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Mortgage Features
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Fixed Rate MortgageWhat Is A Fixed Rate Mortgage? A fixed rate mortgage or fixed interest rate mortgage is a mortgage where the interest rate is locked in or fixed for the the term of the mortgage, and does not change. Benefit Of A Fixed Rate Mortgage The benefit of a fixed rate mortgage is security and piece of mind for a borrower, knowing precisely how much their mortgage payment will be each month for the entire term of their mortgage. A fixed rate mortgage is often higher than a variable rate mortgage, however in comparison to a variable rate mortgage, the fixed rate does not change during the entire term... More
A Fixed Rate Mortgage is a mortgage termA mortgage term is the time period which the mortgage agreement is in effect. Mortgage terms can range from 6 months and up to 10 years. The mortgage term is set at the time of the approval of the mortgage. The mortgage term shouldn't be confused with the amortization period of the mortgage, as the mortgage term is usually 5 years whereas the amortization period can be 25 year to 35 years. At the time of the mortgage approval, a borrower should determine how long of a mortgage term they would like to take, as there is usually a penalty for repaying a mortgage by refinancing or selling their... More with an interest rate which does not change throughout the entire term of the loan. The payments are set from the beginning of the term, and remain the same until the mortgage maturity dateThe maturity date of a mortgage is when the mortgage term ends. The maturity date is often referred to as the renewal date. On the maturity date, the borrower(s) have the option to renew their mortgage with their existing lender, if given an offer, refinance their mortgage, or pay their mortgage off completely. If a mortgage is refinanced or paid in full on the maturity date, there is no penalty applied to the borrower(s) as they are not breaking their mortgage mid-term, as the term comes to an end. Usually, if a borrower maintains good standings with their mortgage lender, during the te... More.
When breaking a fixed rate mortgage, usually a penalty of Interest Rate Differential (IRD) or 3 months of interest payments apply.
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Variable Rate MortgageA variable rate mortgage is a mortgage that has an interest rate that can change during the term of the loan. A variable rate is always attached to the lender's prime rate. If the prime rate goes up or down, then the variable rate effectively goes up or down. Benefits Of A Variable Rate Mortgage The benefit of a variable rate mortgage is that it is usually lower than a fixed rate mortgage. A fixed rate mortgage has an interest rate that is locked and fixed for the entire term of the loan, whereas the variable rate can change, however historically the variable rate has always carried a lower ... More
A Variable Rate Mortgage is a mortgage term where the interest rate is a discounted rate based on the Bank of Canada’s prime rate and may potentially increase or decline, depending on what the Bank of Canada’s prime rate is, during your term.
For example, if the Bank of Canada’s prime rate is 3.00% and your variable rate is prime – 0.50%, then your variable mortgage is 2.50%. If the prime rate goes up, then the variable rate will also go up. If the prime rate goes down, then the variable rate does as well.
When breaking a variable rate mortgage, most lenders and mortgage products have an applicable penalty of 3 months interest.
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Fully Open MortgageAn open mortgage is a mortgage that is fully open and free of any penalty for early repayment. An open mortgage usually carries a higher interest rate, and gives the borrower flexibility to pay the mortgage in full or large sums without incurring unnecessary costs. A home equity line of credit is usually considered an open mortgage. An open mortgage is usually recommended for borrowers looking for a very short term mortgage and plan to pay off the mortgage by refinancing or selling their property within a short time period, as they carry higher interest rates than a closed mortgage, however... More
A Home EquityWhat Is Home Equity? Home equity is money available in a home, and calculated as property value minus mortgage balance(s), including line of credits and liens. For example if a property is valued at $500,000 and the home owner(s) have a total mortgage balance of $300,000, then the home equity available is $200,000. What Is A Home Equity Loan? A home equity loan is a mortgage loan that is approved based on home equity. Traditionally, for home equity loans, income and credit are not considered for qualifying as the qualification is based on the equity in the home. Home equity lenders will,... More Line of Credit (HELOC), is a line of credit secured against real estate, and is equivalent to a mortgage, however as you pay down the principal balance of your line of credit, you will have access to the monies available on the Home Equity Line of Credit.
Most HELOC’s allow you to make interest-only payments, and full principal balance may be paid in full, without penalty.
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Pre-payment Privileges
Pre-payment privileges are a great feature added to most mortgage products. Most of our lenders offer the 20/20 pre-payment privilegeA pre-payment privilege is a mortgage term which allows a borrower to pre-pay their mortgage without incurring a penalty. When a mortgage has a pre-payment privilege, there is usually a lump sum payment privilege and a monthly payment privilege. Pre-payment privileges can range from 5% to 20%, meaning a borrower can increase their mortgage payment by 5% to 20% each month, and that additional amount will be applied to their principal balance. When a borrower is allowed to make a lump sum pre-payment toward their mortgage, they are usually allowed between 5% to 20% as a lump sum payment towar... More.
What does that mean?
It means you can pre-pay your mortgage by a lump sum of up to 20% of the principal balance each year without any penalties. The other 20% component to the 20/20 pre-payment privilege allows you to increase your monthly,weekly, bi-weekly, or semi-monthly mortgage paymentA mortgage payment is the payment amount, usually comprised of principal and interest payments, agreed upon as per mortgage approval documents, which a borrower makes to the lender as repayment for the mortgage. A mortgage payment is calculated based on the interest rate, compounded annually or monthly, as well as the amortization period. Interest rate of a mortgage and amortization period, will determine the amount of interest that is applied to the interest portion, and the amount of principal payment that is applied to the principal portion of the mortgage payment. A mortgage payment ... More by 20%, in addition to the 20% lump sum annual allowance.
By taking advantage of these mortgage features, you are sure to shed some years off the amortization of your mortgage, potentially save thousands of dollars in interest, and become mortgage free faster.
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PortabilityA mortgage portability option allows a home owner to port or transfer their mortgage from one property to another with the same terms, rate and conditions, along with the same outstanding balance. Benefit Of Porting A Mortgage The benefit of porting a mortgage is that the home owner doesn't break their current mortgage and avoids paying a penalty, if applicable for breaking their mortgage. With the mortgage portability option, the home owner would only pay a discharge fee for discharging their mortgage and a registration fee for registering the mortgage on a new property, along with any appl... More
The Mortgage Portability option allows a borrowerA borrower in a mortgage transaction is also known as the mortgagor. The person, people or entity receiving a loan from a lender or bank, also known as the mortgagee. As a mortgage borrower, there are responsibilities to comply with the terms and conditions of the mortgage commitment agreement before and during the term of the mortgage. A mortgage borrower is responsible for qualifying for a mortgage, making payments, along with many other requirements set out in their mortgage commitment. to port/transfer their existing mortgage balance from one property to another, without paying the traditional applicable penalty for breaking a mortgage. This allows a borrower to continue with their existing mortgage and terms. If there are additional funds required for the purchase of the new property, we are able to apply for the difference in the amount needed, and get blend the rate of the new mortgage, with the interest rate of the current mortgage.
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Assumability
The Mortgage Assumability options gives the borrower the opportunity, while selling their property, to also qualify their buyer to take over the existing mortgage charge registered on the property, potentially saving you thousands of dollar in penalties for breaking a mortgage.