First Time Home Buyers – What are the different types of mortgage? Getting a mortgage is almost like buying a car; there are so many makes and models that choosing the right one now can be pretty overwhelming. Let’s go thru the different types of mortgages available to get you started…
- There is a Variable Mortgage where the interest rate charged and your monthly payment will change when there is any change to what is called the prime rate.
- There is the popular Fixed Term Mortgage where the rate and length of the mortgage is fixed and will not change.
- There is a Cash Back Mortgage where there is a % of the mortgage amount given to you on closing that may be used for down payment, closing costs etc. This ranges from 1% to 7% or more of the mortgage amount
- There is a Convertible Mortgage – where the term is short, maybe 6 months, and you have the option at any time during this period to convert to a longer term mortgage or different product with no penalty, as long as you remain with the same lender
- There is a Combo or Multi Part Mortgage – where you can select different types of mortgages and terms, where instead of one single mortgage, you have as many as 99 different parts. This is great if you can’t decide whether to go fixed, variable, open, or closed, or even a line of credit…. Why not do them all!
- And last by not least, there are Secured Lines of Credit – even though it isn’t called a mortgage, it acts like one as in it is registered on your property title as a loan. The interest rate will be variable based on the prime rate, with minimum payments of interest only so the lowest possible monthly payment you can have. It is also completely open and can be paid off in full with no penalty. The rate may be higher than a regular mortgage and is based on the prime rate like a variable mortgage.