Mortgages Canada
A home loan from Mortgages Canada can make it easy to buy that dream house you've always wanted. Don't wait for tomorrow, contact us today.
- Why Use Mortages Canada?
- You'll always get our lowest rate and flexible payments
- Simple loan application - very little paperwork
- Instant quotes and a fast approval process
- No service costs
Where others say NO, we say YES! Even if you have been turned down elsewhere, we can help! Our mortgage programs combine the highest quality loans with the most economical rates and the easiest qualifications!Is an Open Mortgage or a Closed Mortgage Best for You?
Is an Open Mortgage or a Closed Mortgage Best for You?
Here, Mortgages Canada takes a look at whether an open mortgage or a closed mortgage is best for you.
Here, Mortgages Canada takes a look at whether an open mortgage or a closed mortgage is best for you.
Mortgages Canada Definition: Open Mortgage
An open mortgage is one where the terms are fixed for the life of the loan, ie, the interest rate never changes.
Other features of the open mortgage: i) you can pay off the loan early with no pre-payment penalty; ii) and you have flexibility as to how often you pay.
Mortgages Canada Definition: Closed Mortgage
The closed mortgage is so named because the option of paying off the mortgage in full before the date of maturity is "closed" to the borrower.
The primary difference between the open mortgage and the closed mortgage are prepayment penalties. With a closed mortgage, if you want to pay off your balance early, you will incur prepayment penalties.
Canada Mortgage Loan Tip: There are various types of open and closed mortgage. The terms vary according to the lender. So, be sure to go over the fine print with your mortgage advisor.
Taking the above into consideration, which mortgage option is best for you?
Mortgages Canada Checklist for Determining Which Mortgage is Best for You
Mortgages Canada on Life Changes:
If there are uncertainties in your life (eg, an illness, the impending birth of a child, a divorce, a career change, job relocation, etc.), an open mortgage is probably better for you.
Mortgages Canada Lifestyle Tip: Open mortgages provide a foundation of surety when everything else may be up in the air.
Mortgages Canada on Finances:
If your finances are not stable, an open mortgage will probably work best for you. You may want to consider this option seriously if you work on commission, are self-employed and/or are a one-income household.
Knowing what your mortgage payment will be month after month is something you can factor and absorb into an uncertain budget, a job loss, and/or a low commission/no commission month.
On the other hand, if your finances tend to be pretty stable, a closed mortgage could work for you. Some factors you want to consider: i) how long you've been at your job; ii) how secure do you feel in your position; and iii) are you in an expanding industry; and iv) if your industry expanding in your area.
Mortgages Canada Personal Finance Tip: Because closed mortgages don't accommodate life changes very well, financial stability across the board is something you want to pay particular attention to.
Mortgages Canada on Home Occupancy Length:
How long you're going to be in the home can help you decide which type of mortgage is best for you as well.
Mortgages Canada Occupancy Tip: As interest rates tend to be lower on closed mortgages, most experts advise that if you're going to remain in the home for less than five years, you may want to consider some of the various closed mortgage options.
Choosing whether an open mortgage or a closed mortgage is best for you depends on the various factors in your life.
Mortgages Canada Overview: Getting a Mortgage in Canada
Following are areas to look at when applying for a mortgage in Canada.
Mortgages Canada Loan Tip: 3 Areas to Look at When Applying for a Mortgage in Canada
Mortgages Canada Down Payment Tip: Canadian mortgages typically cover 90 percent of a home's purchase price. This means that the borrower has to come to the table with a 10 percentdown payment.
However, if a borrower pays for indemnity insure, which inoculates the lender against borrower default, most banks will lend more than 75 percent of a home's purchase price.
Mortgages Canada Info for Foreign Homebuyers:
For foreign home buyers to get a Canadian mortgage, they must come up with a 35 percent down payment, as banks will typically only lend 65 percent of a home's purchase price.
In addition to the 35 percent down payment, Canadian lenders look for foreign buyers with clean credit histories in their home country. This is extremely important, as you need to prove that you've been a responsible homeowner in your own country - ie, you've had/have a mortgage there and have an excellent payment history.
Mortgages Canada Income Requirements Tip: In Canada, mortgage lenders look for gross annual income to be about three times less the amount of mortgage you are applying for.
A simple example: if you are applying for a $100,000 mortgage, your gross annual income should be $30,000.
High-Income Earners:
For high-income earners, many lenders will increase this multiple to 3.5 or 3.75.
Mortgages Canada Overview of Mortgage Types:
Canada offers many type of mortgages, eg, open mortgages, closed mortgages, variable mortgages, etc. A brief overview of each:
Open Mortgage:
Some would consider it the most secure type of Canadian mortgage. The interest rates remain the same for the life of the loan, and there are no prepayment penalties.
Closed Mortgage:
While it usually has a lower interest rate than the open mortgage, it also comes with prepayment penalties. This type of mortgage is only suggested if your income - and life - tend to be pretty stable.
Variable Mortgage:
The variable-rate mortgage is so named because the interest rate on it is tied directly to the money market rates. While the fluctuations can bring good news (ie, when the rates go down), it's the tick up that should concern borrowers considering this type of Canadian mortgage.
Canadian Mortgages Industry Tip for All Homebuyers: Mortgage brokers know about most of the best mortgages Canada has to offer. They are experts, don't cost you (the purchaser) anything and they can walk you through which type of mortgages Canada proffers, and which one is best for you.
Mortgages Canada Financial Advisory Tip: This mortgage is usually only recommended for the extremely financially secure, as changing interest rates mean changing mortgage payments.
Examine such indicators as finances, job stability and family needs will ultimately help you determine which type of Canadian mortgage is best for you.
