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Conventional Mortgage - a mortgage where the down payment is equal to 25% or more of the property's value. A conventional mortgage does not normally require mortgage loan insurance.
High-Ratio Mortgage - a mortgage where the borrower is contributing less than 25% of the value of the property as the down payment. High-ratio mortgagesmust be insured through Canada Mortgage and Housing Corporation (CMHC) or GE Mortgage Insurance Canada (GE), the two mortgage insurance companies in Canada.
Open Mortgage - an open mortgage allows the mortgagor to prepay all or part of the principal amount at any time with or without notice or bonus. Open mortgages usually have short terms of six months to one year. Interest rates on open mortgages are higher than on closed mortgages with similar terms.
Closed Mortgage - Closed mortgages are mortgages that do not allow any prepayment or early repayment except on the sale of the property, in which case penalties are required.
Fixed Rate Mortgage - the interest rate is derermined and locked in for the term of the mortgage. Lenders often offer different prepayment options allowing for quicker repayment of the mortgage and for partial or full repayment of the mortgage.
Variable Rate Mortgage (VRM) / Adjustable Rate Mortgage (ARM) - this type of loan differs from a fixed payment mortgage in that the interest rate charged on the loan may be changed during the term of the mortgage. Generally, these loans are initially set up like a standard loan, based on the current interest rate.
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