How Mortgage Payments Work

By Author: Allen Marsh
Total Articles: 6
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More and more Canadians are beginning to bounce back from the recent economic slide and are considering purchasing a home. For many individuals, this is going to be the first time they’ve approached the process of finding a house to call their own. Homes can range anywhere from $100,000 to $1,000,000 – so many first-time buyers need to consider mortgage options.
Negotiating a mortgage agreement can be a complicated task. For this reason Canadians often seek out the assistance of a mortgage agent – someone qualified to “shop around” with banks, credit unions and other institutions in order to find the best rates and conditions for a particular lifestyle. The certified mortgage broker we have at Mississauga Mortgage are an excellent choice for individuals who don’t have time to sort through the many options available to them. But we’re also a great choice for people who want to talk to someone in the know about mortgages in Mississauga without feeling the kind of pressure they might find at their bank.
Mortgage ...
... rates, terms, conditions and fees can be overwhelming, so we’re going to be posting a series of articles to help first-time buyers understand the mortgage process. For this very first post, we’ll go over the mortgage payment system and some preliminary terms you should become familiar with.
The Mortgage Payment
The first payment new home owners will need to commit to is the down payment. This is the amount that the purchaser puts towards the listed value of the home. Typically, most people will put up 20% of the purchase price, but there’s room to negotiate. The more you put towards the down payment, though, the less you’ll need to finance for the rest of the cost. This usually translates into lower monthly payments. Depending on your circumstance and the property you’re interested in, our mortgage brokers can advise you how much money you should put towards the down payment.
Once you’ve signed a mortgage agreement and paid your down payment, you’ll have to start making the monthly payment. The monthly payment is determined by the following costs:
• Principle: The total amount of money borrowed after the down payment.
• Interest: The amount you’re being charged for the loan – expressed as a percentage of the principle.
• Taxes: Money used to pay property taxes are usually held by a third-party who releases the funds when the taxes are due
• Insurance: Mortgages almost always require insurance to protect against losses from fire, theft, floods, etc.
Our mortgage agent will be happy to walk you through this process further. Check back here for our next post where we’ll discuss two different types of plans: The fixed-rate mortgage and the adjustable-rate mortgage.