If you are a first time home buyer or New to Canada, getting a mortgage is a decision not to be taken lightly; a mortgage is an big financial decision. For most people living in Canada, it is not possible to own a home without a mortgage as very few home buyers have thousands of dollars ready to put down as one lump sum. Fortunately, there are hundreds of lenders in Canada ready to help you acquire that dream home or remortgage. With a mortgage, you repay part of the capital plus interest every month and at the end of the mortgage term the home will be all yours.
There are many pros and cons to getting a mortgage and today, we list some of these pros and cons.
Pros of getting a mortgage
- A mortgage makes the process of owning a home affordable
For most people, buying a house is the biggest purchase you’ll ever make. A mortgage comes in handy to make the purchase affordable. With a mortgage, you are able to spread the payments towards the house over many years.
Since the payments towards the home are spread over years, the periodic payments are manageable and affordable.
- A mortgage is the most cost effective way of borrowing
Because a mortgage is secured against your property, interest rates tend to be lower than other forms of borrowing. With a mortgage, the lender has the security that if you are unable to repay the mortgage they can sell the property to pay back the mortgage.
Cons of a mortgage
Although mortgages are the most popular form of debt when you want to buy a house in Ontario, they do come with some shortcomings.
The following are some disadvantages of getting a mortgage.
- The fees
In addition to mortgage interests, you are expected to pay other mortgage fees when getting a mortgage. These fees can be hefty.
Some of the fees associated with mortgages are set up costs, legal fees, insurance costs and penalties if you decided to renegotiate the mortgage.
Consider talking to a mortgage broker at Richmond Lending for more information on mortgage-associated fees.
- You pay back much more than you borrowed
Like any other loan, mortgage loans come with interest. At the end of the term, you’ll have paid the original loan amount plus accumulated interests.
This can only be avoided if you have enough money to put down as one lump sum when buying a home.
Contact the mortgage professionals at Richmond Lending for refinancing an existing mortgage, buying a new home or commercial property, or making available ready cash for emergencies – whatever be your need – we have an answer. The following are the advantages and disadvantages of taking out a mortgage in Ontario. For more benefits and shortcomings of getting a mortgage, contact an Ontario mortgage broker.