What are the different types of mortgages available in Ontario?

Ontario homebuyers can choose from several mortgage types. These include fixed-rate, variable-rate, open, closed, conventional, and high-ratio mortgages. Each differs by how the interest rate works, how flexible the prepayment terms are, and how much down payment is required. Most borrowers combine these features. For example, you might choose a closed, fixed-rate, high-ratio mortgage. Other options include adjustable-rate mortgages (where payments change with the lender’s prime rate) and home equity lines of credit (HELOCs). The best fit depends on your down payment, budget, and plans for the property.

What is the difference between open and closed mortgages in Ontario?

An open mortgage lets you pay off some or all of your balance at any time without a penalty, while a closed mortgage limits extra payments in exchange for a lower interest rate. Open mortgages cost more but offer maximum flexibility. Open mortgages suit people who plan to sell soon or pay off a lump sum, such as an inheritance or a sale of another property. Closed mortgages are far more common. Most allow annual prepayments (often 10–20% of the original balance). Paying off the mortgage early or breaking it before the term ends typically triggers a prepayment penalty, usually the greater of three months' interest or the interest rate differential (IRD).

What is the difference between conventional and high-ratio mortgages?

A conventional mortgage requires a down payment of at least 20% of the purchase price. A high-ratio mortgage is for down payments below 20% and must be insured against default, typically through CMHC, Sagen or Canada Guaranty. The difference is the size of your down payment. Conventional mortgage: When you put down 20% or more of the purchase price, so the loan is 80% or less of the home's value. Mortgage default insurance is not required. High-ratio mortgage: When you put down less than 20%. Mortgage default insurance is mandatory, provided through CMHC, Sagen, or Canada Guaranty. The premium is a percentage of the mortgage amount (typically about 2.8% to 4%), is usually added to your mortgage balance, and Ontario charges provincial sales tax on it, which is paid at closing. Under current federal rules, the minimum down payment is 5% on the first $500,000 of the price, 10% on the portion from $500,000 to $1.5 million, and 20% for homes priced at $1.5 million or more. Insured mortgages are available only on homes under $1.5 million.

Which type of mortgage is best for first-time home buyers in Ontario?

For most first-time buyers, a closed, fixed-rate mortgage offers the most stability because your payment stays the same throughout the term. The best choice still depends on your down payment, budget, risk tolerance and plans for the home. Many first-time buyers use a high-ratio mortgage with as little as 5% down. First-time buyers can also choose a 30-year amortization on an insured mortgage, which lowers monthly payments but adds an extra insurance premium and more total interest. Programs such as the FHSA, RRSP Home Buyers’ Plan (up to $60,000) and Ontario and Toronto land transfer tax rebates can also help.

Can a mortgage broker help me compare different mortgage options in Ontario?

Yes. A mortgage broker can compare rates, terms and features from multiple lenders on your behalf, including banks, credit unions and monoline lenders. This often gives you more options than approaching a single bank. Brokers can also explain the trade-offs between rate, flexibility and prepayment penalties, and help you find lenders that fit your income, credit and down payment. For borrowers with non-standard income, such as self-employed applicants, a broker can be especially helpful. Brokers are typically paid by the lender when the mortgage funds, so there is usually no direct fee to the borrower. In Ontario, mortgage brokerages and brokers are licensed and regulated by the (FSRA) Financial Services Regulatory.

Types of Mortgages in Canada | Northwood Mortgage

What are the different types of mortgages available in Ontario?
Ontario homebuyers can choose from several mortgage types. These include fixed-rate, variable-rate, open, closed, conventional, and high-ratio mortgages. Each differs by how the interest rate works, how flexible the prepayment terms are, and how much down payment is required.

Most borrowers combine these features. For example, you might choose a closed, fixed-rate, high-ratio mortgage. Other options include adjustable-rate mortgages (where payments change with the lender’s prime rate) and home equity lines of credit (HELOCs). The best fit depends on your down payment, budget, and plans for the property.
What is the difference between open and closed mortgages in Ontario?
An open mortgage lets you pay off some or all of your balance at any time without a penalty, while a closed mortgage limits extra payments in exchange for a lower interest rate. Open mortgages cost more but offer maximum flexibility.

Open mortgages suit people who plan to sell soon or pay off a lump sum, such as an inheritance or a sale of another property.

Closed mortgages are far more common. Most allow annual prepayments (often 10–20% of the original balance). Paying off the mortgage early or breaking it before the term ends typically triggers a prepayment penalty, usually the greater of three months' interest or the interest rate differential (IRD).
What is the difference between conventional and high-ratio mortgages?
A conventional mortgage requires a down payment of at least 20% of the purchase price. A high-ratio mortgage is for down payments below 20% and must be insured against default, typically through CMHC, Sagen or Canada Guaranty.

The difference is the size of your down payment.
- Conventional mortgage: When you put down 20% or more of the purchase price, so the loan is 80% or less of the home's value. Mortgage default insurance is not required.
- High-ratio mortgage: When you put down less than 20%. Mortgage default insurance is mandatory, provided through CMHC, Sagen, or Canada Guaranty. The premium is a percentage of the mortgage amount (typically about 2.8% to 4%), is usually added to your mortgage balance, and Ontario charges provincial sales tax on it, which is paid at closing.
Under current federal rules, the minimum down payment is 5% on the first $500,000 of the price, 10% on the portion from $500,000 to $1.5 million, and 20% for homes priced at $1.5 million or more. Insured mortgages are available only on homes under $1.5 million.
Which type of mortgage is best for first-time home buyers in Ontario?
For most first-time buyers, a closed, fixed-rate mortgage offers the most stability because your payment stays the same throughout the term. The best choice still depends on your down payment, budget, risk tolerance and plans for the home.

Many first-time buyers use a high-ratio mortgage with as little as 5% down. First-time buyers can also choose a 30-year amortization on an insured mortgage, which lowers monthly payments but adds an extra insurance premium and more total interest. Programs such as the FHSA, RRSP Home Buyers’ Plan (up to $60,000) and Ontario and Toronto land transfer tax rebates can also help.
Can a mortgage broker help me compare different mortgage options in Ontario?
Yes. A mortgage broker can compare rates, terms and features from multiple lenders on your behalf, including banks, credit unions and monoline lenders. This often gives you more options than approaching a single bank.

Brokers can also explain the trade-offs between rate, flexibility and prepayment penalties, and help you find lenders that fit your income, credit and down payment. For borrowers with non-standard income, such as self-employed applicants, a broker can be especially helpful.

Brokers are typically paid by the lender when the mortgage funds, so there is usually no direct fee to the borrower. In Ontario, mortgage brokerages and brokers are licensed and regulated by the (FSRA) Financial Services Regulatory.