Home Equity Line of Credit
A home equity line of credit (HELOC) is a form of credit based on the equity of a home. It is a revolving credit: You can withdraw money, pay it off, and keep taking out more, so long as you do not exceed your credit limit.
HELOCs can be combined with a mortgage, a standalone product, or even used as a substitute for a mortgage.
Investment Property Mortgage
An investment property mortgage (also known as an income property mortgage) is a mortgage taken out on a property that’s intended to provide some form of cash flow, often by renting it out. Vacation homes, tenements, and bed and breakfasts are all examples of such types of property.
A mortgage broker is a third party that connects mortgage lenders with mortgage borrowers. A broker does not sell mortgage products but rather acts as a mediator so that borrowers can find a suitable lender for their financial circumstances.
Lenders often have special mortgage products for newcomers to Canada. These are called new-to-Canada mortgages, and they usually feature a low down payment amount and a more extended amortization period.
Despite the name, a pre-approved mortgage isn’t a mortgage per se. Rather, it is a statement by the lender that you qualify for a certain loan amount. Getting pre-approval is a great way to know how large of a loan you can take out and start weighing your options.
A purchase-plus-improvements mortgage is for someone who wants to buy a home and make improvements to it. The purchase-plus-improvement mortgage factors the price of home improvements into the amount of money borrowed, allowing the borrower to start renovating immediately.
A reverse mortgage allows the homeowner to take out a loan secured by the value of their property. It gives consumers a way to access their equity without having to sell their home, making it particularly useful for seniors who are looking to retire.
A second mortgage is an additional mortgage taken out on the same piece of property. It is subordinate to the original mortgage, and it usually comes with a higher interest rate than the first.
Like an adjustable-rate mortgage, a variable-rate mortgage has a floating interest rate, which varies according to fluctuations in the market.
But unlike an adjustable-rate mortgage, a variable-rate mortgage will always require the same payment amount each month. Your payments will stay the same, no matter what happens to the prime lending rate. What will change, however, is the length of time you will need to pay off the loan. If the prime rate increases, you’ll need more time to pay off the loan. If it decreases, you’ll pay it off sooner.