Mortgage Types, Explained
Conventional vs. high-ratio, open vs. closed, fixed vs. variable — what it all means.
Not all mortgages work the same way. Here's a plain-language rundown of the terms you'll run into while you shop.
Conventional vs. high-ratio
Put down 20% or more and you have a conventional mortgage — no default insurance required. Put down less, and it's a high-ratio mortgage, which needs default insurance through CMHC or a private insurer.
Open vs. closed
An open mortgage lets you repay any amount, any time, without penalty — but usually at a higher rate. A closed mortgage locks in a lower rate in exchange for limits on prepaying or breaking the term early.
Fixed vs. variable
A fixed rate is locked in for your whole term. A variable rate can move with the market, changing your payment or your amortization as rates shift.
There's also the home equity line of credit (HELOC) — a revolving line secured by your home that lets you borrow, repay, and borrow again up to your limit, usually at a variable rate. The right mix of these features depends on your plans and how much flexibility you want to pay for, so we'll walk you through which combination fits your situation.