You have different options to look at when deciding on the type of mortgage that is right for you. You can choose between fixed rate and variable rate mortgages. A fixed rate mortgage reduces the risk of interest rates rising on you and increasing your interest due on the principal amount. Variable rate mortgages take advantage of immediate low interest rates and keep your payments low by being based on the prime rate set by Bank of Canada.
02. Conventional or High Ratio Mortgage
You can also choose the amount you would like to pay as down payment through either a conventional or high ratio mortgage. Conventional mortgages are lower cost because you pay 20% of the purchase price on the value of the house. This means you do not need insurance from CHMC or Genworth to secure against default. However there is also an option to put as low as 5% down on your mortgage and get insurance. This lets you pass the barrier of saving large amounts of cash to buy the house you need. At PrestoMortgages, we can set the type of mortgage that you need
03. Open or Closed Mortgage
You have options on when and how you’d like to pay down the principal (amount owing on the mortgage). This means you can have either an open or closed mortgage. With an open mortgage you can pay down any extra amount on your mortgage whenever you like without any penalty. A closed mortgage requires you to pay a set amounts based on mortgage payments – if you’d like to pay more there is a penalty to be paid for paying more. With a closed mortgage the penalty also applies if you want to pay down the house, refinance the mortgage or transfer the mortgage before end of term.
04. Term
Mortgages can be stretched over certain terms of time periods. The time periods can vary between a few months up to 10 years. The term is what a closed mortgage will depend on as to when you can renegotiate, renew or pay off the balance. You can renew with the lender you got your mortgage from or with a new provider. At PrestoMortgages, our clients always renew terms with us due to our flexibility and highly favorable terms.
05. Mortgage Amortization
The last thing to consider is how long you would like the payments on your house to last. This entire period is called the amortization period. Typical amortization periods are 25 years to fully pay off the house (assuming that you stay on the same interest rate and payments). There are alternatives to amortization periods and PrestoMortgages has the tools and ability to set this according to your needs. A longer amortization reduces your payments and we can help!
06. The Presto Difference
At PrestoMortgages, we have the relationships and flexibility to create a solution that works best for you. We are not rigid like the big banks. We do not have problems that brokers have in hunting for the right rates or additional lenders. We are your advisor and will guide you through the entire process.