What is a Lien?
Did You Know Majority Home Owners Do Not Know how are their First Mortgage is registered on Title of Their own property.
This article is an attempts to clarify the fundamentals of registered first mortgages caveat and their impacts on first time home buyers and existing home owners in Ontario.
Generally speaking, The safest lender is the lender who has first mortgages lien on the property. Due to relative safety of the lenders money they charge lower interest rates on mortgage. Major banks always give out first mortgages hence they always register first mortgages liens.
Since there is higher risk of losing money on the second mortgage and and third mortgages respectively, lenders charge higher mortgage interest rates and register second and third mortgages liens against the property.
There are a lot more lenders beside major 6 banks, who compete for your first mortgage business. They all offer very similar mortgage rates to home buyers however greatly differ on the terms and conditions associated with a particular mortgage interest rates.
How does it impact lenders?
The later the mortgages caveat is registered the bigger the chance of losing principal in case of payment default.
This means the lender who has registered fist mortgages lien on real estate they got the first right to the proceeds from the sale of the property irrespective of the amount registered.
Surprisingly around 80% of home owners are not aware of type of mortgages liens lenders are registering against the title of their their properties.
What are 2 Types of first mortgages liens?
- Standard Mortgages Lien: This is the most liberating lien on a real estate. Standard liens allow you to pay off and change lenders at relative ease. The exact amount of loan amount is registered on the title
- Collateral Mortgages Liens: This lien on other hand is restrictive. It does not allow transfers. Some lenders offering first mortgages at rock bottom mortgage rates and register collateral liens. Via this type of lien lender can registers up to 125% of the value of a real estate.
In case of arrears or late payments banks can raise the mortgage rates. On the other hand, It enables you to access extra cash without incuring any legal cost.
In case you like to check out your first mortgages monthly payments with 0.99% or any other mortgage rate, you should download our premium mortgage calculator app for your smartphones. Realtors love it, so will you!
We personally believe, mortgages are the most critical factor of financial planning, retirement planning and last but not least debt free living in Ontario Canada. If you are looking for a mortgage broker for your home or next investment property in Toronto, Mississauga, Brampton and surrounding area book Your Free Strategy Session to discuss and/or design a customized mortgage solution above and beyond just lowest mortgage rates.
To discuss more about your mortgage liens or other real estate matter, know list of questions to ask a lawyer before hiring them