Conventional Ontario mortgage
or Ontario mortgage conventional
An Ontario mortgage that does
not require a mortgage default insurance fee. Typically
this is a mortgage Ontario
loan which is 75% or less of the purchase price or property
value. The good? By having a large down payment, you
can save thousands of dollars in insurance fees. The
bad? When you sell there will be less buyers eligible
to ‘assume‘ your Ontario mortgage because
they may not have enough of a downpayment.
Non-conventional 1st Ontario
mortgage or ‘first’ Ontario
An Ontario mortgage that is
used when you need Ontario lender financing which is
greater than 75% of your house
purchase or property value. This can also be called a ‘high
ratio’ Ontario mortgage when it is a refinanced ‘first’ Ontario
mortgage. The good? It allows people who don’t
have large down payments the ability to buy a house.
They do this by using mortgage default insurance. (See
CMHC or GE Capital below). Another good? It allows you
to refinance your house beyond its 75% appraised value
so you can access your equity and get cash out! This
allows people that are loaded up in other high interest
debt (credit cards) or high loan repayments (car loans)
the ability to payout these debts and conserve family
cashflow. The bad? The benefit of ‘insuring’ an
Ontario mortgage default costs a lot in premium costs
- but, thankfully, this can be added to the ‘first’ mortgage
Ontario loan. The cost is minimized if the real estate
market is rising or stable as it allows people to buy
real estate today - rather than waiting years to save
up more of a down payment.
Ontario mortgage Second or Second Ontario mortgage (Ontario
home equity loan)
An Ontario mortgage second or second
Ontario mortgage (also called a Ontario home equity loan)
a non conventional mortgage Ontario loan. Often it
is used when Ontario mortgage financing exceeds 75%.
This is usually made available through private Ontario
lenders rather than institutional Ontario lenders.
A private Ontario second mortgage or Ontario mortgage
second is used with your mortgage Ontario first priority.
Your personal Ontario mortgage broker will advise you
when this makes sense. The good? Sometimes, your current
down payment amount available PLUS a new Ontario second
mortgage allows you ’enough’ of a down
payment to qualify for a non conventional purchase.
You can then avoid paying mortgage default insurance
altogether. And that can save you thousands in default
mortgage insurance premium dollars. Also, an Ontario
mortgage second or second Ontario mortgage (Ontario
home equity loan) will allow you to access your cash
in your home equity. This allows you to improve your
monthly cash flow by paying off other higher interest
debt (credit cards) AND other debt that has high monthly
payments (car loan). Also there is no default insurance
payable when you obtain a private Ontario mortgage
second or Ontario home equity loan as the lenders are
private and do not charge an insurance fee. The bad?
Second mortgages always have a higher interest rate
cost than a first mortgage because there is a higher
perceived risk by the lender with the borrower.
CMHC or GE Capital
Mortgage Insurance companies licensed by the Federal
Canadian Government to provide mortgage insurance for
Ontario lenders. This insurance protects Ontario lenders
against default by borrowers. The insurance is usually
added to the mortgage Ontario loan. The good? This insurance
enables many more buyers to enter the market which keeps
housing demand strong. It allows people to be able to
buy with a low down payment. The bad? Premium rates range
from 0.5% to 3.75% or more of the mortgage Ontario loan
‘Open’ Ontario mortgage or a ‘Closed’ Ontario
An open Ontario mortgage has
terms from 6 months to 1 year This is an Ontario mortgage
in which you can prepay
all, or part of the original balance without penalty.
The good? You can save usually 3 months interest charge
penalty or more for the entire Ontario mortgage balance.
This is helpful if you plan to pay down your mortgage
Ontario loan with a large sum, or the entire balance
of your Ontario mortgage in a short period. The bad?
Ontario lenders charge higher rates than for closed terms
because of this convenience. Here is a helpful tip from
your personal Ontario mortgage broker. If rates are going
up…and you are moving…get a closed term Ontario
mortgage. You can ‘port’ your current Ontario
mortgage to your new place.
A closed Ontario mortgage
has terms from 6 months to 10yrs. The good? The rates
are lower than ‘open’ mortgage
Ontario loans. The bad? You need to be careful to pick
a term that suits your needs. Your personal Ontario mortgage
broker can explain to you the risks of not choosing a
term that suits your needs. You may be faced with a large
penalty if you try to prepay too much or try to switch
your Ontario mortgage to another Ontario lender in the
middle of your term.
ARM Ontario mortgage or Variable Ontario mortgage
The ARM (Adjustable Rate Mortgage)
or Variable rate Ontario mortgage is all about the ‘rate’ charged
with your mortgage Ontario loan. Instead of a ‘fixed’ rate
the rates fluctuate. These variable Ontario mortgages
can be either open or closed. Terms are from 6 months
to 5yrs. Rates fluctuate with prime, usually monthly
but can be every few months. Variable mortgage Ontario
loans have been historically extremely popular. The good?
Ontario mortgage rates are as much as 2 or 3% below the
5 year fixed rates. This can save you up to $200 or more
interest per month on a $100,000 Ontario mortgage. The
bad? You will pay a penalty if you want to pay it off
early or switch lenders. Or you may find yourself chasing
headlines when prime rates rise. Ask your personal Ontario
mortgage broker for advice on obtaining the best variable
mortgage Ontario loan. The good? Most Ontario lenders
will let you convert to a fixed rate, closed term, without
penalty. If you are lucky you can save tens of thousands
off the principal and interest. This will take years
off your amortization on your Ontario variable mortgage.
First a disclaimer. No Ontario
mortgage or mortgage Ontario loan is portable. It is
the rate and term that
are portable. If you move to a new place and want to
take your Ontario mortgage with you, you will need a
new Ontario mortgage with the same rate, term, and amortization
that was left on your old place. The good? The benefit
of a portable mortgage is that you may keep your low
rate and not have to pay CMHC or GE Capital fees again.
The bad? You will have to re-apply - even if you are
staying with your present Ontario lender. And, you will
still owe a ‘pound of flesh’ as you will
have to pay legal fees.
If you would
like Gregory Stanley, CFP AMP to be your personal
mortgage broker to help you with all your mortgage
financing needs Apply