Mortgages are used to borrow money from lenders against a property. If the borrower fails to pay back the money with interest, the lender can take the property back. Mortgages are a good way of achieving funds for business or personal needs. The borrowers just need to know they can pay the mortgage.
These are the types of mortgages available in Canada.
Closed Mortgages are for borrowers who have a specific budget and term in mind. With this type of mortgage, a person will need to pay a penalty fee if the loan is paid in full before the agreed term. It also comes with a fixed interest rate. Closed mortgages also provide lower interest rates and longer terms.
Open Mortgages are a great way of getting a flexible term and being able to pay the amount off before the term runs out. In turn, for the flexibility, interest can change from month to month, and repayments can be quite large. This type of mortgage allows the borrower to settle the mortgage before the term ends without a penalty fee.
A hybrid mortgage consists out of a range of mortgages blended into one single mortgage registration. This mortgage can provide either variable, fixed, or credit interest rates. There are various aspects of hybrid mortgages depending on the lender, and this provides a wider array of options during mortgage registration.
Convertible mortgages provide the borrowers with the chance to change to a different type of mortgage later in the term. Many homeowners opt for convertible mortgages to move from an open mortgage to a closed mortgage later in the term. Many lenders provide convertible mortgage homeowners with the chance to change to a fixed-rate mortgage.
Reverse mortgages are essentially only accessible to homeowners who are 55 years and older. These individuals can convert their home equity into a lump sum or monthly cash payment for living expenses. When the homeowners decide not to live on the property anymore, the property may be sold to pay the owed amount.