Purchasing a home is by far one of the largest actions a person can make in life. It sets up a financial bedrock, but also, is a place you intend to share with others, improve and sustain over years. So when it comes to understanding Canadian mortgage rates, what steps can you take to find the one that works best for you?
Primarily, the first two mortgage types you’ll be faced with are either an open mortgage or a closed mortgage. Understanding the crucial differences between these two methodologies is paramount when it comes to finding a plan that works for you.
An open mortgage is as its name suggests. This type of mortgage plan allows you to pay off your debt as you see fit, with very little in the way of restrictions. You won’t be hit with a pre-payment penalty and you can integrate your payments in your own way. This means increased flexibility but keeping that in mind, your interest rates are set at a higher standard than with closed mortgages.
Closed mortgages, on the other hand, are an entirely different beast to be tamed. As their name also suggests, they are set, with fixed conditions and not much in the way of wiggle room. However, this is not a bad thing. Closed mortgages allow you to make prepayments without additional charges, additionally, since this is a full-term locked-in contract, you’ll get a more favourable interest rate.
The more traditional mortgage is as you may already understand it. A lender offers you a set amount of funds for a loan, and in turn, your set borrowed amount which will have to match the cost of your prospective home purchase.
Collateral mortgages are roughly the same, however, may allow the lender to loan you more than just the set cost of your intended purchase.
If you ever need assistance finding the right one for you, you can always contact our expert mortgage team, and we’ll guide you down the right path.