Different types of mortgages and see what is right for you for next real estate transaction.
Two types of mortgage rates typically available
Fixed Rate: A fixed rate mortgage is a mortgage with a fixed interest rate for a specific term. This type of mortgage gives you the security of locking in your interest rate for the full term of your mortgage, so that you don't have to think about interest rate fluctuations.
Variable Rate: The variable rate mortgage does not provide a rate guarantee for a specific period. With a variable rate mortgage the interest you pay fluctuates based on the bank Prime Rate; however, a variable rate mortgage generally offers the lowest interest rate available.
Types of mortgages:
Closed mortgages: The closed term mortgage may be ideal if you're not planning to pay off your mortgage in the short term. Interest rates for closed term mortgages are generally lower than for open term mortgages. Closed term mortgages offer you the ability to save on interest costs and pay off your mortgage faster. You will pay a prepayment charge if you wish to renegotiate your interest rate or pay off your mortgage balance prior to the end of its term.
Convertible mortgages: The convertible mortgage gives you the same benefits as a closed mortgage, but can be converted to a longer, closed term at any time without prepayment charges.
Open Mortgage: The open term mortgages may be appealing if you are planning to pay off your mortgage in the near future. They can be repaid either in part or in full at any time without prepayment charges. Open mortgages can be converted to any other term, at any time, without a prepayment charge. Interest rates for open mortgages are generally higher than for closed mortgages because of the added pre-payment flexibility.
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