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Fixed Rate vs. Variable Rate

A FIXED RATE MORTGAGE is a mortgage where interest rate remains the same through the term of the mortgage. It is the most popular type of mortgage as the borrower has the option to lock in the interest rate from 3 up to 10 years. Every month he/she pays the exact same predetermined amount consisting of interest and principal. In the event that the interest rates rise, the borrower can benefit and be absolutely sure that the monthly mortgage payment would remain the same throughout this chosen term.

Every lending institution has pre-payment privileges in their mortgage contracts, which allow the borrower to pay off the mortgage faster by letting a certain percentage of it paid off per year. It is usually advised to get this information prior to signing any documents as the terms vary between the financial institutions.

A VARIABLE RATE MORTGAGE is a mortgage in which interest rate fluctuates with a prime rate during the term of a loan and payments as well as balance outstanding are adjusted accordingly. In this case, the interest rate is compounded monthly as oppose to the fixed rate mortgage rate compounding semi-annually. Any fluctuations in the current interest rates do not affect the mortgage payment, but rather determine how much of it should be applied against the interest portion and how much against principal.

Open vs. Closed Mortgage

An OPEN MORTGAGE is a type of mortgage that may be prepaid during the term in part or in full without penalty or bonus.

A CLOSED MORTGAGE is usually the one with a locked-in schedule, also referred to as a fixed rate mortgage. A borrower in this case will face a punitive penalty payment of 2-3 months interest or interest rate differential (whichever is greater) if he/she chooses to pay off the loan before its maturity date.

Renovation Mortgage – CMHC Improvement Program for New Construction/Renovations

Whether you are thinking to renovate your existing home or purchase an older home with an intention to renovate it, right now is the right time to do it as it is now made possible with a new program from CMHC. All you have to come up with is as little as 5% of “as improved” value and let the bank finance the rest by giving you a manageable mortgage with one low monthly payment. The insured mortgage will be based on the lower of either the purchase price plus the actual cost of improvements or the "as improved" market value. Listed below are the examples of the renovations that add and do not add value to your home.

Make sure to have a qualified contractor prepare a detailed description and a cost estimate for the proposed renovations/repairs to be submitted to your mortgage consultant.

Renovations – what renovations add value?

What types of renovations add value to your home?

  • Improving the kitchen
  • Adding/remodeling a bathroom
  • Creating a master bedroom with an en suite bath and/or walk-in closet
  • Adding a family room, especially on the main floor
  • Creating a sun room

What types of renovations do not add value to your home?

  • Adding a swimming pool/sauna/hot tub
  • Installing a central vacuum system
  • Reducing the number of bedrooms to fewer than three
  • Installing paving stones in the driveway

Contact us today for more information on this program.

Poor Credit Mortgages

For those of us who had a few bumps along the road and have less than a perfect credit score, there are quite a few options out there in terms of property financing. Consolidate your debt, refinance to substantially reduce your mortgage payments or finally be able to afford that house you wanted to buy for sometime now. These institutions are equity lenders and their lending guidelines differ from those called “A” lenders, but they want your business and offer attractive options to choose from. They will finance your property up to 80% of its value (conventional mortgage). Some might go as high as 90%.

No Income Verification Mortgages

This type of mortgage is specifically designed for self-employed and commissioned individuals. All you need to show is that your business has been operating for the past 2 years. The mortgages are calculated by stated income and not net taxable income as it were in the past. It is also a great advantage to reduce your income taxes without interfering with your ability to finance your home with best results possible.

Qualify for a mortgage up to 90% LTV today.

Contact us today for more information on these programs.

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