Mortgage Renewal Reminder

There are a number of different mortgage options to choose from, and each comes with their own pros and cons. It’s important to analyze what you are looking for, your situation and choose the mortgage that best fits your needs.

Open Mortgage

An open mortgage allows you to make lump sum prepayments at any time with no prepayment charge. This allows you to completely pay off your mortgage before the end of your amortization period if you decide to do so. However, in return for this greater flexibility you should be prepared to pay a considerably higher interest rate.

This mortgage product is for you if:

• You want the ability to pay off your mortgage at any time.
• You anticipate your income will increase over time, allowing you to make larger payments.
• This mortgage product is NOT for you if:

• You want to get a lower interest rate.

Closed Mortgage

A closed mortgage cannot be prepaid, renegotiated or refinanced before maturity, except according to its terms. Some lenders may allow you to exit a closed mortgage if you sell your home, but prepayment penalties would apply. The benefit of a closed mortgage is that it offers a lower interest rate than the open mortgage of the same term.

This mortgage product is for you if:

• You want to get a lower interest.
• You don’t anticipate being able to pay off your mortgage before the amortization period is up.

This mortgage product is NOT for you if:

• You want the ability to pay off your mortgage at any time.

Fixed Mortgage

With a fixed mortgage, the interest rate stays constant for a set period of time, usually between one and ten years. It offers increased stability, but also has slightly higher interest rates than other types of mortgages where the rate changes. Most lenders allow up to 20% pre-payment annually without penalty, however, the percentage may be less depending on the lender. If you wish to vacate a fixed rate mortgage a prepayment penalty must be paid.

This mortgage product is for you if:

• You have a very fixed budget.
• You’re not very comfortable with rate fluctuations.
• You anticipate that interest rates will rise.

This mortgage product is NOT for you if:

• Your budget is flexible.
• You want a lower interest rate.
• You anticipate interest rates will drop.

Variable Rate Mortgage

A variable mortgage offers a fluctuating rate. This rate is dictated by the Bank of Canada and is based on current bond rates. It is essentially the opposite of a fixed rate mortgage, meaning the mortgage rate may be changed during the term of the mortgage. Generally, these mortgages are initially set up like a standard loan, based on the current interest rate.

The mortgage is reviewed at specified intervals and if the market interest rate has changed the lender will alter the mortgage repayment plan. This may mean changing the size of the payment, or the length of the amortization period (or a combination of both).

Variable mortgages also provide an option to switch to a fixed product at any time without cost.

This mortgage product is for you if:

• You’re a financially-secure experienced home buyer or first-time buyer with a flexible budget.
• You’re very comfortable with rate fluctuations.
• You anticipate interest rates will drop.
• You prefer to make small payments based on the lowest market rate (if you choose the variable payment option).
• You want to repay your mortgage quickly (if you choose the fixed payment option).
• This mortgage product is NOT for you if:

• You have a very fixed budget.
• You’re not comfortable with interest rate fluctuations.
• You anticipate interest rates will rise

Are You Unsure Which Mortgage Product is Right For You?

When you meet with a mortgagestogo.ca agent we’ll analyze your financial situation to help you find the option that’s the best fit. We’ll work with you to get the lowest rate possible, as well as a payment plan that you’re comfortable with.