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Different Types
of Canadian Mortgages - A Beginner's Guide By Marlene Budde The first thing most people think of when they come to the realization that they want to buy a home is "uh oh, what type of mortgage do I need?" Most people are aware that there are different types of mortgages, but many people, especially first-time home buyers, may not be familiar with the differences between the types of mortgages available in Canada. Conventional - This type of loan is available to you if you have at least 25% of the purchase price available for a down payment. So if the home you wish to buy is $200,000 and you have $50,000 available for the down payment, you may qualify for a conventional mortgage. High Ratio - Available to people who are able to put down between 5% and 25% of the purchase price as a down payment. These usually need to be insured through CMHC (Canada Mortgage and Housing Corporation). Purchasing this insurance lets you qualify for a mortgage when you have less than 25% available for the down payment. CHMC 5% Downpayment Program - Originally only for first-time homeowners, this lets you qualify for a loan (although there is a maximum purchase price set: for example in Calgary it is $250,000) even if you only have 5% available for a down payment. Open - Allows you to pay off part or all of the mortgage at any time without penalties. The interest rates are usually higher, though. There are more types available so it's recommended you check with your broker or lender to see what is available specifically for you, but this is a general start so you'll have some information available. Please visit http://www.purcellmortgageteam.com/2009/09/23/four-steps-to-an-affordable-mortgage to learn more about the types of mortgages.
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