What is a mortgage? For a first time home buyer there are so many things to consider. But first and foremost you need to understand exactly what it is you’re signing up for when you take out a mortgage.
Basically a mortgage is a loan secured against property. In exchange for the money that the prospective home buyer uses to buy a home the money lender is repaid that money with interest and also has the legal right of claim on the property if the borrower doesn’t continue providing the agreed to payments.
Most often mortgage are repaid through monthly, bi-weekly or weekly payments. If you’re wondering what is a mortgage payment composed of, it’s at minimum a portion of the principle plus interest. A mortgage payment could also include amounts for property taxes or insurance on the home or a life insurance policy for the borrower with the beneficiary being the money lender. In that way an accident ensures that the money lender is repaid their principle without having to pursue a family which is grieving the loss of a loved one.
The interest charged on a mortgage payment varies depending on the mortgage term, interest rates at the time of the mortgage being signed or on the date of payment for variable rate mortgages. Other factors affecting the interest rate include the credit history of the applicant, employment history, income and source of income.
First & Second Mortgages is happy to discuss with you any of your first or second mortgage questions. We can help clear up any confusion you have around the question of “what is a mortgage”, or any other mortgage related concerns. Use the contact form to the right or call us today toll free at 1-866-405-1228, from Calgary at (403) 543-0927 or from Edmonton at (780) 428-1222 for a free consultation.