With interest rates as low as they�ve been in 50-years, the Canadian real estate and mortgage business have been fueled to higher levels than we�ve seen in a long time. To expand their share of the increasing mortgage business, lenders are offering innovative mortgage products to make borrowing easier and more convenient than ever.

Renters have been moving into first time homes while existing home owners have been borrowing at ever increasing rates to move up to larger homes, finance home renovations, make capital purchases or fund investments. If you�re behind on your RRSPs and you don�t have the cash readily available, wouldn�t it be nice to borrow the funds at prime, or below prime without any hassles? Using the equity in your home, you can do just that.

The secured line of credit has become a very popular way for many to source funds beyond their conventional 1st mortgages. Some consumers are even getting a line of credit instead of a conventional 1st mortgage because it offers more flexibility. It�s fully open, so you can pay it down or draw as much as you like up to the maximum loan amount at any time. It also offers added affordability for some � for the first ten or fifteen years it�s interest payable only.

Also growing in popularity is the all in one mortgage which combines a conventional mortgage, a line of credit and one or more credit cards. With it, only one loan needs to be registered and as the principle gets paid down over time, your credit line can be increased up to the original loan amount. With this kind of a mortgage, you may never need to apply for another loan again.

Another popular feature offered by many lenders is the tiered mortgage, which allows you to structure your mortgage into multiple segments, or tiers. As an example, you could set 50% of the loan amount at the 5-year variable rate, 10% at the 1-year rate, 10% at the 2-year rate, and so on. This is a good way to take advantage of low short term rates, while at the same time reducing your exposure to later increases in rates.

In the last few years there�ve been a number of false starts -- economists predicted rates were going to go up and they still haven�t. After seeing this happen three or four times, psychologically, it becomes easy to be lulled into a sense that rates just won�t go up � careful. Remember that over the 3-year period between 1978 and 1981, the prime rate more than doubled, rising from 8.25% to 18.25%. It�s is unlikely that rates will go that high, but eventually the trend will reverse and when it does, it�s not impossible that rates could double inside the period of a few years. How many of us have seriously considered how our financial well being would be impacted if interest rates increased substantially over the next few years?

I�m not suggesting you run out and lock into a 10-year mortgage. It makes sense to take advantage of some of the great opportunities that low interest rates affords us. We may not have opportunities like this for well, another 50-years. Just don�t make the mistake of thinking rates will stay this low forever.

Having a strategy to manage your debt is no different than having a strategy to manage your investments. You would never invest 100% of your money in equities, even though you know that in the long run they are likely to yield the greatest results. You diversify, because you don�t want to be totally exposed to market volatility and because you never know what curves life might throw you. Having a strategy to service your debt when interest rates begin to rise that will get you through unexpected changes in life circumstances is just as important.

When choosing the right mortgage for you, there are a number of factors to consider including your risk tolerance, stage in life, employment status and foreseeable extraordinary expenses i.e. children�s education, new car, etc. When deciding on a mortgage, seek the advice of an independent mortgage professional to help you select the best mortgage for you.

David Grossman is a Mortgage Consultant with The Mortgage Centre. You can reach him at david_grossman@rogers.com. or phone (416)876-2031.