Need More Options When it Comes to Your Mortgage?
It is extremely common for people to settle for a standard mortgage when it comes time to purchase their house. Most concentrate on getting the best interest rates, and they may ask if it is open or closed and are utterly unaware of all the different mortgage options from which they can choose.
“Understanding is much more profound than knowledge. Knowledge is necessary, but not enough, condition for understanding.”
Regardless of whether you are a first-time homebuyer or experienced, it never hurts to possess information regarding the different types of mortgages to understand if there isn’t a more desirable option for your needs.
How many options do you think are available to Canadians?
There are over ten types of mortgages and features available in Canada. As you may already comprehend the obvious ones such as fixed or variable rate, traditional or conventional, Reverse mortgages and Home Equity Line of Credit (HELOC). We will describe the unique ones, in this article.
Assumable mortgage To take over (the debts of another) as one’s own. Borrowers will assume the existing mortgage on the home they are purchasing. This type of financing arrangement usually has to be approved by the current lender, and the terms of the outstanding loan such as current principal balance, interest rate, repayment period, and whatever additional contractual terms of the mortgage to remain the same once transferred.
Hybrid mortgage It usually is insufficiently promoted and moreover, misunderstood. It’s a type of adjustable-rate or tracker mortgage that grants a fixed rate for a predetermined duration and then an adjustable rate for the rest of the mortgage term. Simply put, you can combine rates and terms in almost inexhaustible sequences. Also referred to as a 50/50 mortgage and by that the whole purpose of this is to lessen your vulnerability to unexpected unfavourable interest-rate changes.
Portable mortgage You don’t always have to repeat the process. If you move to a new home so could your mortgage and you could feasibly retain the same interest rate without incurring prepayment fines, and usually won’t have to pay penalties for breaking your mortgage contract. If you don’t care to go through the approval process again, this may be an option to consider, but remember not all mortgages allow for porting. It is advantageous if your current loan has a lower interest than anything you could arrange with your new property. Keep in mind this remains mostly recommended for homeowners who frequently relocate for work.
To learn more about Canadian Mortgages Alternatives click here as there are several mortgage types, terms, and alternatives, and some can be consolidated to meet your requirements. You can review all opportunities with a mortgage expert to secure a product that’s best for you and your current financial situation.
There are many ways to communicate with an expert using the Canadian Mortgage App. Open support chat to get connected to one of our trusted Brokers in your area who can help walk through the scenarios. They will also work with you to find the best rate and mortgage option that applies to your needs.