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  • Buying a Home
    • Why Work With a Mortgage Broker?
    • Steps to Mortgage Approval
    • Understanding Mortgages >
      • Mortgage Types & Rates
      • Being a Responsible Borrower
      • Your Mortgage Contract
      • Being Aware of Risks
    • Mortgage Insurance
    • Real Estate Fraud
    • Find a Mortgage Broker
  • For Mortgage Brokers
    • Our Role in Advocacy
    • Value of membership >
      • Affinity Program
    • RECA Guides & Industry Tools
    • Compliance Toolkit
    • Become a Member
    • Member Portal Login
  • Join Our Industry
    • Why Become a Mortgage Broker
    • Apply for Mortgage Courses
    • How to get licensed in Alberta
    • Join a Member Company
    • Industry Job Board
    • Newly Licenced >
      • Finding a Brokerage
  • Events & News
    • Event Calendar
    • 50th Anniversary
    • Awards
    • 2025 Sponsorship Packages
    • Industry News
  • About Us
    • Our Mission & Strategic Plan
    • Board of Directors
    • Committees >
      • Audit, Finance & Risk Committee
      • DEI Advisory Committee
      • Education & Professional Development Committee
      • Governance Committee
      • Political Action Committee
      • Professional Standards Committee
      • Women of AMBA Committee
      • 2025 Awards Adjudication Working Group
      • 50th Anniversary Advisory Committee
    • Code of Conduct
    • Our Team
    • Contact
  • Blogs & Articles

Mortgages & Rates

There are several different types of mortgages to consider when shopping around. Ultimately, you need to find the right one for your situation. Below are explanations about each type.

Closed
This type of mortgage remains unchanged for whatever term you agree to. Prepayment penalties will apply if you decide to payout, renegotiate, or refinance before the end of term.
• Provides lower rates than open or convertible mortgages.
• Often gives you options to make additional payments up to a certain amount without penalty. For example, you may be allowed to make a 20% lump sum each year that goes directly onto the mortgage principal. This is known as a pre-payment privilege.

Open
This type of mortgage may be repaid, in part or in full, at any time during the term without penalty.
• Provides flexibility until you are ready to lock into a closed term.
• Allows you to pay off any or all of the mortgage without prepayment costs.

Convertible
This is a mortgage which offers the same security as a closed mortgage, but which can be converted to a longer, closed mortgage at any time without prepayment costs. It is typically associated with fixed rate mortgages.
• Provides security and flexibility allowing you to convert into a longer closed term mortgage without prepayment costs, if you think rates will rise.
• Allows you to make an annual prepayment of up to 10% of your original mortgage amount.

Reverse
A reverse mortgage is a product available to homeowners 55 years of age and older that allows them to draw liquid cash from their home without having to move or sell.


Rate Types

Fixed
An interest rate that does not change during the entire mortgage term.
• You can take advantage of the same interest rate for the entire term with a regular payment that stays the same.
• You will have the security of knowing exactly how much your payments are and how much of your mortgage will be paid off at the end of your term.

Variable
An interest rate that can fluctuate during the term. The interest rate varies with changes in market interest rates (typically the bank’s prime lending rate). The mortgage payments can be fixed, or they could change if the interest rate changes – it depends on the lender and type of product.
• Historically, variable rates have been lower than fixed rates and could save you more money.
• If rates go down, a larger portion of your payment goes towards principal, helping you pay off your mortgage faster.
• If rates vary, your regular payment may stay the same by changing the amount being applied to paying off the principle versus paying the interest.

Amortization Period
The amortization period on a mortgage is the total length of time it will take to pay off the mortgage.

Terms and Conditions of the Mortgage
Understand the terms and conditions that come with your mortgage product. These include:
• The amount of the mortgage - how much the lender will lend you.
• The amortization period - how many years it will take to pay the mortgage off in full.
• The term of the mortgage - the length of time the agreement with the lender is in effect.
• How often payments will occur.
• If it's a fixed or variable rate mortgage, and the interest rate on the loan.
•  The conditions under which the funds will be released. These are often the supporting documents you must supply - for example, proof of income from your employer or evidence of paying off a credit card. 
FIND A MORTGAGE BROKER
Alberta Mortgage Brokers Association
7326 10th Street NE, Suite 310   
​Calgary, AB T2E 8W1
Phone: 587.774.9828 
​Email: [email protected]
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At the Alberta Mortgage Brokers Association, we acknowledge that our work in the housing industry is deeply connected to the land we call home. We recognize and pay tribute to the traditional territories of the peoples of Treaties 4, 6, 7, 8 and 10.  We also honour the Métis Nation of Alberta.  As we work to facilitate homeownership in Alberta, we remember that we operate on land that has been home to Indigenous peoples for generations.