Understanding Mortgages

The mortgage marketplace in Canada consists of dozens of lenders and hundreds of mortgage products. Mortgages are becoming more flexible, with more features and benefits for Canadian consumers.

Choosing the right mortgage is an important decision that will require careful consideration of numerous factors, such as term, amortization, prepayment privileges and interest rate.

Here are some of the mortgage options available today, along with some of the issues surrounding these options.

Variable Interest Rate Mortgages :

Interest rate fluctuates according to bank Prime. These mortgages can offer lower rates than fixed interest rate mortgages, with the opportunity to take advantage of lower rates when the Prime rate decreases, however the rates can also increase over time. You need to understand your conversion options or whether the rate can be capped. Contact your Lending Logic Financial Inc. mortgage agent for further details.

Fixed Interest Rate Mortgages:

The interest rate is fixed over the term of the mortgage (usually between 1 and 10 years). This type of mortgage provides increased security and peace of mind; however the rate is normally higher than variable rate mortgage. Contact your Lending Logic Financial Inc. mortgage agent to find out what’s best for you.

High Ratio Mortgages:

If the mortgage amount exceeds 80% of the value of the property, then the mortgage is considered high ratio. Normally, the mortgage must be insured against default. The one-time insurance premium is paid by the borrower, and is usually added to the mortgage loan. There are alternatives to this financing structure; contact a Lending Logic Financial Inc. mortgage agent for more information.

Home Secured Line Of Credit:

Become your own bank manager; use a line of credit to finance the purchase of your home, switch your existing mortgage or take out equity from your existing property.

Lines of credit provide for a high degree of payment flexibility, along with revolving/repeat credit that allows you to borrow more money in the future once you’ve paid down the original principal. To see if this option makes sense for you, contact your Lending Logic Financial Inc. mortgage agent to review features and benefits.

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