4 Things You Must Know About Mortgages in Canada

Getting your own house built or purchasing one is a dream for almost everyone. Most people get a mortgage to get their new home, especially those buying it for the first time, because home ownership is one of the biggest investments a person makes in their lifetime.

However, getting a mortgage is not as simple as simply taking out a loan from a bank. There are a lot of complexities involved in the process. Due to this, around 20% of mortgage applications are rejected in Canada!

Let’s take a look at everything you need to know about mortgages in Canada.

A new house
 

1. Types of Mortgages

There are essentially two types of mortgages:

Open Mortgage

Open mortgages allow individuals to pay their mortgages without penalties. This type of mortgage allows renegotiation at any time. However, open mortgages have higher interest rates. Breaking an open mortgage may result in penalties.

Closed Mortgage

A closed mortgage is not as flexible as an open mortgage regarding renegotiation, but this type of mortgage has lower interest rates. 

2. Mortgage Schedule

Canadian banks and lending institutions allow individuals to choose a payment schedule that suits their requirements. For example, a person can choose to pay for their mortgage once a month, once every two months, once every two weeks, and more.

3. Mortgage Payback Period

The mortgage payback period is the total time an individual must pay the mortgage money and interest back. The National Bank of Canada offers a mortgage payback period of up to 30 years!

The lesser the payback period is, the higher your scheduled payments will be. However, the interest you pay on your mortgage will be significantly lower. Similarly, the longer your payback period is, the smaller your scheduled payments are, but you’ll be paying a higher interest.

4. Mortgage Terms

Mortgage terms refer to a period as short as six months or as long as five years or more, during which the borrower is locked at a specific mortgage rate. After the expiration of this period, borrowers are free to renegotiate their mortgage or even change lenders without penalty. 

A person holding a 3D model of a house
 

If you’re planning to get a mortgage for your new home, it’s better to borrow from private lenders to get more favorable terms and payment schedules. If you’re looking for a private mortgage company in Vancouver, GCP Fund is where you should go!

They are a private lending company in Vancouver offering multiple types of mortgage loans. They also provide services in Toronto and Edmonton. Contact them now to start your loan application!

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