To learn more about your mortgage in Brampton, read this blog series where we show you the different types of options you have.
If you aren’t familiar with mortgages then you may be surprised at how many options there are for you out there. Some mortgage types are more common than others, however, the type of mortgage you go with all depends on your personal situation and what works for you.
In this blog series, we’re going to go over several different types of mortgage in Brampton options, including what they are and who they’re ideal for. In this post (Part 1), we look at the more common type of mortgage solutions Canadians use.
A good place to begin is perhaps the most common mortgage available, traditional/conventional mortgages. This is a mortgage in Brampton where buyers put at least a 20% down payment on a loan with the rest of the amount being covered by a lender. A mortgage where the lender is paying more than 80% of the property’s value is called a high-ratio mortgage and will typically require mortgage insurance. Because a traditional mortgage requires the buyer to put a minimum 20% down, mortgage insurance is often not needed.
As mentioned, a high-ratio mortgage is one where the lender is paying more than 80% of the loan. One requirement with a high-ratio mortgage is that the buyer obtains mortgage insurance. High-ratio mortgages have been especially popular with the recent low-interest rates as many borrowers are choosing to use the extra cash that otherwise would have gone towards a down payment for other homebuying-related expenses.
An adjustable-rate mortgage is a type of loan that changes its interest rate throughout the term of the loan, reflecting movement in the prime interest rate. Because the rate may change over the life of a loan, the borrower will often pay different monthly amounts depending on whether the interest rate increases or decreases. Similar to an adjustable-rate mortgage is a variable-rate mortgage. However, with a variable-rate mortgage, the borrower will pay the same monthly amount whether the interest rate rises or falls. This means that you could pay a higher (or lower) amount to your mortgage principal depending on the activity of the interest rate.
A fixed-rate mortgage allows a borrower to lock in an interest rate for a specified term, often for five years. For those who like to know exactly how much they are paying each month and budget accordingly, a fixed-rate is an ideal solution. This type of rate is usually a bit higher than others; however, it provides the borrower with peace-of-mind and monthly stability. When interest rates are low many people jump at the chance to lock the rate in using a fixed-rate mortgage.
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In Part 2 of this blog series, we will look at even more mortgage types and, although they may not be as common as some of the ones used in this blog post, can still be extremely useful.
If you’re searching for a mortgage in Brampton, contact one of our qualified mortgage brokers today! With several years of real-world experience and an industry leader in Brampton, we would be more than happy to match you with the mortgage type that fits your specific needs.
