What is a Renovation Mortgage?

There are many homes offered for sale that have great potential but are in need of repairs or renovations. These homes are generally sold at prices that represent excellent value. While the value of these homes is attractive, financing the necessary work has often been difficult. Wouldn't it be nice if it were possible to buy that "fixer-upper" at a great price, immediately have it renovated into your dream home, and do it all with one manageable mortgage, and a minimum down payment?

Well, it's possible with a CMHC "Purchase Plus Improvements" mortgage. Now you can purchase a home, renovate it the way you like and pay for it all in one mortgage payment at first mortgage rates. All of this can be done by putting down as little as 5% of the "as improved" value.

A reverse mortgage allows home owners to convert equity in their homes into cash, without selling the property or having to make monthly payments.

To qualify, home owners must be at least 62 years old, have significant equity in their property and live in Ontario. The amount that can be borrowed depends on the homeowner's age. Reverse mortgages are for between 10% and 40% of the appraised value of the home. The older the home owners, the more they can borrow.

The homeowner retains ownership and possession of the house. The lending company registers a reverse mortgage against the property. At death, or when the house is sold, the loan and the accrued interest must be repaid.

Check out the Latest Mortgage Rates

Everybody's heard of Variable Rate Mortgages (VRMs)-but very few people understand what they are, how they work and so people tend to shy away from one of the best products available to help them pay down their mortgage faster. As one of the most innovative mortgage products available, the variable rate mortgage (V.R.M.) is increasing in popularity among Canadians. The VRM caters to individuals who have a higher risk threshold and believe that the bank rate will either remain stable in the near to mid future.

The greatest difference between VRMs and fixed rate mortgages is how the rates are set. VRM rates are set based on the Bank of Canada rate. The chartered banks add a slight premium to the Bank Rate to establish the Prime Rate. This is what most lenders use to price their various VRM products.

Check out the Latest Mortgage Rates

OPEN MORTGAGE 

An open mortgage allows you to pay off part or the entire mortgage at any time without penalties. Open mortgages usually have short terms of six months or one year. The interest rates are higher than those for closed mortgages with similar terms.

CLOSED MORTGAGES / FIXED RATE MORTGAGES

The expression 'closed mortgage' originates from the 1980's when this type of mortgage was literally 'closed'. You contracted to the lender to make your payments for the term chosen, you could not pay anything additional, nor could you pay off the entire amount for any reason except the sale of your property.

Check out the Latest Canadian Mortgage Rate