Common Mortgage Myths

Most mortgage mistakes we see don’t come from bad decisions — they come from bad information. We hear the same myths at kitchen tables across Alberta and Saskatchewan every week. They sound convincing, they’re often repeated online, and they can quietly cost people years of progress.

Let’s walk through the most common mortgage myths we see — and what’s actually true.

Written by our team at Patricia McKean - Mortgage Architects, where we help Alberta and Saskatchewan clients make confident mortgage decisions every day.

In This Article

• What a mortgage myth really costs you

• Myth #1: You need 20% down to buy a second home

• Myth #2: Mortgage brokers are only for bad credit

• Myth #3: You should always go straight to your bank

• Myth #4: Pre-approvals lock in your rate and price

• Real Alberta case study

• Mortgage glossary

• Frequently asked questions

What Mortgage Myths Really Cost You

Mortgage myths don’t usually stop people from buying homes. They delay plans, shrink options, or push people into the wrong mortgage — quietly.

We see clients who waited years longer than they needed to. Others put down more cash than required, drained savings, or accepted terms that didn’t fit their life because “that’s just how mortgages work.”

Most of the time, that simply isn’t true.

Myth #1: You Need 20% Down to Buy a Second Home

This is one of the biggest myths we hear in Alberta and Saskatchewan, especially from rural and recreational buyers.

The truth:
You do not always need 20% down to buy a second home.

If the property meets insurer guidelines and will be owner-occupied part of the year, many buyers can purchase a second home with as little as 5–10% down, depending on the purchase price.

How the Second Home Program Works

This program is commonly used for:

• Lake properties

• Cabins

• Rural acreage homes

• Properties purchased for family use (not rentals)

Key points:

• It must be for personal use, not a rental

• You can’t use it for short-term income property

• Qualification is based on your overall finances, not just the new mortgage

Simple Example

• Purchase price: $450,000

• Down payment at 10%: $45,000

• Mortgage: $405,000

Many buyers assume they need $90,000 down — when in reality, that extra $45,000 could stay invested, be used for renovations, or remain as a safety buffer.

Myth #2: Mortgage Brokers Are Only for Bad Credit

We hear this one all the time — and it couldn’t be further from the truth.

The reality:
Mortgage brokers work with:

• Salaried professionals

• Business owners

• Farmers and trades

• Strong-credit clients who want better structure and flexibility

Yes, we help clients rebuild after credit challenges. But a large part of our work is strategic mortgage planning, not damage control.

Why Strong Borrowers Use Brokers

Clients with good credit often come to us because:

• They want multiple lender options, not one bank’s offer

• They need help with self-employed income

• They’re buying rural or unique properties

• They care about penalties, portability, and future plans, not just rate

A low rate doesn’t matter if the mortgage traps you later.

Myth #3: Your Bank Will Automatically Give You the Best Deal

Banks offer mortgages — but they only offer their own.

That doesn’t mean the deal is bad. It means it’s limited.

As brokers, we compare:

• Banks

• Credit unions

• Monoline lenders

• Insured and conventional options

Sometimes your bank wins. Sometimes it doesn’t. The value is in seeing the full picture before committing.

Myth #4: A Pre-Approval Means You’re Fully Protected

Pre-approvals are helpful — but they’re not a guarantee.

What many buyers don’t realize:

• Pre-approvals are conditional

• Income, property type, and debt still matter

• Rate holds can expire or change with policy updates

We see buyers shocked when conditions appear later — often because no one explained the fine print upfront.

Case Study: Second Home Purchase in Alberta

A couple from central Alberta came to us believing they needed 20% down to buy a family lake property.

Their situation:

• Household income: $145,000

• Existing home mortgage: $320,000

• Savings available: $60,000

They assumed they were short.

What we structured instead:

• Second home purchase: $480,000

• Down payment: 10% ($48,000)

• Insured second home program

• Remaining savings kept as emergency and furnishing funds

They moved forward two years sooner than planned — without overextending.

Glossary

• Amortization – The total length of time to pay off a mortgage

• Down Payment – The cash you contribute toward a purchase

• Insured Mortgage – A mortgage backed by default insurance

• Second Home Program – Insured financing for personal-use secondary properties

• Portability – Ability to move your mortgage to a new property

• Pre-Approval – An early assessment of borrowing capacity

• Penalty – The cost to break a mortgage early

Frequently Asked Questions

[FAQ] Can I really buy a second home with less than 20% down?
Yes, if it’s for personal use and meets insurer guidelines.

[FAQ] Do brokers charge clients directly?
In most cases, no. Brokers are paid by lenders.

[FAQ] Is a broker only helpful if my credit is weak?
No. Many strong-credit clients use brokers for flexibility and planning.

[FAQ] Should I still talk to my bank?
Yes — but it shouldn’t be your only option.

[FAQ] Are rural and acreage purchases harder to finance?
They can be, but many are still fully financeable with the right structure.