What constitutes a non-conventional mortgage?

A non-conventional mortgage is characterized by specific features that differentiate it from standard mortgage options. In this context, choosing a mortgage that exceeds 80% of the appraised land value accurately identifies a non-conventional mortgage. When a mortgage exceeds this threshold, lenders typically require it to be insured, as it presents a higher risk both to the lender and the borrower due to the lower equity stake from the borrower. This insurance often comes from entities such as the Canada Mortgage and Housing Corporation (CMHC) or private insurance providers, which help protect the lender in case of default.

In contrast, a mortgage with a variable interest rate, a fixed-rate mortgage, or a standard mortgage with no insurance does not by themselves indicate that the mortgage is non-conventional. These options can fall within conventional mortgage parameters depending on the other aspects of the agreement, such as the loan-to-value ratio, the borrower's creditworthiness, and whether the mortgage is insured or not. Therefore, the distinguishing factor of exceeding 80% of the appraised value clearly defines the mortgage as non-conventional.