About Mortgage Types

There are many different types of mortgages and a licenced mortgage professional like myself can help you choose the one right for you.

Here’s a summary of the main types:

Closed mortgage:

This is a mortgage that comes with a lower interest rate but has a penalty if you pay it out earlier than the end of the term (at maturity). The penalty would be the higher of either 3 month’s interest or interest rate differential. It also comes with a prepayment privilege, usually 15-20%, that you can prepay on the principal amount of your mortgage once per year.

Open mortgage:

This mortgage usually has a higher interest rate but no penalty on early payout.

Insured mortgage

This type of mortgage is when you have less than 20% down. Your home’s value must be less than $1,000,000.00, and you cannot have an amortization (total life span of your mortgage) of more than 25 years. There is an insurance premium that’s added back into your mortgage, and that premium depends on a number of factors determined by your application.

Insurable mortgage

An insurable mortgage can be when you have 20% or more, your home’s value is less than $1,000,000.00 and an amortization of 25 years or less. It can be a purchase or a switch between lenders. In this type of mortgage, there is no insurance premium paid by you.

Uninsured mortgage

This is when your home’s value is over $1,000,000.00, you have more than 25 years on your amortization, or you are taking equity out of your home (refinancing).

Fixed mortgage

A fixed mortgage is where the interest rate doesn’t change over the term of your mortgage. This kind of mortgage is not subject to any changes in prime.

Variable mortgage

A variable mortgage is where the interest rate is impacted by changes to prime. Depending on what kind of variable you have, either your payment will change alongside prime or the allocation of principal and interest within your payment will change.

Standard mortgage

A standard mortgage is a regular mortgage. There are no other credit products attached (such as a secured visa or home equity line of credit) and is easier to switch from one lender to another when your term is up for maturity.

Collateral mortgage

A collateral charge mortgage is when your mortgage has other components to it, such as a secured visa or home equity line of credit. Not all lenders can accept a collateral charge mortgage when your mortgage comes up for maturity, so this could impact rates available to you if you want to switch your mortgage to a new lender at the end of it’s term.