Mortgage Types

Feeling overwhelmed by all the different mortgage options? Here’s a quick breakdown of the different mortgage types.

Conventional Mortgage
A mortgage that is no more than 80% of the purchase price (or appraised value) of the property. This is a minimum of 20% down payment and you would avoid having to pay a mortgage insurance premium. You have the option to obtain a 30 year amortization with this mortgage type.

High-Ratio Mortgage
A mortgage in which a borrower places a down payment of less than 20% of the purchase price of a property. Loan must be insured. Insurance premiums are charged based on your down payment amount (5%, 10%, 15%). The insurance premium is added to the mortgage and the maximum amortization is 25 years. If you hold an existing high ratio mortgage, you are not eligible for a refinance.

Home Equity Line of Credit (HELOC)
A revolving line of credit secured by your home at a much lower interest rate than a traditional line of credit. A HELOC cannot exceed 65% of your home's value, however, coupled with a mortgage, the maximum lending value would be 80% of the property. Interest rates are predominately variable, and your payments are interest-only, which can keep your overall costs down.  Not available for high-ratio.

Always ask your broker if your mortgage has restrictions that could affect pre-payment options, mortgage transferability, and the saleability of your property. Contact us today!

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