Available with most banks, trust companies and commercial lenders.
Normally financing from 75% to 80% of the value of residential properties.
Terms of 1 to 10 years with amortization periods of 10 to possibly 30 years.
Interest rates are competitive around the current prime rate or below.
Features include, variable rates, fixed rates, open or closed mortgages, repayment plans may be monthly, biweekly or weekly, prepayment options at various times during the mortgage period and numerous other options and features depending on the institution.
Low Equity Financing:
Generally these are insured mortgages by Canada Mortgage and Housing Corporation through the Charter Banks.
Financing is usually up to 90% or 95% of the mortgage value on residential mortgages.
The cost of the mortgage insurance is added to the value of the mortgage at approx 3% of the mortgage value.
CMHC insured mortgages are a viable option “first time home buyers” with low down payments.
Traditionally available through private lenders, family members and vendor take back.
Interest rates are traditionally higher as a first mortgage takes priority on repayment over a second mortgage in the case of default. (in 2013, rates can be as high as 10% to 12%)
Second mortgages are somewhat riskier to the lender, however they are a viable alternative to CMHC in certain circumstances.
Generally, they follow the same pattern of features as a first mortgage.
Secured Lines of Credit:
Have become very popular as of late. Normally provided by the chartered banks as an alternative to or in conjunction with a first mortgage.
Secured lines of credit are, just that, secured by the primary property and registered on title.
Flexibility is the greatest advantage of this product. Variability of equity, low interest rates, an option for secondary properties such as cottages when placed on the primary property, are completely open for repayment at any time, and repayment can be interest only at the borrowers discretion.
Private Mortgage Financing:
Private mortgages are generally simple in complexity, higher in interest rates and are generally handled by mortgage brokers or lawyers.
Most often, they are used by purchasers with less than appealing credit ratings, private building mortgages, or an alternative to conventional mortgages with immediate family.
In some instances, substantial fees are charged by the mortgage brokers dependent on the nature of the loans and the position of the mortgagee.
Farm properties and commercial enterprises often have access to viable financing alternatives such as Farm Credit Canada and organizations with specific relationships and business environments.
Qualified applicants would be required to provide detailed business plans, growth projections and viable means of repayment.
Vendor Take Back Mortgages:
Generally available at the time of sale for a property and the vendor is willing to provide private financing in an effort to make the property more appealing or assist in financing a property that does not fit conventional financing means.
Rates, terms and details are a negotiable with the sale of the property but generally are appealing to the purchaser.
Purchase Plus Improvements Financing:
Some charter banks such as Scotiabank are providing financing for properties being purchased which requires improvements that add equity to the property.
This type of financing is a much more competitive alternative to home improvement loans.