The different types of mortgage rates
* Some conditions may apply. Subject to change without notice. Rates may vary depending on amount borrowed, collateral offered or other factors. Contact your Mortgage Broker at Yves St-Denis Mortgage Brokers for more information.
Open/Closed: Different Mortgages Types
Closed mortgages are generally offered by banks and other financial institutions. These loans are available to borrowers who meet certain conditions. Open mortgages are often more expensive than closed mortgages because they offer more flexibility. However, open mortgages also have risks.
Closed mortgages: the most popular for home owners
A closed mortgage is one that can only be paid off in full if you sell your home. You will pay interest on the amount borrowed, plus any fees charged by the lender. If you decide not to repay the loan, you will lose your property.
This type of loan is well suited for real estate owners who live in the house.
Open Mortgage: Ideal for those who want to buy now and plan to sell soon.
An open mortgage allows you to pay off any amount of the loan at any time without penalty. This means you can prepay the loan if you need extra money, or you can pay off the entire loan if you leave the house. An open mortgage also gives you flexibility when it comes to paying down the principal. You can choose to pay off the principal monthly, quarterly or annually.
Open mortgages are the most common type of home loan for investors.
How much of a mortgage can I afford?
Lenders will look at your income, assets, debts, credit score and other factors to determine if you qualify for a loan. Your income is the first thing they will consider. If you have a steady job, they will look at your salary history and compare it to your current situation.
Your credit score: Over 680 to get the best rates
If your credit score is 680 or higher, you can access the best rates in the mortgage market. If you have bad credit, you will have to pay a higher interest rate. On the other hand, if you have good credit history, you can get lower rates.
If your credit score is below 600, you will be turned down by most banks. However, Lily Morel has other solutions to propose to workaround.