Getting A Mortgage!

What is a Mortgage?

Understanding the basics of a Mortgague
 
Likely the largest debt you'll ever take on, a mortgage is a loan to finance the purchase of your home.
Your home is collateral for the loan, which is also a legal contract you sign to promise that you'll pay the debt, with interest and other costs, typically over 15 to 30 years.
If you don't pay the debt, the lender has the right to take back the property and sell it to cover the debt. To repay the debt, you make monthly installments or payments that typically include the principal, interest, taxes and insurance, together known as PITI.
Principal: The principal is simply the sum of money you borrowed to buy your home. Before the principal is financed you can give the lender a sum of cash called a down payment to reduce the amount of money that will be financed.
Interest: Usually expressed as a percentage called the interest rate, interest is what the lender charges you to use the money you borrowed. As well as the given rate, the lender could also charge you points, and additional loan costs. Each point is one percent of the financed amount and is financed along with the principal.
 
Principal and interest comprise the bulk of your monthly payments in a process called amortization, which reduces your debt over a fixed period of time. With amortization, your monthly payments are largely interest during the early years and principal later.
In addition to your principal and interest, your mortgage payment could include money that's deposited in an escrow or trust account to pay certain taxes and insurance.
Generally, if your down payment is less than 20 percent, your lender considers your loan riskier than those with larger down payments. To offset that risk, the lender sets up the escrow account to collect those additional expenses, which are rolled into your monthly mortgage payment.
Taxes: The taxes are property taxes your community levies based on a percentage of the value of your home. The tax is generally used to help finance the cost of running your community, say to build schools, roads, infrastructure and other needs. You must pay property taxes even if you don't need an escrow account and even after your Mortgage Is paid off

 

 

Time to buy your dream.

Home ownership is something many Canadians seek to achieve in their lifetime. It can be a rewarding experience that helps you achieve both personal and financial goals.

Getting pre-approved for a mortgage has real benefits when purchasing a home:

  • know exactly how much home you can afford and what your interest rate will be
  • be in a better position to make an offer to purchase as soon as you find the right home
  • there's no obligation or cost to you

If you already own your own home, you understand the value and security property ownership brings. Because your home is an investment you're paying off over time, you may have already accrued valuable equity in your property. Often, that equity can be leveraged to improve your home, improve your lifestyle, or help you realize other dreams you may have.

Flexible Mortgage Payment Options

When going through the mortgage selection process, payment options, such as payment frequency and amount of down payment required, will most likely be your top priority. Flexibility in your mortgage payment can help you to better budget your finances, plan for the future, and make you feel more comfortable overall with your home purchase.

Mortgage Payment Options

Mortgage payments can be made weekly, bi weekly, semi monthly and monthly.

What prepayment options are available?

A variety of mortgage prepayment options are available that suit the unique needs of different home buyers. Many mortgages allow you to elect to increase your original mortgage payment amount (principal and interest).

Depending on the mortgage product selected, there are various prepayment privileges that are available. For example: A variety of closed mortgages allow prepayment privileges as a percentage (%) of the original mortgage amount to be paid each year, without paying a prepayment charge.

Open Mortgage

A mortgage that may be prepaid, in part or in full, during the term without paying a prepayment charge.

Mortgage Principal, Interest & Other Amounts Payable

When you take out a mortgage on a home, you'll generally have a regular payment automatically deducted from your account that covers all amounts you're required to pay. However your mortgage payment may consist of several components, such as principal and interest and property taxes. Let's take them one at a time.

Mortgage Principal

The mortgage principal is the amount you originally borrowed, less any payments made towards it. This does not include interest, which is calculated on the remaining principal balance and paid with your regular payments.

Mortgage Interest

Generally, mortgage interest comprises a much larger percentage of your regular mortgage payment at the beginning of the life of the mortgage than toward the end.

Property Taxes

The property taxes that are based on the official assessment of the market value of your property may be part of your regular mortgage payment. These taxes are ordinarily paid in installments. These payments can be held by the lender until they are due as the respective city/municipality will send the bills directly to your lender.

Whether you're considering your first home purchase, leveraging your home equity, buying another home, refinancing your current mortgage, or perhaps wanting to pay down your mortgage faster, The Mortgage Centre is here to help you realize your dreams.

 

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Newton Simms

Newton Simms

Sales Representative
CENTURY 21 Leading Edge Realty Inc., Brokerage*
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