What are the mortgage options available to me, and what are the requirements for each?
When getting a conventional mortgage, you must provide a down payment of at least 20% of the home's purchase price. If you have less than that, purchase mortgage insurance from the Canada Mortgage and Housing Corporation or other approved mortgage insurers.
A high-ratio mortgage is an alternative for those with less than a 20% down payment. This type of mortgage comes with insurance that protects the lender if the borrower defaults.
When opting for a fixed-rate mortgage, your interest rate will be fixed for the term of your mortgage, which typically ranges from one to ten years. This means your mortgage payments stay unchanged throughout the term, even if the interest rate changes.
A variable-rate mortgage has an interest rate that varies based on the Bank of Canada's prime rate. As such, your monthly payments will also vary depending on fluctuations in interest rates.
An open mortgage allows you to pay off all or part of your loan anytime without incurring prepayment penalties, making it ideal for people who plan on paying off their loans early. In contrast, a closed mortgage comes with prepayment penalties if you pay off your loan before the end of its term but usually has lower interest rates than an open mortgage.