TYPES OF MORTGAGES
Closed mortgages generally have prepayment options of up to 20% of the original mortgage amount. If you decide to pay out, renegotiate or refinance before the end of the term of a closed mortgage, prepayment costs will be applied.
An open mortgage can be repaid at any time throughout the term, either in full or partially without paying a prepayment charge. Provides flexibility until you are ready to lock into a closed term.
A convertible mortgage is similar to a closed mortgage, but gives you the option of converting to a longer, closed mortgage at any time without paying a prepayment charge. With this option you can generally make an annual prepayment up to 10% of the original mortgage amount.
WHAT IS A HIGH-RATIO MORTGAGE?
A high-ratio mortgage refers to a mortgage in which the borrower has a down payment between 5% – 20%. These mortgages require mortgage default insurance.
CMHC, GENWORTH FINANCIAL CANADA, CANADA GUARANTY
The Canadian government supports high levels of homeownership through an insurance plan that covers lenders in the event that borrowers of insured mortgages default on their mortgage.