What's the difference between open term and closed term mortgages?
With an open term mortgage, aside from your regular mortgage payments, you can pay down your mortgage as much as you would like. There is no penalty for ending your mortgage term early.
A closed term mortgage, on the other hand, sets limits in terms of how much you can pay towards your mortgage. Paying above these limits will result in your mortgage lender charging you a prepayment penalty.
Most homeowners go with closed term mortgages, as they have lower interest rates. People who go with an open term mortgage are usually looking to sell their home within the next year and want to keep their options flexible.
What's the difference between a fixed rate and variable rate mortgage?
A fixed rate mortgage will have the same interest rate throughout your mortgage term. Your mortgage payments won't change, even if your lender's prime rate changes.
A variable rate mortgage, conversely, has a floating interest rate. The interest rate you pay on your mortgage will depend on the prime lending rate of your mortgage lender.
Most people get fixed rate mortgages because they provide stable monthly payments. On the other hand, variable rate mortgages can offer lower interest rates up front, but they run the risk of higher interest costs if your lender's prime lending rates increase.
Desjardins fixed rate mortgages
Desjardins offers fixed rate closed term mortgages that range from 6 months to 10 years.
If you want to make extra lump sum payments on your mortgage, Desjardins allows for limited prepayment privileges. With Desjardins, you're allowed to make prepayments of up to 15% of the original mortgage amount every year.
If you would rather have a mortgage that lets you pay more than 15% in prepayments than Desjardins' 6 month or 1 year open term mortgage could be a good option. These open term mortgages come with higher interest rates, but they also provide unlimited prepayment privileges.
Desjardins variable rate mortgages
On variable rate mortgages, Desjardins offers a 5 year closed term and a 5 year open term mortgage. They also offer a 5 year closed protected rate mortgage. The protected rate mortgage is a variable rate mortgage with a cap. No matter how high prime lending rates climb, your protected variable rate mortgage won't exceed the ceiling rate set by Desjardins.
Versatile Line of Credit
If you have at least 20% equity in your home, Desjardins offers a home equity line of credit, called the Versatile Line of Credit. With this line of credit product, you can borrow up to 65% of your home's value. You can use the line of credit for home renovations, vehicle purchases, tuition, or any other expenses.
With the Versatile line of credit, an additional 15% of the value of your home can be borrowed in the form of a term loan. The amount you borrow from the term loan is paid back by scheduled payments of principal and interest.
With over 7 million members and clients, The Desjardins Group is the largest federation of credit unions in North Amerca. Founded in 1900, Desjardins primarily operates in Quebec and Ontario.