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Mortgage Types in Ontario: How to Compare Your Options
The right mortgage is not always the one with the lowest advertised rate. A good mortgage should fit your purchase, refinance, renewal, cash flow, income, credit, future plans, and comfort with risk.
This page explains the main mortgage types Ontario borrowers often compare, what each option may affect, and when it makes sense to review the full structure before choosing a lender or term.
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Quick answer
Most Ontario borrowers compare mortgage types by looking at the rate type, term, payment flexibility, prepayment rules, qualification requirements, and how easy it may be to change the mortgage later. A lower rate can help, but the wrong structure can cost more if you need to sell, refinance, renew early, borrow more, or move before the term ends.
Who this page is for
Before choosing a mortgage, it helps to step back and ask: what problem does this mortgage need to solve? A first-time buyer, a homeowner renewing under pressure, a self-employed borrower, and someone using home equity may all need different mortgage structures.
- You are buying a home and want to understand fixed, variable, open, closed, insured, and conventional mortgage options.
- You are renewing and want to compare your lender’s offer against other available structures.
- You are refinancing or accessing equity and want to know how the new mortgage may affect cost, flexibility, and qualification.
- You have income, credit, debt, or timing issues and need to compare standard, alternative, second mortgage, or private mortgage options.
Common mortgage types to compare
Fixed-rate and variable-rate mortgages
A fixed-rate mortgage keeps the interest rate the same for the term, which can make budgeting easier. A variable-rate mortgage can change with the lender’s prime rate, which may affect interest cost, payment structure, or principal repayment depending on the product.
Fixed rates may appeal to borrowers who value payment certainty. Variable rates may appeal to borrowers who understand rate movement and have enough budget room to handle changes.
Open and closed mortgages
An open mortgage usually provides more repayment flexibility and may allow the borrower to pay off the mortgage without a prepayment charge. A closed mortgage usually offers a lower rate than an open mortgage, but may involve a penalty if you break the term early.
This matters if you may sell, refinance, renew early, separate, move, or borrow more before the term ends.
Shorter-term and longer-term mortgages
The mortgage term affects your rate, renewal timing, and penalty exposure. A shorter term may create an earlier chance to renegotiate. A longer term may provide more rate certainty, but can also increase the importance of understanding prepayment rules and penalty calculations.
High-ratio and conventional mortgages
A high-ratio mortgage usually applies when the down payment is less than 20% and mortgage default insurance is required. A conventional mortgage usually means the borrower has at least 20% down or 20% equity, although lender rules still determine final approval.
The down payment, property value, purchase price, insurer rules, income, credit, and debt levels can all affect which mortgage path is available.
Purchase, renewal, refinance, second mortgage, and private mortgage options
Mortgage type is not only about interest rate. The purpose matters too. A home purchase, renewal, refinance, equity release, second mortgage, or private mortgage can each involve different lender rules, costs, timelines, documents, and exit strategies.
Practical takeaway
The right mortgage should be judged by the full outcome: payment comfort, qualification, penalty risk, flexibility, lender fit, closing timeline, and the plan for what happens next.
What lenders usually consider
Lender review depends on the mortgage type and the borrower’s situation. In many Ontario mortgage files, lenders may consider:
- income type, income history, and documentability,
- employment, self-employment, pension, rental, or variable income,
- credit history, recent missed payments, balances, and debt payments,
- down payment or available home equity,
- property type, location, condition, and marketability,
- loan-to-value, debt ratios, amortization, and payment comfort,
- the reason for the mortgage request, and
- the exit plan if the mortgage is short-term, alternative, second, or private.
Related mortgage options to compare
- Mortgage refinance options
- Mortgage renewal options
- Debt consolidation mortgage options
- Second mortgage options
- Private mortgage options
- Mortgage options with credit issues
- Mortgage options with income issues
About Roger Carroll
Roger Carroll is an Ontario Mortgage Broker with Real Mortgage Associates Inc. Broker licence M08003074. He works with clients across Ontario on purchases, renewals, refinances, second mortgages, private mortgages, and alternative lending solutions.
His approach is focused on clear explanations, careful file review, and practical guidance before borrowers make a mortgage decision.
Not sure which mortgage type fits?
Before you choose based on rate alone, review the structure. A careful mortgage review can help you compare payment comfort, qualification, flexibility, penalty risk, and the most practical next step for your situation.
Last updated: June 2026
Refinance
Like many other Canadians you may be considering using the equity you've built in your home to re-invest in your dreams or consolidate debt.
CHIP Reverse Mortgage
The Canadian Home Income Plan (CHIP) our reverse mortgage solution has helped thousands of older homeowners enjoy more financial flexibility without having to sell or move.
Other Mortgages
The Mortgage Centre understands that everyone has a unique lifestyle, and we believe your mortgage financing should be just as unique.
Types of Mortgages
Closed mortgages
Closed mortgages generally have prepayment options of up to 20% of the original mortgage amount. If you decide to pay out, renegotiate or refinance before the end of the term of a closed mortgage, prepayment costs will be applied.
Open mortgages
An open mortgage can be repaid at any time throughout the term, either in full or partially without paying a prepayment charge. Provides flexibility until you are ready to lock into a closed term.
Convertible mortgages
A convertible mortgage is similar to a closed mortgage, but gives you the option of converting to a longer, closed mortgage at any time without paying a prepayment charge. With this option you can generally make an annual prepayment up to 10% of the original mortgage amount.
What is a high-ratio mortgage?
A high-ratio mortgage refers to a mortgage in which the borrower has a down payment between 5% - 20%. These mortgages require mortgage default insurance.
CMHC, Genworth Financial Canada, Canada Guaranty
The Canadian government supports high levels of homeownership through an insurance plan that covers lenders in the event that borrowers of insured mortgages default on their mortgage.
Talk with us today!Types of mortgage interest rates
Fixed rate mortgages
A fixed interest rate does not fluctuate during the mortgage term. This option allows your payment to remain constant so you know exactly how much you will pay every month and the amount you will have paid off at the end of the term.
Variable rate mortgages
A variable interest rate will fluctuate with prime rate throughout the mortgage term. This impacts the amount of principal that you pay off each month as your mortgage payment will remain constant.
What determines variable interest rates
Variable interest rates are generally expressed in relation to a bank's prime rate, which is set by the bank from time to time. A bank's prime interest rate may change at any time.
What is a Basis Point?
Changes to a bank's prime rate are sometimes described in terms of increases or decreases in basis points. A basis point is a unit of measure that represents 1/100th of one percent (0.01%). For example, if interest rates are increased by 50 basis points, it means they were increased by 0.5%. The term basis point value simply denotes the change in the interest rate in relation to a basis point change.
Selecting the Right Mortgage
The right mortgage for you isn't necessarily the one that offers the lowest rate, but rather a complete package of terms, conditions, rates and fees that fit your specific short- and long-term financial goals. A Mortgage Centre specialist will strive to understand your needs and explore options that are relevant to you.
Some of the basic choices in selecting a mortgage include:
Conventional vs. high-ratio mortgages
A conventional mortgage equals no more than 80% of the appraised value or purchase price of the property, whichever is less. A high-ratio mortgage is usually for more than 80% of the appraised value or purchase price. It's often referred to as an NHA mortgage because it is granted under the provisions of the National Housing Act and must, by law, be insured through a mortgage insurance provider. The insurance premium as well as application, legal and property appraisal fees are paid by the borrower.
Closed vs. open mortgages
Closed mortgages generally offer lower interest rates than open mortgages of the same term, but open mortgages let you pay off as much as you want, any time, without penalty - which could save you a bundle in the long run.
Short term vs. long term
The term you select is important. Short term mortgages are appropriate if you believe interest rates will be lower at renewal time. Long term mortgages are suitable if you feel current rates are reasonable and you want the security of budgeting for the future. This can be especially important for first time homebuyers.
Fixed rate vs. variable rate
Identifying whether a fixed or variable rate mortgage is best for you is an important decision. The truth is that no one can accurately forecast what the future holds in the financial markets 3 to 5 years from now. So assessing whether a fixed or variable rate mortgage product is best for you requires an understanding of your personal financial plan and ability to handle market fluctuations.
Fixed rates are based on the yield on Canadian government bonds and will not change during the term of your mortgage. This buffers you from increases in market interest rates and allows you to budget precisely for whatever term you select - from one to as many as 25 years.
Variable rate mortgages fluctuate with the market. Variable rates are essentially determined by institutional prime lending rates, which are influenced by the Bank of Canada's key interest rate. So you receive a discount or surcharge on prime based on what your lender is offering at any given time.
Specialty mortgages creatively combine the best of all worlds.