Canadian mortgages vary based on their loan-to-value, simply put, the current mortgage balance over the home's current value.

The home is the asset that secures the mortgage loan. The more that is owed relative to its value will dictate what type of mortgage needed.

In the eyes of the bank, it's all about risk. Among other variables, such as Credit Scores Income, and debt, the main factor is the property loan-to-value.

This is where the National Housing Act allows for a purchase with a lower down payment, as low as 5% of the purchase price. To achieve this, the mortgage must be insured to alleviate the risk from the bank, with the insurance premium passed onto the homeowner.

Over time, as you make regular payments, the mortgage balance decreases and the home's equity increases. When the loan-to-value drops below 80%, then we look at tapping into this equity. After all, this is the smartest way to borrow, meaning it has the lowest cost or less interest paid.