Almost everybody in Canada need a mortgage to buy their house; that mortgage when taken out from a bank , trust companies, insurance companies, credit unions, Mortgage investment corporations or a private lender to pay for a first home, is called a first mortgage. First mortgages are mostly paid in blended payment that is principal and interest agreed over particular rate and term.
A first mortgage is the primary lien on the property that secures the mortgage.When a person wants to buy a property, they need a mortgage to finance the purchase with a loan from a lender.The lender expects the mortgage to be repaid in installments which include a portion of the principal and interest payments. The lender will have a lien on the property since the loan is secured by the home. This mortgage taken out by a homebuyer to purchase the home is known as the first mortgage. The lender will not own the property through a first mortgage, lender just put a lien on the property. You are generally free to do with your property as you wish, however you cannot usually transfer or sell the property without the lender’s consent, unless you are paying off the mortgage. Because the first mortgage gets paid first in the event of default, you do not usually need the lender’s consent to obtain a second or third mortgage.
On the other hand, the second or third mortgage lender will want to be assured that you can continue making payments on both mortgages. The lender will need to be assured that you have sufficient equity in the property so that, in the event of a default and if secondary lender goes for power of sale or foreclosures their interests would be protected, that is there is enough equity to overcome legal fee, real estate commission etc.
Most mortgage lending institutions have penalties for breaking out of first mortgages before the date of maturity so, depending on the penalty, there may not be an advantage to doing so. You should speak with a mortgage Broker/Agent, who can advise you about penalty and help you to weigh your options. They can also help you verify that which option works best for you before you take steps towards deciding whether to break, Switch, renew, transfer your current first mortgage loan.
First Mortgages: Points to be considered
CREDIBILITY OF THE MORTGAGE LENDER
There is a lot of credible mortgage lenders sukh as banks, credit unions, insurance companies and a lot of trust companies who can lend as very competitive rate depending upon your qualification.
It is very important for potential borrowers to determine a mortgage amount that lets you both buy their home and repay the monthly payments to the mortgage lender easily. We will examine your income and debts. Based on your remaining outstanding debts, determine a mortgage loan amount that you can repay comfortably.
RATE OF INTEREST
Determine the needed loan amount, and then compare the first mortgage interest rates being offered by various mortgage lenders you’re considering. This way, you will be able to figure out the current market interest rate.
The amount of time it takes to pay back first mortgages can vary between homeowners. Paying back the loan over a short period of time will help to save money on the amount being paid on interest, however may risk stretching your monthly budget to the limit. In comparison, paying your first mortgage over a longer period of time will mean paying more interest, but allow for greater cash flow.
As the primary method of financing to complete your real estate purchase, it is very important to choose first mortgage lender wisely. Our Team at Approvalassist.ca specialize in assisting you to obtain the right first mortgage for you.