In the 1930s to the 1940s, buying a house was a much bigger commitment than today in comparison. This is because you were expected to make a down payment of at least fifty percent of the price of the house. This was a very tough time for any homeowner, but these days buying a house is much easier due to the availability of mortgages. Mortgages have made almost everybody capable of owning a home. This is because the terms of buying a house have immensely changed over the years. Here are the benefits you can get when you take up a mortgage:
This is one of the chief advantages that having a mortgage brings about. For example, if you buy a house at $500,000, and pay $100,000 as your down payment, your loan is relatively $400,000. The leverage part comes in here, since a house is an asset, which appreciates with time if it is well maintained. If the house increases in value in the next few years and you decide to sell it, you will have made a marginally higher profit than if you would have paid the amount as a lump sum. This leverage allows you to make profits or income off the bank’s mortgage. It basically maximizes the effective appreciate rate.
Sense of security
There is a certain sense of security that accompanies paying off a mortgage and there is also that feeling of security that crops up when you know you have cash in the bank that will be used to pay up this loan instead of you paying the whole amount at once. This is usually evident due to the fact that the bank is responsible for protecting you and compensating you if disaster strikes. If you are hit by an earthquake and you do not have the necessary insurance you are going to languish in your losses.
With a mortgage, the bank bears the lion share of all the possible risks that your home is prone to. This translates to the fact that if you are hit by a catastrophe, you will walk away with your cash in the bank. Life is fraught with a lot of hard times, from illnesses to disasters and even the most rampant issue divorce. You will be in a more compromising situation if you experience one of these predicaments if you had not undertaken a mortgage.
Initiates home ownership
This is the reason anyone takes up a mortgage. A mortgage gives you the capability of actually purchasing a house, without paying the full amount. You make a deposit or rather a down payment, which is usually just a small fraction of the actual purchase price. Using a mortgage to buy a home frees up your available revenue stream. You can undertake other projects such as remodeling with the extra cash, as you gradually repay this particular loan.
Credit rating improvement
Mortgage loans in good standing in anyone’s credit report, improves their credit score. A credit score determines the interest rate that you incur in any of your credit products. When you have a history of actually paying your mortgages on time, your credit score is greatly improved. This will convince other creditors or the creditors you initially approached to continue offering you their credit. This is because they are assured of payment. So having a mortgage is more of a win-win situation if you have allocated the right amount of money for its payment and all its other proceedings.
Accessible cash flow
For a mortgage whose purpose is not purchasing a home, for example a home equity loan, this increases the chances for you to access more funds. This acts as an emergency kitty for when you require funds urgently. These proceeds can be used for renovations and house repair or even medical bills. However you want to use the money is up to you. The cash is usually available at the bank, so you are assured of a reliable source of money in case something happens that you had not planned for or any impromptu situation that you may experience.
A mortgage is the most cost effective ways you can borrow money. This is because it is secured against your asset. Interests tend to be minimal than other types of borrowing. For mortgages, the lender has the security that if you are not in a financial situation to repay the money you owe, you can sell the property to pay the mortgage. This is a foolproof way of borrowing money so that you do not have to worry about laden in even more debts if you cannot pay your mortgage.
With the information that you now have concerning mortgages, you can contact us if you want to know more about the type of Montreal mortgages suitable for you. Our rates are highly reasonable and our customers always come first!