Do you live in Calgary and are ready to move out of the rental market and purchase your first property? Or perhaps you’re preparing to relocate to Calgary and are looking for a home to buy that meets all your needs? Whatever your reason for searching for a property in Calgary, you’ll want to know what your mortgage options are, and we’ve compiled a list to help make the process as straightforward and stressless as possible:
Table of Contents
Mortgage Preapprovals
Telling you in writing that you are able to qualify for a mortgage (based upon your income and credit report), a mortgage preapproval is no guarantee that you’ll get approval when you do make an offer on a property, but it can certainly help. Note that most preapprovals last for around 3 months, and once expired, you’ll need to get another one, if necessary.
Mortgage Products
Shopping around for a mortgage is always a sensible idea, and having a professional broker do so on your behalf, is even better. However, even if you hire a broker to search through all the options for you, it can be helpful to familiarize yourself with the components that make up different mortgage products, such as:
- Amortization period
- Prepayment options
- Early payment penalties
- Fixed or variable rates
What Types of Mortgages Are Available to Calgary Homebuyers?
There are several mortgage options available to you, and these include:
Conventional Mortgages
Requiring a minimum down payment of 20%, these loans are low-ratio and a lower risk for lenders
High-Ratio Mortgages
If making a down payment of less than 20%, a mortgage is considered as high-ratio and will be subject to mortgage default insurance
Open Mortgages
Typically coming with shorter terms, open mortgages can be paid back at any time without incurring a penalty, with interest rates that are usually higher
Closed Mortgages
These mortgages cannot be paid off early or refinanced before their maturity without incurring a penalty
Fixed-Rate Mortgages
Easier to predict, the interest rate on fixed-rate mortgages doesn’t change throughout the duration of the term
Variable-Rate Mortgages
The interest rate on these mortgages can change at various intervals throughout the duration of the term, and are far harder to predict than a fixed-rate mortgage
Home Equity Lines of Credit (HELOC)
Allowing consumers to borrow against the equity in their home, these are often referred to as second mortgages
Amortization Periods
This term refers to the total amount of time taken to fully repay a mortgage, and while shorter amortization periods can help you pay off the loan quicker and save money in interest, the payments are typically much higher. In contrast, longer amortization periods allow consumers to make smaller payments, but with a higher overall interest cost, and naturally, taking more time.
To discuss your mortgage options in more detail and find the best deals for your specific financial circumstances, consult with an experienced mortgage broker in Calgary.