Description: Get yourself familiar with the different types of mortgages available in Canada and their uses.
Taking out a mortgage loan is one of the most significant decisions that you make in your lifetime. In Canada, homebuyers have a wide range of loan options to choose from. Consumers go for mortgage loans in Canada to fulfill various purposes like buying a home, refinancing, home renovation, debt consolidation and so on. Mortgage loan policies in Canada are flexible and have been designed to meet every need of the consumer.
Though a mortgage is basically a loan that is backed by your home, there are different variations to the mortgage types that can be utilized for different requirements. Before choosing a loan, you must set your goals and look at the risks involved.
Given below are some common types of mortgages that are available in Canada:
First time homebuyers mortgages: For buying a home for the first time.
Pre-approved mortgages: These are free and no obligation loan offers that allow you to understand how much you can manage to borrow based on your credit and the eligibility criteria. This lets you fix a price limit on your purchase.
High ratio mortgage: Allows you to buy a home with a down payment as low as 5%.
No money down mortgage: If you have a steady job and good credit, then you can take out such a loan without making a down payment.
Open mortgage: This loan gives you the flexibility to pay off the loan at any point without any penalties. The repayment terms range from 6 months to 1 year.
Closed mortgages: These loans provide the safety of fixed payments for loan terms ranging from 6 months to 10 years.
Fixed rate loans: The interest rate and monthly payments stay unchanged during the entire loan term.
Adjustable rate loans: These are flexible loan options and the interest rates are adjusted from time to time.
Home equity lines of credit: Use your home equity to borrow money. These loans allow you to fix your own monthly payments. You can pay off the loan according to your convenience.
Commercial loans: Useful for buying commercial properties.
Refinancing and consolidation loans: You can use these loans to repay your other high-interest loans.
Mortgages for self-employed: Self-employed individuals can avail these programs for various purposes.
Reverse mortgages: These are useful options for seniors to switch their home equity into cash flow.
Important lenders in Canada
Following are some of the names of prominent home loan providers in Canada:
Scotiabank
Peoples Trust
Bank of Montreal
Citizens Bank of Canada
HSBC
Bridgewater Financial Services Ltd
First National
Home Trust Company
Maple Trust
Laurentian Bank
Citi Financial
TD Canada Trust
