Conventional Mortgage

Conventional mortgages on residential single family homes in Canada are mortgages which are not classified as high-ratio and do not require any lender insurance premium.  A high-ratio mortgage is a mortgage whereby in excess of 80% of the value of the property is mortgaged.  Conventional mortgages are mortgages whereby 80% or less of the value of the property is mortgaged. 

With conventional mortgages, financial institutions providing the mortgage financing have a sufficient cushion to withstand a real estate downturn in most cases and limit the amount of risk on the loan in the event the borrower does not fulfill their mortgage payment obligations and the property needs to be sold. 

Historically, conventional mortgages were considered lower risk for the financial institutions and lenders and in these cases, lower mortgage rates were offered to individuals.  In today’s market, individuals will now sometimes see that mortgage rates are actually more attractive for non-conventional mortgages requiring lender insurance premiums as a result of banks and other financial institutions removing the risk associated with the loan. 

Conventional mortgages in Canada can be amortized over a 30 year period. 

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April 27, 2017

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