Mortgages and secured loans – basic information

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A mortgage refers to a loan taken with the purpose of buying a house or property that gets paid back in monthly instalments. If you get a mortgage, you are expected to cover it over a long period of time up to twenty five or even thirty years. Signing a mortgage agreement means that you offer the property or house as security. Irrespective of the reason, if you cannot pay back the mortgage until the end, you will need to give up on your property and the bank or the financial institution lending you the money will be allowed to sell it in order to recuperate their money. However, seizing the property will not be possible without a court procedure, not to mention that you can ask for help when you can no longer keep up with the repayments. Mortgages are regulated, but lenders can establish their own terms and eligibility criteria. If you wish to ensure that an offer is advantageous and meets your specific needs, you need to consult an Ottawa mortgage broker. A specialist adviser can also help you when you encounter mortgage problems.

There are two principal types of mortgage loans: repayment and interest only. If you choose a repayment mortgage, your monthly repayment will go towards the capital and interest. In other words, you will cover the amount you borrowed and the interest by the end of the mortgage. On the other hand, when you get an interest only mortgage, all your monthly instalments will cover only the interest and you will need to pay the capital at the end of the mortgage in a lump. This type of loan is advantageous only if you have savings or an insurance policy such as endowments and pensions with which you can cover the entire borrowed sum.

 

Secured loans are additional loans and they are generally called second mortgages. The house or property is used as security for the second charge and the lender will have the right to repossess it, if you cannot pay back the instalments. The same rules apply like in the first case, but you are more likely to be charged, if you do not have the means to pay the money back, so you will need to pay extraordinary attention when choosing the lender and signing the contract. Generally, second mortgages are taken for home improvements.

 

If you are planning to get a loan, you will need to learn as much as possible about them beforehand. Consulting a specialist adviser is a great idea, because brokers can help you understand hardwired terminology and find a more advantageous deal taking into consideration your specific financial situation. You will also need to keep in mind that lenders are not allowed and will not risk giving you a mortgage that you cannot afford. Bad credit history and low income can easily become impediments in your struggle for a mortgage loan, so make sure that you keep your credit history good.