Types of Mortgages in Canada
Here are the types of mortgages that you need to know about as you look for the one that is right for you:
Fixed-Rate Mortgage: Your interest rate remains the same throughout the term, which provides stability against interest rate fluctuations.
Variable-Rate Mortgage/Adjustable-Rate Mortgage: The interest rate can fluctuate with market conditions but typically offers lower initial rates compared to fixed-rate mortgages.
Hybrid/Combination Mortgage: A blend of fixed and variable rates and home equity line of credit within the same mortgage, providing a balance of stability and flexibility.
Open Mortgage: Higher interest rates but allows the flexibility to make lump sum repayments or pay off the entire mortgage without penalties.
Closed Mortgage: Lower interest rates and limited prepayment options. Breaking this type of mortgage can result in penalties.
Portable Mortgage: Allows you to transfer your existing mortgage to a new property, maintaining your current mortgage terms.
Assumable Mortgage: Enables a buyer to take over the seller's mortgage along with the property.
HELOC (Home Equity Line of Credit): A revolving credit line secured by the equity in your home.
Reverse Mortgage: A loan for seniors aged 55 and older that allows homeowners to borrow money against the value of their home without having to sell or move out. The homeowner is not required to make monthly mortgage payments, as the loan is repaid when the homeowner no longer uses the home as their primary residence or sells it.