If you are buying your first home you might be a little confused about all the different types of mortgages that are now available. Many people are now utilizing the services of a mortgage broker because buying a house is a big commitment and it is very important to make sure you have the right loan. The following provides a basic understanding of the differences so you can choose the best mortgage for your situation.

Standard Loan
In 90% of cases a standard mortgage is the best option for buying a home. This type of loan is offered by almost every financial institution and, in general, has the lowest interest rates in the industry. You must be able to provide documentation, such as proof or income, other debts or assets, and savings history that shows that you are eligible for this type of loan.

No Income Verification
A no income verification mortgage is the type of mortgage that you apply for if you cannot, or do not want to, provide information about your income to the lender. It is designed for people who are financially able to make the repayments, but earn in a non traditional way, such as someone who lives off investments.

No Doc (Low Doc)
Similar to the previous mortgage a no doc loan basically means that the borrower doesn’t need to provide the paperwork that the lender would usually require. However, you may still need to prove that you will be able to make the repayments and undergo a credit history check.

Investment Loan
These type of loans, also called a non owner occupied mortgage loans, are designed for real estate investment and, in some cases, other forms of investing such as the stock market. However, most people choose to use a line of credit loan to finance their other investments.

Having a basic understanding of the different types of mortgages can help prepare you for your final decision. If you want a more in depth explanation a mortgage broker or financial advisor would be a good place to start.

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