Mortgages are one of the most significant financial decisions you’ll make in your lifetime, and choosing the right one is crucial. In Canada, various types of mortgages are available, each with its unique benefits and drawbacks. Here’s a guide to help you determine which mortgage is best for you.
Fixed-rate mortgage: A fixed-rate mortgage is one where the interest rate remains the same throughout the mortgage term. This type of mortgage is best for people who want the security of knowing what their monthly payments will be and don’t want to worry about interest rate fluctuations.
Variable-rate mortgage: A variable-rate mortgage is one where the interest rate changes with the market. This type of mortgage is best for people willing to take on a bit more risk in exchange for potentially lower monthly payments. Please note that payments do not adjust with this type of mortgage, and the interest paid to the lender will go up or down depending on rate changes.
Adjustable-rate mortgage: Similar to the Variable-rate mortgage, however, the payments change as interest rates change.
Hybrid mortgage: A hybrid mortgage combines a fixed-rate and a variable-rate mortgage. This type of mortgage is best for people who want the security of a fixed-rate mortgage but also want to take advantage of lower interest rates if they become available.
Low-down payment mortgage: A low-down-payment mortgage is one where you only need to put a small amount down, typically less than 20%. This type of mortgage is best for people who want to enter the housing market but don’t have much money saved for a down payment.
Your best mortgage will depend on your financial situation, risk tolerance, and plans. It’s important to talk to a mortgage professional to help you determine which mortgage is best for you. They will be able to guide you through the process and ensure that you are making an informed decision.