score, income, and servicing ratios.

Insured Prime Mortgages

Insured prime mortgages are backed by mortgage insurance. This insurance protects the lender in case the borrower defaults on the loan. While the borrower pays for this insurance, it allows them to qualify for a mortgage with a smaller down payment. In Canada, mortgage insurance is required for any home purchase with a down payment of less than 20% of the purchase price. The cost of this insurance is typically added to the mortgage amount and paid off over the life of the loan.

Uninsured Prime Mortgages

Uninsured prime mortgages, on the other hand, are not backed by mortgage insurance. Because of this, they often require a larger down payment. However, they also typically come with interest rates comparable or slightly higher than insured mortgages. Uninsured mortgages can be a good option for borrowers who have saved a significant down payment.

Alternative Mortgages

Alternative mortgages, also known as non-prime mortgages, are offered to borrowers who may not qualify for a prime mortgage. This could be due to a lower credit score or a higher ratio. While these mortgages come with higher interest rates, they can provide a path to homeownership for many individuals. Alternative lenders often offer more flexible lending criteria than traditional lenders, making them an attractive option for some borrowers.

Reverse Mortgages

A reverse mortgage allows homeowners aged 55 and older to access the equity in their home without having to sell it. The loan is repaid when the homeowner sells the home, moves out, or passes away. This can be a good option for seniors who want to supplement their income in retirement. However, it’s important to understand that a reverse mortgage can reduce the equity you have in your home, which can impact your estate planning.

Private Mortgages

Private mortgages are offered by private lenders, such as individuals or private lending companies (MICs), rather than traditional financial institutions. These mortgages can be beneficial for borrowers who need a short-term loan or who cannot qualify for a traditional mortgage. However, they often come with higher interest rates and fees. Private mortgages can be a good option for borrowers who need flexible lending options or who need to secure financing quickly.

Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit, or HELOC, is a type of loan that allows you to borrow against the equity in your home. It works similarly to a credit card, with a limit on how much you can borrow. HELOCs can be used for a variety of purposes, including home improvements, debt consolidation, or major purchases.


Understanding the different types of first mortgages available in Canada can help you make an informed decision about which option is right for you. At TheBroker.ca Ltd., we’re here to guide you through the process and help you find the mortgage that best fits your needs. Whether you’re a first-time homebuyer or looking to refinance your current mortgage, we’re here to help. Remember, choosing a mortgage is a significant financial decision, and it’s important to consider all your options and understand the terms of your loan before making a decision. With the right guidance and a solid plan, you can secure the mortgage you need.