Mortgages

Fixed rate mortgage: If you like predictability when it comes to your finances, a fixed rate mortgage may be just what you need. With a fixed-rate mortgage, you’re locked in for the duration of your term. If mortgage interest rates go up during the term, you're protected because your rate stays the same.

Variable rate mortgage: This type of mortgage might be right for you if you’re comfortable taking on more risk. The interest you pay fluctuates based on the lender’s prime rate. If you can take advantage of decreasing interest rates, you can pay down more of your principal than originally planned. : But you’ll need to keep a close watch on rising rates, which could have the opposite effect.

Open mortgages: An open mortgage can be paid off in full, any time, without a penalty. Sounds pretty good, right? But pay attention to the rates. You’ll likely pay a higher rate on an open mortgage than on a closed one.

Closed mortgages: A closed mortgage allows only limited prepayments and includes a penalty if you want to repay more than what’s allowed.

For information about the types of security available to a lender for a mortgage loan or real estate secured line of credit, go to motusbank security information.

To learn more about pre-payment charges and how to pay off your mortgage faster go to information on mortgage prepayment.

If you’re buying a home, but you have less than 20% of the purchase price for the down payment, you will need to purchase mortgage default insurance. This insurance protects the lender, but it also gives you the opportunity to buy a home with as little as 5% down. The premium is added to your mortgage principal, so you don’t have to pay for it in a lump sum all at once.