It is a common practice in Canada to attract third-party funds, i.e. various types of loans a when buying real estate. First of all, the buyer often simply can’t afford to pay the entire amount for the acquired property, and he is forced to seek funds. Besides, prices on real estate in big cities like Toronto, Montreal or Vancouver are rather high. Secondly, it is not always advantageous to buy a house or apartment for the full cost, even if you have such funds. Very often, it is wiser to invest available funds in real estate purchasing for premises leasing (especially when property prices are rising), or invest in areas that generate significant profits.
Today it is not a problem to get a loan to buy real estate. The main question is to find a bank offering the best rates on such loans. Almost all banks and financial institutions in Canada and in Vancouver in particular, lend money to buy property secured by purchased real estate. This type of loan is called mortgage loan. By the way, system of mortgage lending is well-developed in Canada that is people can afford to buy their own homes even in big cities like Vancouver, where prices on real estate are higher than average in the country. So if you want to take such a credit in Vancouver you should search for better mortgage rates as different institutions offer different rates and different loan terms.
Speaking in legal terms mortgage is a mechanism, which secures borrower’s obligations, primarily unpaid debts with property. In ancient times, this mechanism allowed to draw as collateral for this loan, primarily land sites and immovable property standing on this land, as well as ships, forests, livestock, etc. Currently, such a mechanism is used in many countries for the purchase of real estate. The meaning of this mechanism is that in the case of loan debts non-payment, pledged real estate property is sold to cover all the debts.
When concluding an agreement with a financial institution to issue you a mortgage you have an opportunity to choose various loan schemes, which depend on the following parameters as interest rate, payment period, down payment amount and so on. Typically, financial institutions have their own set of interest rates, which are determined by market conditions and the period of concluded contract. The shorter the term of the contract is, the lower interest rate usually is, and vice versa – the longer the duration of contract is, the higher the interest rate is. Although almost all financial institutions in Vancouver usually adhere to established rates, nevertheless you can negotiate for more favorable terms and the best rates.
There are several types of interest rate, fixed rate mortgage (FRM) or adjustable rate mortgage (ARM), also called a variable. In the case of fixed interest rate, it is written in the contract and does not change throughout the contract, regardless of current situation on the market and what kind of interest rate financial institution that issued you a loan offers at the moment. In the case of adjustable interest rate, it is adjusted in accordance with interest rate changes offered by financial institution at the current moment. That is, if the situation has changed and the financial institution raises interest rate on your loan, you automatically will be charged to pay at a higher rate than in the beginning. Conversely, if the rate goes down, then you will have to pay less. As you see, interest rates vary greatly and your task is to find the best ones.
Boris Napkin for http://www.elearning-tour.com with the assistance from jessijohnson.ca offering best mortgage rates in Vancouver.