Mortgage Matters

I have a relative who bought a house in downtown Toronto and paid the entire purchase price in cash. I still can’t quite grasp how he did it. (No, he was not wealthy. He worked in a small retail store. No, it wasn’t in the 1930s either.) For most of the rest of us, a mortgage is an essential for home ownership. Here’s some interesting articles I’ve read recently about mortgage matters.

While personally I disagree strongly with the statement “With the low interest rates available today there is often no benefit in continuing to rent while trying to save 20% to eliminate the CMHC fee.” I found the overview of mortgage types and terms very clear in Boomer’s article: “How To Pick The Perfect Mortgage.”

Collateral vs Conventional Mortgages
One thing that needs an article of its own to explain, however, is the difference between conventional and collateral mortgages. My parents and I had a conventional so I didn’t even know collaterals existed. I think some people are getting themselves into a collateral mortgage without really understanding how it differs from the old kind. In “Decoding Mortgages”  Marketplace tries to clarify the differences, and the disadvantages of collateral mortgages.

Mark Weisleder at The Star also discusses this topic in “Beware the pitfalls of collateral mortgages.” He makes the interesting statement “Some lenders are offering collateral mortgages in a “negative option billing” manner. Unless you are informed enough to say you want a conventional mortgage, you will be asked to sign documents for a collateral mortgage.” Buyer beware indeed!

Home Hunting
Krystal Yee reminds us that we should think about what we really want and need from a home before buying in How I Chose My First Home.Sometimes picking the right home reduces the cost and the mortgage required.

Paying Off the Mortgage
This is a popular topic among finance writers.

The Passive Income Earner summarizes many of the best methods in Mortgage Strategies. He does mention one high risk possibility called the Smith Manoeuvre. May I cordially suggest you don’t try that one? Thank you.

Mortgage Vs HELOC
Jane discusses her challenge in choosing between a Mortgage and a Home Equity Line of Credit, raising important concerns about both in “Maybe I Should Get a Mortgage.”

Related Reading

Join In
Do you have a mortgage? Conventional or Collateral or do you know? Any tips or tricks to share with the rest of us? Please share your experiences with a comment.

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