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Mortgages Made Easy

Mortgages Made Easy

For many buyers, mortgages can seem intimidating, confusing, and even a bit scary. Even if you’ve dealt with a mortgage before, it can be hard to know which mortgage type is the best for your situation. And that’s where I can help! Here’s your handy cheat sheet with several of the most popular loan types available to Canadians.

If you have 20% or more of the purchase price for a down payment chances are that’ll you’ll be able to apply for a traditional (conventional) mortgage. Depending on the lender you may have to have insurance on the home as well.

An open mortgage allows you to pay off part of the debt or pay it back in full without having to worry about any penalties. An open mortgage will often have term lengths ranging from six months to a year with interest rates on this type of mortgage being comparable to those of a closed mortgage.

When you first get a variable rate mortgage your payments calculated by the lender which includes interest and principal. These payments will remain consistent throughout the term of the mortgage. As the rare of the market changes, so will your mortgage rates. So, when the interest rates drop, you’ll notice that less of your payment will going to the interest with more coming off the principal.

Capped rate mortgages offer a variable rate that is capped by the lending institution. Markets will fluctuate with rates rising and falling but the lending institution offers a guarantee that you’ll never pay more than the capped interest rate. On average these mortgages will hit you with a penalty if you decide to pay your mortgage back in full.

If you’d like a little more stability in the type of mortgage you take on, the closed mortgage could be a viable option. With a closed mortgage you’ll be able to lock in your interest rate over the length of the loan. Bringing peace of mind with the benefit of lower rates than an open mortgage. If you feel like interest rates may increase, you’ll want to choose a loan with an extended term.

In a convertible mortgage, with a term of 6 months to a year you’ll receive a fixed rate with the options of locking in for an extended term or continue for a short term with a more flexible rate.

Simply put, reverse mortgages afford you the opportunity to transfer the equity in your home into cash value. You won’t have to worry about selling or leaving in your home in the process, but you’ll need to be at least 62 years of age to qualify for this type of mortgage. Depending on the age of a homeowner, the amount of money you can borrow will vary; the older the homeowner is, the more money they’ll be able to borrow.

There can be a few variations of the above loan types and some banks offer their own style of lending, but it all basically boils down to these 7 types of mortgages. The right loan for you is out there, but I know it can be confusing to know which one is best. That’s why I always recommend that my buyer clients work with a lender to see which mortgages will be the best choice. If you want to be connected to my favourite, trustworthy lenders, just reply to this email!

Data is supplied by Pillar 9™ MLS® System. Pillar 9™ is the owner of the copyright in its MLS®System. Data is deemed reliable but is not guaranteed accurate by Pillar 9™.
The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.