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A Quick Comparison of Mortgage Features
Here are some basic features of the most common mortgage types:
Fixed Rate Closed
When you take out a fixed-rate mortgage, your interest rate will not change throughout the entire term of your mortgage. As a result, you'll always know exactly how much your payments will be and how much of your mortgage will be paid off at the end of your term. Fixed Rate mortgages offer you peace of mind.
Variable Open vs Variable Closed
Open mortgages can be paid off at any time without penalty. They are suited to homeowners who are planning to sell in the near future or those who want the flexibility to make large, lump-sum payments before maturity. Variable Open mortgages are for those who are planning to, or want the option to make moves with their mortgage.
Variable closed mortgages are commitments for a specific term, usually 5 years. Your mortgage interest rate will fluctuate with prime and when it decreases, your mortgage will be paid off faster. With a variable closed, you will need to wait until the maturity date or pay a penalty to switch. However you can move to a fixed rate mortgage option at any time without penalty provided the term is equal to or greater than the original period. Variable closed mortgages are for those who are willing to lock into fluctuating rates for a set period of time.
High-Ratio vs Conventional Mortgage
Any purchase where the down payment is less than 20% is considered a high-ratio mortgage, and the mortgage must be insured by the Canada Mortgage and Housing Corporation (CMHC). A fee is charged for this insurance with the amount dependent on the Mortgage Amount to Value of property you are purchasing. High-Ratio mortgages are for buyers with less than a 20% down-payment.
A conventional mortgage is a loan for no more than 80% of the appraised value or purchase price of the property, whichever is less. There is no additional insurance required with this type of mortgage.
Cash Back Mortgages
Take a cash back option when you apply for our 5-Year Fixed Rate mortgage. We'll give you 4% of the mortgage principal which could net you thousands of dollars for renos, education, investments, furniture, closing costs, anything you want! Check out the features and benefits of the Provincial Alliance Cash Back mortgage.
