That time has come. You need a residential mortgage, but you don’t know what’s available or which type would be best for you. So, what type of mortgages in Ontario are available?
A first mortgage is the type of mortgage you’ll need if you’re buying a home and you currently don’t own it. This type of mortgage is one of the most common, and the type that many individuals are the most familiar with. A first mortgage can be a conventional, or standard, mortgage; a high-ratio mortgage because you don’t have good credit; or an insured mortgage, because you don’t have a 20 per cent down payment.
After first mortgages, second mortgages are some of the most common. These allow you to borrow against the equity you’ve accumulated in a home you already own, and can come in the form of private mortgages, HELOCs, or a home equity loan. With these mortgages, up to 80 per cent of the existing equity can be borrowed against.
After first and second mortgages, you get into residential mortgages that aren’t as common, but have very specific purposes that can be quite useful. A construction loan is a loan that can be obtained if you are building a new home and need financing during the construction of it. Because the contractor building the home will need to be paid during the construction process, a construction mortgage can give you that financing, and can then be turned into a conventional first mortgage after the home is completed.
A reverse mortgage is one type that can allow seniors to borrow against the equity in their home. These mortgages can be beneficial because the balance is not due until the home is sold or until the time of the homeowner’s death. These types of loans can sometimes be complicated, and can have consequences to the homeowner’s family that were never intended. When a person is considering taking out a reverse mortgage on their home, it’s of utmost importance that anyone considering taking one out speak to a mortgage professional extensively about their own situation before deciding that a reverse mortgage is right for them.
When you say that you’re getting a residential mortgage, there can be more than one type of mortgage that you’re speaking of, even if you don’t know it. Rather than speaking to a bank or major lender, who will only have two or three packages for you to choose from, speak to a mortgage broker who can outline all of your options, and help you decide which one is best for you.
