DEFINITION of 'Canadian Rollover Mortgage'

A home mortgage with an adjustable rate feature. The Canadian Rollover mortgage differs from a 30-year fixed rate mortgage, in that the loan's interest rate is adjusted every five years, with no cap on the interest rate adjustment. The Canadian Rollover Mortgage is also known as a Variable Rate Mortgage or a Renegotiable Rate Mortgage.

BREAKING DOWN 'Canadian Rollover Mortgage'

The Canadian Rollover Mortgage is called such as it is the standard mortgage in Canada. Adjustable Rate Mortgages (ARM's) in the U.S. are usually linked to an index such as the Consumer Price Index (CPI) and adjust every year after a lock-out period (usually 3, 5, or 7 years). The rate on the Canadian Rollover Mortgage is actually renegotiated, typically once every five years.

Canadian Rollover Mortgages are one kind of rollover mortgage. Other mortgages that belong to this group are the aforementioned ARM, the variable rate mortgage, and the renegotiable rate mortgage. All of these mortgages were developed, in part, to allow a larger group of borrowers to participate in the housing market. When real estate gets too expensive for borrowers (either due to price appreciation or high interest rates) mortgage providers get creative with mortgage structures to entice people to borrow.

RELATED TERMS
  1. Rollover Mortgage

    A mortgage in which the unpaid balance (outstanding principal) ...
  2. Mortgage Rate

    The rate of interest charged on a mortgage. Mortgage rates are ...
  3. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  4. Second Mortgage

    A type of subordinate mortgage made while an original mortgage ...
  5. ARM Index

    The benchmark interest rate to which an adjustable rate mortgage ...
  6. Variable Rate Mortgage

    A type of home loan in which the interest rate is not fixed. ...
Related Articles
  1. Personal Finance

    Shopping for a Mortgage in 2017? Use This Tool First

    As home-buying technology has progressed, the process of finding the best mortgages rates for 2017 can all be done online.
  2. Personal Finance

    Finding the Best Mortgage Rates in 2017

    As home-buying technology has progressed, the process of finding the best mortgages rates can all be done online. Here's how:
  3. Personal Finance

    5 Things You Shouldn't Tell Your Mortgage Broker

    Applying for a mortgage can be a strenuous process. Here are five things to avoid doing when meeting with your mortgage broker.
  4. Investing

    Today's Current Mortgage Rates: May 25, 2017

    Find the current day's mortgage rates offered by Investopedia Partners and learn more about what may impact rates in the upcoming weeks.
  5. Personal Finance

    Behind the Scenes of Your Mortgage

    Four major players slice and dice your mortgage in the secondary market.
  6. Financial Advisor

    Effect of Fed Fund Rate Hikes on the Housing Market

    Understand what drives the federal funds rate and why the Fed would increase that rate. Learn about the effect of a rate increase on the housing market.
  7. Personal Finance

    5 Reasons To Save For A Big Mortgage Down Payment

    You may be anxious to buy a home, but taking time to save a large down payment has numerous advantages.
  8. Personal Finance

    Adjustable Rate Mortgage: What Happens When Interest Rates Go Up

    Adjustable rate mortgages can save borrowers money, but they can't go into it blind. In order to benefit from an ARM, you have to understand how it works.
  9. Personal Finance

    Mortgage Company

    A company engaged in the business of originating and/or funding mortgages for residential or commercial property.
  10. Personal Finance

    Understanding the Mortgage Payment Structure

    We explain the calculation and payment process as well as the amortization schedule of home loans.
Trading Center