 |
|
A mortgage is basically money borrowed to finance the purchase of a home, property or building wherein the mortgager agrees to repay the principal amount plus interest and the mortgagee holds a lien on the asset. Further, mortgages come from many sources including the banks, other financial institutes, mortgage companies, private lenders and family. And mortgages agreements are as varied as there are people. In some instances, a mortgage might be a very small amount of the total value of the asset while others may be one hundred percent of the value of the property. Nowadays mortgages can be set up for monthly, bi-weekly, or weekly repayment schedules. Typically, the more often the payments are made, the faster the mortgage is paid off. But it does depend on the interest rate and amortization period. As a general rule, the banks offer the best interest rates because the rate is tied to the prime rate set by the Bank of Canada or the Federal Reserve. Individuals with the very best credit and a large down payment will receive the best interest rates. Although banks are extremely competitive, it does not follow that all banks offer the same interest rate. In addition, because the banks are competitive, they will offer incentives and bonuses to attract new business. Specials are used to entice mortgagers to switch lenders. But a word of caution before switching mortgages; regardless of whether changing financial institutes or changing types of mortgages within the same institute, it is important to research your options. Calculating the actual dollar amounts is key to whether the new mortgage is advisable. At the outset the new mortgage may sound better but when the interest, amortization period, any penalties, fees or extras are added all together, it may not be what it appeared. Remember that institutes are in business to make money and offering different packages is just a form of marketing. Mortgages can also be obtained to make renovations on the mortgaged home, consolidate debt, pay for another property such as a cottage or vacation home, or it can be used to fund any large purchase. As long as there is equity in the home, usually there is someone willing to advance monies against the house. In fact, owning a home is actually the easiest way to get credit because property is the best collateral. Property does not normally depreciate like cars for instance. So when individuals find themselves in need of cash, a mortgage is usually available. Our friends over at BMC Car Insurance and Get Home Insurance have much more financial information for you! |
|
home | What steps to take when you can't pay? | The biggest lies in the mortgages | Improve credit scores overnight | Why renters remain poor |