Conventional Mortgages

Smart Start Management and consulting

Conventional mortgages are a popular choice for individuals and corporations looking to purchase property in Canada. In this article, we will explore the benefits of conventional mortgages for both individuals and corporations.

For Individuals:

  1. More control: With a conventional mortgage, borrowers have more control over their loan terms. They can choose from a wider range of lenders and loan products and negotiate the interest rate and terms that work best for them. This can be especially helpful for individuals who have good credit and a stable income, as they may be able to secure a lower interest rate and better loan terms.

  2. Lower overall cost: In some cases, a conventional mortgage can be less expensive than a high ratio mortgage. While a high ratio mortgage may have a lower down payment requirement, it often comes with additional costs such as mortgage insurance. With a conventional mortgage, borrowers with a down payment of 20% or more can avoid these additional costs and potentially save money over the life of the loan.

  3. More equity: By making a larger down payment, borrowers with a conventional mortgage can build equity in their property more quickly. This can be a useful tool for long-term financial planning, as it allows borrowers to build wealth over time and potentially access that wealth in the future through refinancing or selling the property.

For Corporations:

  1. Greater flexibility: Conventional mortgages can be a more flexible option for corporations than high ratio mortgages. With a conventional mortgage, businesses have more control over their loan terms and can negotiate with lenders to secure the most favorable terms for their specific needs. This can be especially important for businesses that have unique financing needs or are operating in a niche market.

  2. Tax benefits: In some cases, the interest paid on a conventional mortgage can be tax-deductible for corporations. This can be an attractive benefit for businesses that are looking to maximize their tax savings and reduce their overall tax burden.

  3. Access to more financing: By opting for a conventional mortgage, corporations may be able to access more financing than they would with a high ratio mortgage. This is because conventional mortgages are typically viewed as less risky by lenders, and therefore lenders may be more willing to lend larger amounts of money to businesses with strong credit and financials.

In conclusion, conventional mortgages can be an attractive option for both individuals and corporations looking to invest in property in Canada. With greater control over loan terms, lower overall costs, and the potential for tax benefits and greater access to financing, conventional mortgages can be a useful tool for achieving long-term financial goals and building wealth over time.

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