4 Types of Mortgages You Can Get

One of the most important aspects of purchasing a home is getting a mortgage.

Types of mortgages you can get

Visit ComFree to see more of this beautiful Ontario home

There are 4 types of mortgages you can get:

1- Open mortgages: means that you don’t have a payout penalty if you pay the mortgage off in full. You can make as many pre-payments as you like.

2- Closed mortgages: means there will be a penalty if you pay the mortgage off in full but with most closed mortgages you can pay 20% of the principal amount per year and increase your payments by 20% per year.

3- Fixed mortgages: means the rates are fixed for the term you choose. (Most common is a 5-year term.)

4- Variable mortgages: are based on the Bank of Canada’s prime rate, and your interest rate changes as the prime rate changes. Example Prime -0.3% for 5 years – the -0.3% will always stay the same for the 5 years, just prime will change.

Generally speaking, the open variable and open fixed usually have higher interest rates than the closed rates. The closed fixed and closed variable are the most common types of mortgages people take.

NOTE: Cindy Freiman (@DLCPR) also mentioned that: There are also 50/50 mortgages that are a hybrid between fixed and variable. Great mix for people concerned over variable risk!

If you’re ready to buy or sell a home, visit ComFree.com today.

Information provided by Collin Bruce Mortgage team/Dominion Lending Centres.

2 comments

  1. Rosy Saadeh says:

    Hi Ines, that is a great idea. For now, however, feel free to read the 5 Criteria of Credit Ratings

  2. Ines Rutherford says:

    I tried to get a mortgage but was refused because I had no credit. Can you write an article about how to build your credit and how long it takes?

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