| Mortgage
Type |
Ideal
for |
Features |
Pros/Cons |
| Fixed rate mortgages |
Individuals who like knowing what
their payments will be over the term of the mortgage |
terms of 6 mo, 1, 2,3,4,5,6,7,9,10,
15, 20, 25 yr; interest locked-in for term |
Pros - protect against rising
interest rates: Cons - Higher interest rate compared to
variable rate mortgages; Generally, higher prepayment penalties
apply |
| Variable rate mortgages |
Individuals who want to lower their
monthly payments and maximize savings on their mortgage |
3 or 5 year term; interest rate at
below prime; Fluctuates with the prime rate or Bankers
Acceptance rate; |
Pros - lower interest rate on
mortgage; Cons - Interest rate fluctuates |
| Combination Mortgage |
Ideal for individuals who want the
lower rates of a variable rate mortgage and some certainty with
a fixed rate mortgage |
A portion of the mortgage is on a
fixed rate and another portion is variable (usually 50-50) |
Pros - You get a mix of the
benefits of a fixed rate and a variable rate mortgage; Cons
- Switching the mortgage will require legal fees |
| Interest-Only |
Individuals who have at least 20%
down, good credit but want to minimize monthly payments |
Interest rate at Prime rate; Up to 80%
financing; Available under a line of credit |
Pros - Minimizes payments; Cons
- borrower does not make interest payments |
| Umbrella Mortgages |
Individuals have a variety of debts
(credit cards, auto loans, line of credit) and would like to
wrap all debts under one mortgage |
Variety of terms available; All debt
requirements are covered under the mortgage; Up to 80% financing |
Pros - Can lower overall
borrowing costs since consumer debt is more expensive; Cons -
difficult to switch to another lender |
| Stated Income Programmes / Equity
Programmes |
Individuals who cannot provide income
verification (e.g., self-employed individuals) |
Qualification based on
"stated" income; Mortgage insurance applicable if less
than 25% equity; Up to 95% financing
Offered primarily through mortgage broker BC
|
Pros - low documentation
requirements; Cons - Depending on credit and equity
level, interest rate and mortgage insurance premium could be
higher |
| Line of Credit Mortgages |
Individuals who have fluctuating
income |
Interest rate at prime (up to 80%
financing) |
Pros - flexible; allows home
owner to pay down and re-borrow as needed; Cons -
Interest rate higher than a traditional variable rate
mortgage |
| Cash back Mortgages |
Individuals who want some extra cash
for other expenses (e.g., furniture, legal costs, etc) |
Only fixed rates available; Interest
rate on mortgage will be higher to compensate for the cash back; |
Pros - Gives borrower extra
cash; Cons - Can be expensive, depending on the lender |
| Second Mortgages |
Individuals who need to take out
equity from their home; Often, this is used to consolidate
debt; Ideal if the 1st mortgage is at a low interest rate
or avoid pre-payment penalties on 1st mortgage |
Generally, only fixed terms available
Available only through mortgage broker BC
|
Pros - Can lower monthly
payments; Cons - Higher interest rate and up front set-up
costs |
| Non-Conforming Mortgages (e.g., bad
credit, new immigrants, non-residents) |
Individuals who have a low credit
score, or turned down by banks, or want a larger mortgage than
what traditional lenders can offer |
Variety of products and options
depending on the borrower's situation; Generally, higher
interest rates for non-conforming mortgages
Available only through mortgage broker BC
|
Pros - Allows borrower to
obtain financing; Cons - Higher interest rate and set-up
costs applies |
| Reverse Mortgage |
Individuals over 62 who have equity in
their home but do not want to sell or leave their home |
10% - 40% financing depending on age,
type of property and location; No repayment as long as the
customer lives in the home |
Pros - Access to funds; No
repayment; easy qualification; Cons - higher interest
rate; Limited amount that can be borrowed |
