Lenders constantly add features and incentives to their mortgage products to attract business in a highly competitive market. There are many types of mortgages available today offering repayment options that can save you significant amounts of money.
MORTGAGE TYPES All mortgages are of two basic types:
Conventional: The buyer can borrow up to 75% of the purchase price or the value of the property, whichever is less. The buyer has to pay 25% down. A conventional mortgage cannot exceed 75% of the value of the property.
Insured or High Ratio: A buyer can borrow up to 90% (95% for qualified first-time home buyers under CMHC's First Home Loan Insurance Program) of the purchase price or the value of the property, whichever is less. The down payment can be as low as 10% (5% for less qualified first-time buyers).
MORTGAGE OPTIONS You can choose any of these mortgage options that fit into the two basic mortgage types. Lenders may even customize these options to suit your needs.
First Mortgage: Usually the only financing required. Gives borrowers the best rate interest.
Second Mortgage: A higher interest loan that provides borrowers with additional financing if their first mortgage does not meet their total financial requirements.
Open Mortgage: Allows borrowers to repay all or part of the total amount of their mortgage at any time without penalty. Because of flexibility, this is ideal for borrowers who plan to sell their homes in the near future or who want to switch from a short-term mortgage at high interest rates to a longer term when mortgage interest rates fall.
Closed Mortgage: Usually has the lowest interest rate available but lacks the flexible feature of other mortgage options. A good choice for those who want the security of knowing their monthly payment is fixed for a longer term. Prepayment options are available but they are subject to conditions.
Portable Mortgage: Flexibility if borrowers move. Borrowers can take the mortgage to their new home or can transfer it (usually with the consent of the lender) to the purchaser of their old home. This is an attractive option if the rate on the existing mortgage is lower than current rates.
Copyright 2003. Michael A. Reis, Coldwell Banker Platinum Realty, Canada. All Coldwell Banker offices are independently owned and operated. Powered by Look Communications Inc. and compiled by The Corporate Ninja.
Lenders constantly add features and incentives to their mortgage products to attract business in a highly competitive market. There are many types of mortgages available today offering repayment options that can save you significant amounts of money.