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Mortgages London

Save time and money with Loans Canada

Written by Lisa Rennie

Best Mortgages London 2020

Lender directory

Compare the best lenders in this region

Provider Loan Amount Rate Term (Months) Rating
LendCare
- - Up to 60
-
X-bankers
$5,000+ - Up to 60
$5,000+
ECN Capital
- - -
-
SimplyBorrowed
$500 - $5,000 - 12 - 24
$500 - $5,000
Pebble Cash
$350 - $1,000 - 2 - 12 weeks
$350 - $1,000
Refresh Financial
$1,600 - $25,000 9.47% - 20.07% APR 36 - 60
$1,600 - $25,000
Go Peer
$1,000 - $25,000 7.5% - 31.5% APR 36 - 60
$1,000 - $25,000
North’n Loans
$100 - $1,500 - -
$100 - $1,500
MDG
Up to $3,200 - -
Up to $3,200
Loan or Credit
$100 - $25,000 +4.9% -
$100 - $25,000
Instant Payday Canada
- 15% - 19% -
-
Flexiti Financial
- Up to 35% -
-
FinanceIT
$500 - $100,000  6.99% - 14.99% 12 - 240
$500 - $100,000
Diamond Financial Services
- - -
-
Climb
1800- 2900  15.99% 23 - 36
1800- 2900
Pylo Finance
$500 - $15,000 15.99 - 39.99% 6 - 60
$500 - $15,000
Fresh Start Finance
Up to $15,000 29.99% - 46.96% 9 - 60
Up to $15,000
Marble
Up to $20,000 19.44% and 31.90% 36 - 84
Up to $20,000
Money Mart
$1,000 - $15,000 19.90% - 46.90% 12 - 60 
$1,000 - $15,000
Payday King
$100 - $1,000 546% APR 14 days
$100 - $1,000
Private Loan Shop
$500 - $50,000 15 - 30% -
$500 - $50,000
Progressa
$1,000 - $15,000 19% - 46.95% 6 - 60 
$1,000 - $15,000
My Canada Payday
Up to $1,500 15% - 19% 14 days
Up to $1,500
Mr. Payday
$100 - $1,500 15% - 17% 14 -31 days
$100 - $1,500
Money Provider
$500 - $1,000 28% - 32% -
$500 - $1,000
Loan Express
- - 14 days
-
Meridian Credit Union
Up to $35,000 5.15%+ -
Up to $35,000
Loan Away
Up to $5,000 19.9% - 45.9% APR 6 - 36
Up to $5,000
Loan & Go
$250 -$1,250 29% 3 - 6
$250 -$1,250
Lendful
$5,000 - $35,000 9.9%+ APR 36 - 60
$5,000 - $35,000
LendDirect
Up to $15,000 19.99% APR Open-end
Up to $15,000
Health Smart Financial Services
$300 - $25,000 7.95%+ 36 - 60
$300 - $25,000
GoDay
$100 - $1,500 - 14 days
$100 - $1,500
iCash
Up to $1,500 15% - 23% -
Up to $1,500
Focus Financial Inc.
Up to $1,500 Up to 59% APR 14 days
Up to $1,500
FlexFi
$2,500 + - -
$2,500 +
Eastern Loans
$500 - $1,000 28% - 32%  3 -5
$500 - $1,000
DMO Credit
$300 - $1,000 38% APR 3 - 4
$300 - $1,000
Capital Cash
$100 - $1,000 546% APR 14 days
$100 - $1,000
Cash 4 You
$1,000 -$15,000 46.93%  12 - 60
$1,000 -$15,000
Credit 700
$500 - $1,000 28% - 32%  4 - 5
$500 - $1,000
Credit Club
$100 - $1,500 90% - 390% APR 14 days
$100 - $1,500
Credit2Go
$250 - $1,000 29% APR 3 - 4
$250 - $1,000
Ledn
$500 - $1,000,000 12% 12
$500 - $1,000,000
Amber Financial
$1,000 - $50,000 4.6% – 49.96% 3 - 60 
$1,000 - $50,000
Affirm Financial
$300 - $7,500 29.9% - 39.9% 6 - 60
$300 - $7,500
310 Loan
$50 - $1,500 - 14 days
$50 - $1,500
Newstart Canada
Up to $20,000 19% - 49% 36 - 48
Up to $20,000
Ferratum
$2,000 - $10,000 18.9% - 54.9% 12 - 60
$2,000 - $10,000
SkyCap Financial
$500 - $10,000 12.99% – 39.99% 9 – 36
$500 - $10,000
Fast Access Finance
$500 – $10,000 Starting at 9.90% 12 - 36
$500 – $10,000
Fairstone
Up to $35,000 26.99% – 39.99% 6 - 60
Up to $35,000
Lending Mate
$2,000 – $10,000 34.9% – 43% 12 - 60
$2,000 – $10,000
Consumer Capital Canada
$500 - $12,500 19.99%+ 12 - 60
$500 - $12,500
Lamina
Up to $1000 30% 3 - 5
Up to $1000
Loans SOS
Up to $5,000 60% 6 - 60
Up to $5,000
514 Loans
Up to $3,000 22% - 35% 3 - 4
Up to $3,000
CashCo
Up to $7,000 - 6 – 60
Up to $7,000
UrLoan
$500 - $2,500 29% - 46.95% 6 - 36
$500 - $2,500
Loan Me Now
$500-$1000 28%-32% 3
$500-$1000
Captain Cash
$500 – $750 28% – 34.4% 3
$500 – $750
BC Loans
$500 – $750 23% - 34.4% 3 – 12
$500 – $750
Urgent Loans
$300 - $1500 27% - 35% 3 - 4
$300 - $1500
easyfinancial
$500 - $35,000 29.99% – 46.96% 9 - 60
$500 - $35,000
Mogo Finance
$300 – $35,000 5.9% - 45.9% 24 - 60
$300 – $35,000
Cash Money
$50 – $10,000 - Up to 62 days
$50 – $10,000
Borrowell
$1,000 - $35,000 5.99% to 29.19% 36 - 60
$1,000 - $35,000
Magical Credit
Up to $20,000 19.99% - 46.8% 6 - 60
Up to $20,000
Provider Loan Amount Rate Term (Months) Rating
Clearbanc
$10,000 - $10,000,000 6% - 12.5% -
$10,000 - $10,000,000
SNAP Financial Group
- - -
-
GE Capital
- - -
-
We Can Financial
- - -
-
Wajax Equipment
- - -
-
Key Equipment Financing
- - -
-
Corl
$10,000 - $1,000,000 - -
$10,000 - $1,000,000
Yellowhead Equipment Finance Ltd
- - -
-
Toronto Truck Loan Ltd
- - -
-
Specialty Truck Financing
- - -
-
Travelers Financial
- - -
-
Peel Financial
- - -
-
Pioneer Financial Services
$5,000 - $1,000,000 - -
$5,000 - $1,000,000
Polaris Leasing
- - -
-
Patron West
- - -
-
Payability
up to $250,000 - -
up to $250,000
Planet Financial
- - -
-
Rise
Up to $10,000 - -
Up to $10,000
Merchant Growth
$5,000 - $500,000 - 6 - 18 months
$5,000 - $500,000
Onesta
- - -
-
Lionhart Capital
$10,000- $30,000,000 Min 4.95% -
$10,000- $30,000,000
Lift Capital
- - 12 - 120
-
Leaseline
- - 24 to 60
-
Lease Direct
- - -
-
John Deere
- - -
-
Hitachi Capital Canada
- - -
-
Guardian Leasing
- - -
-
Export Development Canada
- - -
-
Essex Lease Financial Corporation
- - -
-
Equilease
- - -
-
Alliance Financing Group LTD
$5,000 - $150,000 15% + 6 - 24
$5,000 - $150,000
CanaCap
Up to $250,000 - -
Up to $250,000
CLE Capital
- - -
-
Canada Equipment Loan
- - -
-
SharpShooter Funding
$5,000 - $150,000 5.49% - 22.79% 12 - 60
$5,000 - $150,000
First West Credit Union
$500,000 - $10,000,000 - -
$500,000 - $10,000,000
PACE Credit Union
- Competitive -
-
Meridian Credit Union
Up to $35,000 - -
Up to $35,000
DUCA Credit Union
- - -
-
Laurentian Bank of Canada
Up to $250,000 - Up to 10 years
Up to $250,000
HSBC Bank Canada
- - -
-
National Bank
Up to $1,000,000 - -
Up to $1,000,000
Desjardins
Up to $100,000 - -
Up to $100,000
Canadian Imperial Bank of Commerce (CIBC)
$10,000+ - Up to 15 years
$10,000+
Scotiabank
Up to $1,000,000 -   Up to 15 years
Up to $1,000,000
Bank of Montreal (BMO)
Up to $500,000 - Up to 10 years
Up to $500,000
Royal Bank of Canada (RBC)
$5,000 - $10,000 - Up to 7 years
$5,000 - $10,000
CWB National Leasing
$3,500+ - -
$3,500+
Money Line Capital
$5,000+ 4.9% - 24.99% 18 - 48
$5,000+
Money in Motion
$10,000 - $1,000,000 4% - 14% 12 - 84
$10,000 - $1,000,000
Lease Link
Up to $75,000 - Up to 18
Up to $75,000
FundThrough
$500-$50,000 0.5% weekly 12 week cycles
$500-$50,000
Econolease Financial Services Inc.
$1,000 - $1,000,000 6% - 20% -
$1,000 - $1,000,000
Easylease Corp
Up to $5,000,000 4.5% 24 - 72
Up to $5,000,000
Capify
$5,000 - $200,000 - -
$5,000 - $200,000
Canadian Equipment Finance
$50,000 - $12,000,000 - 24 - 96
$50,000 - $12,000,000
Capital Key
$5,000 - $1,000,000+ - 1 - 60
$5,000 - $1,000,000+
Cashbloom
$5,000 - $1,000,000 - 3 - 24
$5,000 - $1,000,000
BFS Captial
$5,000 - $5,000,000 - 4 - 18
$5,000 - $5,000,000
BDC
Up to $100,000 6.05% + 60
Up to $100,000
Baron Finance
$10,000+ 18% - 22% -
$10,000+
B2B Bank
$10,000 - $300,000 4.70% - 5.45% -
$10,000 - $300,000
AOne Financial Solutions
Up to $5,000,000 5% - 10% 12 - 60
Up to $5,000,000
Borrowell
$1,000 - $35,000 5.6% – 25.5% 36 – 60
$1,000 - $35,000
iCapital
$5,000 - $250,000 - 3-18
$5,000 - $250,000
Lendified
$5,000 - $150,000 - 3 - 24
$5,000 - $150,000
IOU Financial
$5,000 – $100,000 15% + 12 – 18
$5,000 – $100,000
Company Capital
$5,000 – $100,000 Starting at 6.87% 3 – 18
$5,000 – $100,000
OnDeck
$5,000-$250,000 8% - 29% APR 6 - 18
$5,000-$250,000
Lending Loop
$5,000 – $500,000 Starting at 5.9% 3 – 60
$5,000 – $500,000
SkyCap Financial
$500 - $10,000 12.99% – 39.99% 9 – 36
$500 - $10,000
Thinking Capital
Up to $300,000 - -
Up to $300,000
Provider Loan Amount Rate Term (Months) Rating
Go Auto
- - 12 - 96
-
Eden Park
- - -
-
Auto Loan Solutions
- 0% - 29.5% -
-
WeFinanceCars
- + 4.9% -
-
Walker Financial Services
- - -
-
Rifco
- - -
-
National Powersports Financing
- - -
-
LMG Finance
- - -
-
Loans2Go
- - -
-
Leisure Trailer Sales
- - -
-
iA Auto Finance
- +8.99% -
-
Gamache Group
- - -
-
Royal Bank of Canada (RBC)
$5,000 - $10,000 - up to 84
$5,000 - $10,000
Laurentian Bank of Canada
Up to $250,000 - 12 - 60
Up to $250,000
National Bank
Up to $1,000,000 - up to 96
Up to $1,000,000
Desjardins
Up to $100,000 - 6 - 96
Up to $100,000
Canadian Imperial Bank of Commerce (CIBC)
$10,000+ - 12 - 96
$10,000+
Scotiabank
Up to $1,000,000 - up to 96
Up to $1,000,000
Daimler Truck Financial
- - up to 72
-
DealerPlan Financial
- - -
-
Coast Capital
- - -
-
Canada Auto Finance
$5000 - $45,000 4.90 % - 29.95% APR 36 - 72 
$5000 - $45,000
Credit River Capital Inc
- - -
-
Capital Trust Financial
- - -
-
Canada Car Loans
- - -
-
Car Loans Canada
$7500 - $59,995 3.95% + 12 - 96
$7500 - $59,995
Car Creditex
- Up to 49.9% -
-
Auto Capital Canada
- - -
-
Carfinco
- - Up to 84
-
Canada Drives
$500 - $35,000 $29.99% – 46.96% 9 - 60
$500 - $35,000
Prefera Finance
Up to $30,000 - -
Up to $30,000
Prudent Financial Services
Up to $25,000 5.75% - 9.9% 12 - 60
Up to $25,000
Dixie Auto Loans
- - -
-
Approve Canada
- - -
-
2nd Chance Automotive
- 4.2%+ -
-
Newstart Canada
Up to $20,000 19% - 49% 36 - 48
Up to $20,000
SkyCap Financial
$500 - $10,000 12.99% – 39.99% 9 – 36
$500 - $10,000
Splash Auto Finance by Rifco
Up to $50,000 - -
Up to $50,000
Carloans411
$5,000 – $40,000 - 12 – 72
$5,000 – $40,000
AutoArriba
- - Maximum 84
-
Provider Loan Amount Rate Term (Months) Rating
Instant Loans Canada
$1,000 - $35,000 - 24 - 60
$1,000 - $35,000
Newstart Canada
Up to $20,000 19% - 49% 36 - 48
Up to $20,000
Fast Access Finance
$500 – $10,000 Starting at 9.90% 12 - 36
$500 – $10,000
BHM Financial
Up to $25,000 - 12 - 60
Up to $25,000
Provider Loan Amount Rate Term (Months) Rating
Mortgage Alliance
- 2.74% - 6.30% 12 - 120
-
Paradigm
- - -
-
Verico
- - -
-
True North Mortgage
- 2.64% - 4.45% 12 - 120
-
Tangerine
$50,000+ 2.74% - 3.49% 12- 120
$50,000+
Think Financial
- - 36 - 60
-
Turnedaway
- - -
-
REICO
- - -
-
Motusbank
- 2.79% - 6.00%  6 - 60 
-
Northwood Mortgage
- 2.74% - 4.45% 12 - 120
-
Matrix Mortgage Global
- - -
-
Mortgage Architects
- 2.74% - 3.70% 6 - 120
-
Keystone Finance Solutions
- - -
-
Finser Mortgages
- 2.79% - 4.45% -
-
IntelliMortgage
- - -
-
Invis
- 2.69% - 3.95% 6 - 120 
-
Manzil
up to 4,000,000 3.49% - 5.49% 12 - 300
up to 4,000,000
Equitable Bank
$25,000 - $800,000 4.59% - 5.64% 6 - 60
$25,000 - $800,000
Dominion Lending Center
- - -
-
Fisgard Asset Management
- -- -
-
First National
- 2.84% - 7.30% -
-
CMLS Financials
$100,000 - $750,000 - 12 - 120
$100,000 - $750,000
CHIP Reverse Mortgage
min 25,000 4.99% - 5.59% 6 - 60
min 25,000
CanWise
- 2.23% - 4.45% -
-
Centum
- 2.89% - 3.79% -
-
Canadalend.com
- - -
-
Broker Financial Group Inc.
- 2.41% - 3.84% -
-
Bridgewater Bank
- - -
-
Alpine Credits
- - -
-
Provider Services Rating
BDO
Credit Counselling, Bankruptcy, Consumer Proposal
Credit Counselling, Bankruptcy, Consumer...
MNP
Personal Bankruptcy, Consumer Proposal
Personal Bankruptcy, Consumer Proposal...
Raymond Chabot
Bankruptcy, Consumer Proposal
Bankruptcy, Consumer Proposal...
Full Circle Debt Solutions Inc
Credit Counselling, Debt Management Program
Credit Counselling, Debt Management Prog...
Hoyes
Consumer Proposals, Bankruptcy, Fresh Start program, Debt Relief Consultations
Consumer Proposals, Bankruptcy, Fresh St...
Consolidated Credit
Credit Counselling, Debt Management Program
Credit Counselling, Debt Management Prog...
4Pillars
Debt Restructuring, After Care - Credit Rebuilding Program, Corporate Debt Restructuring
Debt Restructuring, After Care - Credit ...

If you’re planning to buy a home in London in the near future, now is the time to start shopping around for a mortgage. Preparing yourself for mortgage approval and selecting the right mortgage product for you is a crucial step in the home buying process and can help you secure a home loan that is affordable and suits your budget.

Let’s dig deeper into mortgages in London to help you get more familiar with how these types of loans work and help you determine which mortgage product is most suitable for your financial situation.  

To learn more about the mortgage stress test, check out this article.

Mortgage Insurance Rules in London

In London and Canada in general, mortgage default insurance is required on all high-ratio mortgages, which are those that involve a loan amount that is over 80% of the purchase price of a home. That means that if you need to take out a loan for more than 80% of what you agreed to pay for a home, you’ll have to pay for mortgage default insurance.

Also referred to as CMC mortgage insurance, this type of insurance is meant to help people in London and Canadians in-general buy a home even if they are unable to come up with a high down payment amount. It’s also meant to help protect lenders against the higher chances of delinquent borrowers in the event that mortgage payments are not paid.

Without this type of insurance, mortgage interest rates would be higher, which would make it much more difficult for buyers to realize their dreams of homeownership.

In order to avoid paying mortgage default insurance, borrowers must be able to come up with at least 20% of the purchase price of the home as a down payment. Otherwise, the minimum down payment amount for high-ratio mortgages is 5%, in which case mortgage default insurance would have to be paid.

For even more information about high ratio mortgage insurance, click here.

How to Save For a Down Payment in London

As already mentioned, a down payment is required to secure a mortgage in London, the minimum amount required is 5%. But even 5% can be a hefty amount given the home prices in London and in other cities across Ontario and Canada. In London, the average price of a home is $405,186, and 5% of that would be $20,309.  

That’s a lot of money for the average consumer to be able to pay upfront in one lump sum without having had the time and made the effort to save up. As such, it’s important for homebuyers to give themselves some time and take certain measures to save up for a down payment long before they start their search for a home.

Some ways to save for a down payment in London may include:

  • Dedicating a savings account specifically for your down payment
  • Having a certain amount or percentage of your paycheck automatically deducted and deposited into your down payment savings account
  • Paying off high-interest debts as quickly as possible to free up more money
  • Cutting back on frivolous spending
  • Creating a reasonable budget
  • Selling or downsize your car
  • Borrowing from family or friends

If possible, consider trying to save more than a 5% down payment. There are some good reasons why a larger down payment amount is helpful:

  • Avoid paying mortgage default insurance
  • Take out a smaller loan and owe less to the bank
  • Make smaller loan payments every month
  • Potentially get a lower interest rate as a result of a smaller loan amount

Interested in how to borrow money for a down payment? This article is for you.

Credit Score Required For a Mortgage in London

When you apply for a  mortgage, your lender in London will look at a variety of factors before deciding whether or not to approve your application. And one of the more important aspects of your financial background is your credit score.

While different lenders in London may have their own minimum credit score required before they issue mortgages, the minimum score typically required ranges anywhere from 650 to 680. A high credit score gives lenders some assurance that the borrower they are considering lending to will be more likely to make all payments on time and in full each month.

A borrower in London with a low credit score, on the other hand, is considered a risky consumer and is less likely to get approved for a home loan. That’s because a lower credit score makes a consumer more likely to default on their loan payments, which is exactly the opposite of what lenders in London are looking for.

The higher your credit score, the better the odds of getting approved for a mortgage. Not only that, but a higher score will also afford you with a lower interest rate, which will make your mortgage more affordable over the long run.

Canadian Credit ScoreCheck out this infographic for more information about credit scores.

Alternative Mortgage Options For Bad Credit Consumers in London

Applying for a mortgage with a bad credit score may set you up for disappointment if you apply with conventional lenders in London. As already mentioned, traditional lenders typically prefer to work with consumers with a decent credit score of no less than around 680. If your score is under that mark, you run the risk of your mortgage application being turned down.

That said, there may be other alternatives besides applying with a conventional lender if you have a bad credit score:

Bad credit loans. Rather than applying for a conventional loan with a traditional lender, consider seeking a mortgage in London with an alternative or “bad credit” lender. There are many private lenders available who deal specifically with bad credit borrowers.

Rather than placing much of the emphasis on credit scores, these lenders in London will look more closely at your income, assets, and most recent payment activity when gauging whether or not to extend a mortgage. That said, it should be noted that such loans will more likely come with a higher interest rate compared to conventional mortgages.

Cosigners. If you’re unable to secure a conventional mortgage because of a low credit score, perhaps someone close to you with a high credit score may be willing to cosign on the loan with you. In this case, the cosigner would help you get approved for the mortgage and promise to take over the mortgage payments in the event that you are no longer able to make the payments yourself.

Waiting and improving your credit score. If you’re not in a rush to buy a home, consider waiting and taking the time to improve your credit score first. Rather than searching for a bad credit loan in London and paying a higher interest rate, you can secure a conventional home loan at a lower rate if your credit score improves at some point in the near future.

Some ways to improve your score include:

  • Making all bill payments on time
  • Spending no more than 20% to 30% of your credit card limit
  • Making more than your minimum credit card payments each month
  • Not taking out any additional loans or credit lines

Bridge loans. A bridge loan is a type of loan that’s generally taken out for a short period of time until the arrangement for a larger loan is made available. They’re basically temporary loans that are secured by your home and are named as such because they essentially “bridge” the gap between the sale of a new home and a new mortgage. In other words, you’re actually borrowing your down payment on your new home.

Learn how to negotiate the best mortgage contract based on your needs.

What Are the Hidden Costs of Buying a House in London?

It’s important for all homebuyers in London to understand that mortgage payments are only part of the financial equation. There are plenty of other costs associated with buying a house in London, including the following:

  • Closing costs. These can include, lender fees, appraisals, title fees, lawyer fees, escrow fees, and mortgage interest.
  • Home inspection. All buyers should include a home inspection condition in their purchase agreement which gives them the chance to scope out the condition of the home before buying.
  • Property taxes. Depending on your exact postal code, the rate of property taxes that you have to pay every year will vary.
  • Home insurance. Your mortgage won’t be approved unless you’re able to show proof that your home is insurable.
  • Utility bills
  • Maintenance and repairs

For a comprehensive list of Ontario closing costs? Take a look at this article.

How To Get Your Finances in Order Before You Apply For a Mortgage in London

Before you even speak with a mortgage broker and start your house-hunting search, take some time to get your finances in order first. To do this, consider the following steps:

  • Pull your credit report to see where your credit score is at
  • Look for errors in your credit report and have them investigated and fixed
  • Take steps to improve your credit score if necessary (with the tips mentioned above)
  • Find out what the current mortgage interest rates are
  • Be realistic about what you can afford
  • Start saving for a down payment
  • Cut back on spending
  • Make all efforts to whittle down your debt as much as possible

Mortgage Pre-Approvals in London

Before you start looking at new homes, speak with your mortgage broker first to get pre-approved for a mortgage London. A pre-approval is basically a promise letter from your lender that you can be approved for a specific loan amount at a certain interest rate based on your current financial situation.

Keep in mind that this doesn’t guarantee final mortgage approval, especially if some things change with your situation before the closing of the home. Further, pre-approval letters expire after 90 to 120 days, after which they’re no longer valid.

While mortgage pre-approvals are not mandatory, they’re a good idea to get. For starters, they’ll help you determine exactly how much you’d be able to afford. There’s no sense in looking at homes that are far out of your reach. Knowing what you can afford will help you focus on properties that match your budget.

Being pre-approved for a mortgage will also help to strengthen your position in the eyes of sellers. This is especially helpful if it’s a seller’s market and the competition with other buyers is rather fierce. In this case, you’ll stand a better chance at winning a deal with a seller for a home that you love.

Should you spend your entire mortgage pre-approval amount? Find out here.

Mortgage Payment Options in London

A mortgage is a type of installment loan, which means that the full loan amount is paid back in regular installments. When it comes to mortgages, you have some options in terms of the frequency of your payments:

  • Monthly
  • Semi-monthly/Bi-weekly (payments are made twice a month)
  • Accelerated bi-weekly (payments are made every two weeks)
  • Weekly

Cost of Buying a House in CanadaInterested in how much it costs to buy a house in other parts of Canada? Click here.

Types of Mortgages Available in London

There are different types of mortgages in London that are available for you, including the following:

Fixed-rate mortgages – These are commonly-chosen mortgages among borrowers in London because the payments are more predictable and easier to fit within a budget. As the name suggests, a fixed-rate mortgage means the interest rate associated with the loan does not change throughout the term.

That means the mortgage payments stay the same, with slightly less being paid toward interest and slightly more being contributed to the principal portion with every payment, though the entire payment amount doesn’t change. Fixed-rate mortgages give borrowers in London some assurance that they have locked in at a good rate if it’s anticipated that rates will increase in the near future.

Variable-rate mortgages – Interest rates with variable-rate mortgages will fluctuate throughout the mortgage term. The initial rate offered is usually lower than that of fixed-rate mortgages during the “introductory period.”

When this period expires, however, the rate will change and can either go up or down depending on the prime rate stipulated by the Bank of Canada. The rate will change periodically throughout the term at specific intervals as well.

Some borrowers in London choose this type of mortgage because of the lower rate at the onset of the term. And if they plan to sell before the introductory period ends, they don’t have to worry about what rates will do. Further, if rates are expected to decrease at some point in the near future, borrowers with a variable-rate mortgage can take advantage of lower rates and therefore some savings.

Conventional mortgages – A conventional mortgage is one that requires a minimum of 20% down payment and does not require mortgage default insurance.

High-ratio mortgages – If less than a 20% down payment is made, the mortgage is considered a high-ratio one. These mortgages require a minimum down payment of 5% and mortgage default insurance premiums.

Second mortgages – If you already own a home in London, you may be able to borrow money against it. In this case, you would be taking out a “second mortgage,” or a “home equity loan.” To get approved for a second mortgage, you’ll need to have at least 80% equity in the home, which is basically the value of your home minus what you still owe on your current mortgage.

The lowest mortgage interest rate might not be what you need. Learn more here.

What is a Mortgage Amortization Period?

An amortization period refers to the entire life of the loan and the time period that you have to pay off the entire loan amount in full. A longer amortization period means that you have a longer amount of time to pay off the loan, and therefore your installment amounts would be smaller. However, the mortgage would cost more over the long run because of more being paid towards interest.

Shorter amortization periods, on the other hand, mean that the mortgage would be paid off faster. As such, less would be paid towards interest, making the mortgage cheaper overall. That said, the monthly payments would be higher in an effort to pay off the mortgage in a shorter time frame.

How long should you amortize your mortgage for? Click here.

How to Compare Mortgage Offers in London

Every lender in London has their own specific mortgage products, so it’s important that you take the time to compare these products before choosing one that’s most affordable and more suitable for you. The things that you should be comparing include:

  • Interest rate
  • Term (the length of time that the mortgage has legal effect, after which it would have to be renewed, refinanced, or paid in full)
  • Amortization period (the entire amount of time needed to repay the loan amount in full)
  • Prepayment options
  • Early payment penalties
  • Variable versus or fixed rate

Looking For a Mortgage in London?

If you’re thinking about buying a home in London sometime soon, perhaps now might be a great time to speak with a mortgage broker. You’ll want to get your finances in order before you start house hunting, and a mortgage broker may be able to help guide you in the right direction.

Call Loans Canada today and we’ll help you find the right mortgage broker or lender in London to work with so that you can secure the appropriate mortgage product that’s most affordable and convenient for you!

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