Ontario Mortgage News– Types of Mortgages Part 3: Zero Down Mortgage

Are you getting ready to buy a home and obtain mortgage financing? Knowing your options before jumping in is important. This is part 3 of a 4 part series that gives you important Ontario mortgage news and information about the various types of mortgages available in Ontario. Getting a mortgage does not have to be stressful, and knowing what mortgage types are available to you can help keep the search for your perfect home stress-free.

This third Ontario mortgage news blog will focus on the zero down mortgage. So what is a zero down mortgage? As its name suggests, it is a mortgage that requires you to put no money down as a down payment on a house. In Ontario, according to Canadian Mortgage and Housing Corporation guidelines, a minimum 5% down payment is required for every house purchase in the province. But sometimes saving is easier said than done, and so a zero down mortgage can be the ideal option if you are ready to buy a house but are lacking the funds for that necessary 5% down payment.

How does a zero down mortgage work? A zero down mortgage is a mortgage that combines traditional mortgage financing with your down payment. This means that the interest is usually a bit higher (usually 1-2% above prime) to allow the bank to recoup its financing of your down payment. Furthermore, it is set for a period of no less than 5 years so that the bank can get back those down payment funds.

Are you asking yourself will I get approved for a zero down mortgage? Well, here are some things to keep in mind. Qualifying for a zero down mortgage means having a great credit score and pristine credit history. Since the bank is fronting the entire mortgage rather than just a portion of it, they want to make sure that they are protected – so if your credit is not great it is unlikely that you will get approved for a zero down mortgage.

What about flexibility? Well, a zero down mortgage offers less flexibility than say a variable rate mortgage or a fixed rate mortgage. Because you are relying on the bank to back you, they give far fewer options, such as setting the length of the mortgage or setting a variable versus a fixed rate. However, as far as giving you the chance to buy without a down payment, it is an important option.

If you are ready to buy a house but are without the required minimum 5% down payment, but do have good credit history, a zero down mortgage may be an option for you. Instead of stressing over where to find that down payment or having to wait until you have saved it all, speak to a mortgage broker about the benefits of qualifying for a zero down mortgage right now.

For more Ontario mortgage news or for more information about a zero down mortgage, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.

Ontario Mortgage News – Types of Mortgages Part 2: Variable Rate Mortgage

Are you getting ready to buy a home and obtain mortgage financing? Knowing your options before jumping in is important. This is part 2 of a 4 part series that gives you important Ontario mortgage news and information about the various types of mortgages available in Ontario. Getting a mortgage does not have to be stressful, and knowing what mortgage types are available to you can help keep the search for your perfect home stress-free.

This second Ontario mortgage news blog will focus on the variable rate mortgage. What is a variable rate mortgage? A variable rate mortgage is a type of mortgage financing that fluctuates according to rising or falling interest rates. This means that, when your mortgage broker finds a lender to approve your variable rate mortgage, your payment is not static and may change if interest rates change. There are many advantages to this type of mortgage.

Firstly, if you tend to follow the philosophy that no risk means no reward, you understand that taking some risks could equal major savings in the long run. A variable rate mortgage can provide this. Since it is based on the rate of interest, if this decreases, so does your monthly payment. If it decreases substantially, then this could equal big savings for you.

Another big benefit to a variable rate mortgage is the fact that variable rate mortgages usually offer the lowest mortgage rates available. Since the bank or lender approving your mortgage recognizes the risks that are inherent in a variable rate mortgage, they offer the lowest rate to you. This means that even if the interest rate does increase slightly over the term of your mortgage, you will likely not feel the sting.

It is important to remember though that as the Canadian economy improves, interest rates may increase if the prime lending rate is increased by the Bank of Canada. That being said, many lenders do provide options with variable rate mortgages that will allow you to lock in your variable rate mortgage if interest rates do increase.

Why choose a variable rate mortgage. If you are not afraid to take a bit of a risk in exchange for the chance to save, or if you are planning of staying in your house for a very short period of time, a variable rate mortgage may provide the best financial solution for you. However, if your plans are more long-term, you may want to discuss the option of a fixed rate mortgage with your mortgage broker.

Mortgages don’t have to be complicated, and you should avoid getting stuck in a mortgage you don’t understand by visiting a mortgage broker and getting them to explain all of the different options available to you.

For more Ontario mortgage news or to find out more about the benefits of a variable rate mortgage, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.