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31
Aug

Getting Familiar With 5 Different Types Of Mortgages

Fixed rate mortgages

The most popular type of mortgage is the fixed rate mortgage. About seventy-five percent of all home loans are considered as fixed rate mortgages. In this type, the interest rate does not change throughout the term of the mortgage. Lenders are free to choose their prepayment options. This allows some to be able to repay their mortgages quickly. Fixed mortgages often come in a term of ten, fifteen, or thirty years. The problem with these is that monthly payments are usually higher than other types of loans. This is because of the higher interest rates.

High ratio mortgages

Another common type of mortgage is the high-ratio mortgage. It is a type of loan where the borrower only has to contribute lower than twenty percent of the purchase price of his home as down payment. In Canada, high ratio mortgages must be protected with mortgage protection insurance through the top mortgage insurance companies in the country.

Low ratio mortgages

The counterpart of the high ratio mortgage is the low ratio mortgage, which is also known as the conventional mortgage. The down payment ranges from twenty percent or more of the actual value or purchase price of a certain property. Unlike high ratio mortgages, conventional mortgages do not need to be insured. Insurance is considered depending on the type of property involved and its overall condition.

Open mortgages

There is also a type of mortgages that people refer to as open mortgages. These are very flexible mortgages since borrowers are allowed to pay at any time as they please. They do not have to worry about prepayment charges. Usually, open mortgages come in very short terms. Nevertheless, there are some who enjoy this type of loan on long terms as well.

Closed mortgages

Those who go for closed mortgages enjoy lower monthly bills than those who go for open mortgages. This is because interest rates are lower. Nevertheless, it should be noted that the mortgage agreement is not allowed to be prepaid in this option except according to certain terms. It might be true that the prepayment options are limited but people still consider closed mortgages because of the lower rates.

Do you need help with your mortgage? You should definitely consider getting help from Benson Mortgages. Benson Mortgages could help you fully understand your mortgage options. The company provides expert and creative solutions for both lenders and borrowers. It specializes in financing and restructuring and it has dealt with various scenarios through the years in the industry. Benson Mortgages has received so many positive reviews with previous clients. As a client, you as well could expect nothing but satisfactory and professional services!

by Benson Mortgage
in