What is a Residential Mortgage and How Does it Work?
There are two main types of properties: residential properties and commercial properties. Residential properties are properties primarily located in residential areas, as opposed to commercial or industrial areas. Whether a property is residential or commercial mainly comes down to how the neighbourhood is zoned and your use of the property. For example, a house in a residential neighbourhood is generally considered residential, whereas a business in a commercial area would generally be considered a commercial property.
A residential mortgage is a mortgage obtained to purchase a residential properly. Examples of common residential property types include condos, townhouses and houses. Both owner occupied and non-owner occupied (rental properties) may be considered residential properties.
The property type you’re buying as well as the location will generally dictate the mortgage options you’ll have available. For instance, if you’re buying a condo under 500 square feet, you’ll generally have fewer mortgage lending options than a detached house. Likewise, if you’re buying in a small town in Northern Ontario or B.C., you’ll generally have fewer lending options than if you’re buying a property in the Greater Toronto or Vancouver Areas.