For many Canadians, homeownership has long been seen as a goal worth pursuing. Mortgages play a key role in helping people achieve this dream by providing access to the upfront funds needed to purchase a home. However, while mortgages can open doors to real estate, they also come with important considerations. Here’s what you need to know about the pros and cons of taking on a mortgage.

‍

Increased buying power

A mortgage allows you to buy a home with far less upfront capital than you would otherwise need. Instead of saving the full cost of a property, you contribute a smaller down payment while borrowing the remainder. This debt leverage can make homeownership more achievable, particularly as real estate prices continue to rise in cities like Toronto. Since the property itself serves as collateral, mortgage debt generally comes with lower interest rates compared to other forms of borrowing. That said, mortgages still represent significant long-term financial obligations, so it’s important to understand what you’re committing to before signing any paperwork.

‍

Locking in a price

A mortgage also helps you secure the price of a home at today’s value, protecting you against rising property prices. In growing markets like Toronto, this can work in your favor as home values appreciate over time. By paying down your mortgage over several years, you build equity while potentially benefiting from increases in the housing market. However, home prices can fluctuate. If property values decrease, you may owe more on your mortgage than the current value of the home. This underscores the importance of considering both the market conditions and your financial situation before taking on mortgage debt.

‍

Mortgage commitment

There’s no way around it—mortgages are a major commitment. For most Canadians, a mortgage will represent their largest debt and require careful financial planning to manage monthly payments. This often means prioritizing mortgage repayment over other expense. On the other hand, a mortgage allows you to own a home years earlier than would otherwise be possible. If you’re ready for the responsibility and long-term commitment, it can be a powerful step toward achieving your homeownership goals.

‍

Alternatives to traditional mortgages

While mortgages have been the traditional path to homeownership, they’re not the only option. Programs like Key’s homeownership solution provide a more accessible alternative, enabling you to move into a home with as little as 2.5% down. You benefit from increases in the home’s value over time while building toward full ownership at a predetermined price, all without the immediate weight of a traditional mortgage. Learn more about how Key's program works here.

This article may include AI-assisted content. While we aim for accuracy, please double-check details or consult a professional if needed.

‍