What is Canadian Mortgage?

Food, clothing and shelter have been the three basic needs to which every person needs access. In order to satisfy these needs, a person needs to earn and is assisted by governments in his venture to secure those three objectives. The banks are appointed by the governments in order to serve the interests of the common man. The banks perform these duties by providing them with loans, and mortgages.

Mortgages are a method by which a person or a group of persons obtain the financial help from a bank against a property. This is usually a complex process. The banks in Canada have been particularly interested in mortgage loans. The people pledge a property of theirs to the bank against which a loan is given. The bank loans a particular amount which corresponds to the repayment capacity of the person and also the value of the property which has been pledged. The banks consider various factors while giving mortgages.

Most of the rules for Canadian mortgages vary from bank to bank. Though most banks in Canada are very liberal in their approach, still sometimes it becomes a really tough task to obtain a mortgaged loan from them. Mostly the banks look for the property you are willing to pledge in return for the loan. The amount loaned to you will primarily depend upon the value of the property.

The next basic criteria is that you need to choose your term of payment i.e. the time period of the contract for a particular interest rate e.g.: for 1 year, 2 years, 3 years, 5 years etc. There is an evident advantage in Canadian mortgages than their US counterparts. It is that the Canadian mortgages are calculated in a compound period semi annually. All these options also depend heavily upon your repayment capacity.

If after availing the loans the person is unable to repay the loans the banks will issue notices to the person and if even after that a response is not obtained you run a heavy risk. The property which you have pledged will be taken up by the bank and sold off and the amount which you need to lend to them will be taken from the sale. Sounds pretty rude eh? Well this is what will happen if are a regular defaulter of your loan. So watch out.

Canadian Mortgages:
Canadian mortgages have not been as liberal as their United States counter parts, particularly in the segment of loans above 5 years of term. There is a bit of reservation about the degree of expansion of the financial sector in Canada and hence there is a huge scope of innovation in financial and banking practices. The governments five year cap limit and pre payment penalty need to be revised for a better financial show down. This might improve the amounts of Canadian mortgages that can be achieved.

Have a big dream of buying a house or anything for that matter the time is all good so just rush up and get it done! What is a Canadian Mortgage?

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