Types Of Mortgages

When seeking a mortgage, there are many options available to you.

Fixed Rate: While a fixed-rate mortgage maintains a single rate over a specified period, there are many options within a fixed-rate plan. For example, you can pay weekly, biweekly, bimonthly or monthly, and you can select the term, with durations usually available from 1 to 10 years. There are many more options that can help you pay down your mortgage quicker and save you lots of money over the life of the loan.

Variable Rate: Your payment amounts will fluctuate under a variable rate mortgage because the mortgage rate is connected to the fluctuations of the prime lending rate. Your mortgage rate will decrease if the prime rate goes down, and conversely, they will both simultaneously increase. You can pay weekly, biweekly, bimonthly or monthly. Five (5) year terms are available and the mortgage can be closed or open for prepayment without penalty at any time.

Convertible: Usually available for a short, 6 month term, during which your interest rate will be lower due to the short term. At any time during the term, you can convert your mortgage to a longer term closed mortgage at the rate associated with the longer term you choose.

First-time buyers should be aware of the advantages available to them, such as using funds from your RRSP towards your down payment.

Once you’ve decided on the type of mortgage that’s right for you, you can obtain a mortgage pre-approval. This will give you a better idea of how much you can afford to carry on your mortgage and can lock you in at a specified interest rate, protecting you against rising rates.