| Mortgage
Type |
Ideal
for |
Features |
Pros/Cons |
| Fixed rate mortgages |
Individuals who like knowing what
their payments will be over the term of the mortgage |
terms of 6 mo, 1, 2,3,4,5,6,7,9,10,
15, 20, 25 yr; interest locked-in for term |
Pros - protect against rising
interest rates: Cons - Higher interest rate compared to
variable rate mortgages; Generally, higher prepayment penalties
apply |
| Variable rate mortgages |
Individuals who want to lower their
monthly payments and maximize savings on their mortgage |
3 or 5 year term; interest rate at
below prime; Fluctuates with the prime rate or Bankers
Acceptance rate; |
Pros - lower interest rate on
mortgage; Cons - Interest rate fluctuates |
| Zero Down Mortgage |
Individuals with stable income,
reasonable credit but do not have enough savings for a down
payment |
Up to 103% of the home value;
Owner-occupied only; Available also under a 5% cash back program |
Pros - Allows purchaser to get
into the real estate market without out a down payment; Cons
- Interest rate is slightly higher along with higher insurance premium |
| Interest-Only |
Individuals who have at least 10%
down, good credit but want to minimize monthly payments |
Interest rate at Prime rate; Up to 90%
financing |
Pros - Minimizes payments; Cons
- borrower does not make interest payments but no principal is being paid off |
| Stated Income Programs / Equity
Programs |
Individuals who cannot provide income
verification (e.g., self-employed individuals) |
Qualification based on
"stated" income; Mortgage insurance applicable if less
than 25% equity; Up to 95% financing
Offered primarily through mortgage broker BC
|
Pros - low documentation
requirements; Cons - Depending on credit and equity
level, mortgage insurance premium could be
higher |
| Line of Credit Mortgages |
Individuals who have fluctuating
income |
Interest rate at prime (up to 90%
financing) |
Pros - flexible; allows home
owner to pay down and re-borrow as needed; Cons -
Interest rate higher than a traditional variable rate
mortgage |
| Cash back Mortgages |
Individuals who want some extra cash
for other expenses (e.g., furniture, legal costs, etc) |
Only fixed rates available; Interest
rate on mortgage will be higher to compensate for the cash back; |
Pros - Gives borrower extra
cash; Cons - Can be expensive, depending on the lender |
| Second Mortgages |
Individuals who need to take out
equity from their home; Often, this is used to consolidate
debt; renovate, etc. |
Generally, only fixed terms available
|
Pros - Can lower monthly
payments; Cons - Higher interest rate and up front set-up
costs |
