Short Term...A short term mortgage is appropriate for individuals who may want to minimize their interest rate and who are willing to accept more risk as the rate may fluctuate at renewal.

Long Term...Usually 3 years or longer in duration.  Long term mortgages are often selected by individuals who want to lock into their rate and not have to worry about fluctuations in their rate.

Fixed Interest Rate...The rate will never change for the entire term of the mortgage.  You will always know exactly what you are paying and how much of your mortgage will be paid off at the end of the term.

Variable Interest Rate...The rate could vary from payment to payment.  They usually cost less than fixed rate mortgages when rates are stable.  When rates change, your payment could remain the same; however, the amount that is applied toward interest and principal will change.  If rates drop, more mortgage payment is applied to principal and you could pay off your mortgage a bit sooner (as less is being paid toward interest).

Open Mortgage...Your mortgage can be paid off at any time without a penalty.

Closed Mortgage...A closed mortgage is set for a specific time.  If you want to pay it off early you will encounter a mortgage penalty.  It is often, depending on how far into the mortgage you are, the lesser of the IRD (Interest Rate Differential or 3 months interest...whichever is greater).

Conventional Mortgage...With a down payment of 20% or more you would qualify for a conventional mortgage.  A Financial Institution will use the property as collateral and will require that you make blended payments including principal and interest at intervals you agree upon (monthly, bi-weekly, weekly, etc).

Second Mortgage...This type of mortgage usually has a higher interest rate and shorter amortization than the first mortgage.  Secondary financing is often used to finance renovations.

Vendor Take Back Mortgage (VTB) ...The Seller of the property agrees to cover part of the purchase price by holding a mortgage at an agreed upon interest rate and term, as a loan to be repaid by the Buyer.

Hi-Ratio Mortgage...With less than 20% down you will qualify for a hi-ratio mortgage.  When you have a hi-ratio mortgage you are requested to purchase a special kind of insurance.  Mortgage Loan Insurance enables Buyers to purchase homes with as little as 5% down payment...with interest rates comparable to those with a 20% down payment. The insurer will charge you a premium for this insurance.  The amount of the fee will be a direct result of the amount of the mortgage you are acquiring and the amount of your down payment.

**NOTE: This insurance is for the benefit of the lender but the Buyer must pay it. The amount is based on the Loan to Value ratio. Mortgage Value / Purchase Price.  To see the current Insurance rates please Click Here.

**NOTE: Mortgage Loan Insurance should not be confused with mortgage life insurance which guarantees that any remaining mortgage at the time of your death will not be a burden to your family and / or your estate.

    Deborah Gilmore...Your Trusted Source For Anything Real Estate!