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Thinking about getting a new home in Canada?

Date Added: December 27, 2008 07:16:57 AM

There are several things that you have to know about Canadian mortgages before you get into them. First of all, you should understand what a mortgage is. Secondly, you should understand the rules and regulations for one. Lastly, you should understand what will happen to you if you cannot pay it back.

When it comes to Canadian mortgages, the first thing that you have to understand is what they are. Canadian mortgages are what allow you to buy a home. No one has enough money laying around to purchase a home with cash – well, most people don't, anyway. And lots of people don’t really have the right kind of collateral to allow them to borrow the type of money that it would take to buy a home.  Yet, lots of people are home owners, largely due to mortgages.

A mortgage is a bank loan for a home. What happen is that a person will meet with a financial advisor and the bank. At these meetings, a person will give the financial people a summary of what type of money they have coming in. They will often give proof of how much money they are making each month, as well as proof of what kinds of other loans or debts they might have. This all helps the bank decide on what type of mortgage they can get, and how much money they are eligible for. During this meeting, the bank will help a person see how much mortgage money they can get. Then, a person can take out this mortgage, and use the money to buy a home.

What happens then is that the person gets the money from the mortgage, and immediately uses it to buy the house. The house then actually belongs to the person that has purchased it. However, because the person owes the bank money for the house, the house itself is actually the collateral for the loan that was used to purchase it. Therefore, the person will have to pay back the bank for this loan. Usually, the bank sets a monthly payment that the person can pay back. Often, this is the fee that is decided upon in the early stages of getting a mortgage for a home.

The other important thing to remember is what happens to you if you don’t make your house payments on time. A lot of people mistakenly think that a house is much too big to repossess, or that the bank will be willing to forgive a few missed payments. However, it is important to remember that once you sign the mortgage documents, and close on the home, you actually own this home. You have to be sure that you are aware of this, because this is a very serious situation and serious loan that you have taken on. You absolutely must make each of your payments on time when you have a Canadian mortgage. Otherwise, the bank will be able to take your home back,  and you will not only have to foreclose on your home and move out – you will also have a negative mark on your credit for a very long time.

Because the idea of a Canadian mortgage can be very confusing, and also because it is a very important part of buying a home for most people, you want to be sure that you are talking things through with the people in your life. You should make sure that your spouse and any other family members are aware of what you are doing and are willing to make the sacrifices it might take to make your payments on time. Then, you should sit down with a financial advisor who can tell you exactly what you are going to be able to expect.  You should make sure that you are giving them plenty of time to discuss your various mortgage options with you, and that you understand them completely.

These are all very important factors of your ability to get a Canadian mortgage. Most importantly, you want to be extra sure that you understand what the process is, what you will be doing, and how you can accomplish it. This is also very important for you when it comes to getting the mortgage – and therefore the house – of your dreams.