Mortgage Types Comparison Guide
Understanding different mortgage options in Canada to find the best fit for your needs
Understanding Mortgage Types
Selecting the right mortgage is as important as choosing the right property. Different mortgage types offer various benefits and limitations based on your financial situation, risk tolerance, and future plans. In Canada, mortgages are categorized by both their interest rate structure and their prepayment flexibility.
Key Mortgage Type Categories
Rate Structure
- • Fixed Rate: Interest stays the same for the term
- • Variable Rate: Interest fluctuates with prime rate
- • Convertible: Starts variable with option to convert
- • Hybrid: Part fixed, part variable
Prepayment Flexibility
- • Open: Can be paid off anytime without penalty
- • Closed: Penalties apply for early payoff
- • Partially Open: Limited prepayment privileges
Special Purpose Mortgages
- • Reverse Mortgage: For homeowners 55+
- • Self-employed: For business owners
- • New to Canada: For recent immigrants
- • Construction: For building new homes
Other Features
- • Portable: Can be transferred to new property
- • Assumable: Can be taken over by buyers
- • Cashback: Offers cash rebate at closing
- • Home equity line of credit (HELOC)
Mortgage Types Compared
Mortgage Payment Calculator
Mortgage Pre-Approval Tips
Check your credit report first
Fix any errors before applying
Have documents ready
Income proof, tax returns, employment letters
Don't make major purchases
Avoid new credit applications before closing
Consider a mortgage broker
They can shop multiple lenders for the best rates
Common Mortgage Terms
Amortization Period
Total time to pay off mortgage (typically 25-30 years)
Mortgage Term
Length of your agreement with a lender (1-10 years)
Pre-payment Privileges
How much extra you can pay toward principal each year
Conventional vs. High-Ratio
Down payment ≥20% vs. <20% requiring insurance
Additional Resources
Related Guides
Related Resources
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