Did you know that 38% of Canadian families had a mortgage loan in 2016? The median value of this mortgage was $190,000. It is worth noting that younger people held higher mortgages than elderly individuals did. More specifically, the median value for adults below 34 years doubled the one held by those who were above 65 years. That means the rate of mortgage uptake is increasing, especially among young adults. However, do they know what to do with it? Here are the top 5 ways to use a mortgage loan.
Buy A Home
Canada is one of the top economies worldwide. However, that does not mean that Canadians have perfect lives. For example, Canada is experiencing a housing crisis. Did you know that 40% of residential tenants spend over 30%of their income on rent and utilities? Did you also know that 20% of them spent more than half their income on the same? Buying a home gets you out of this quagmire. A mortgage loan can help you do that.
Refinance Your Home
Borrowing against your home is possible if you have a mortgage loan. In this case, you can receive more than three-quarters of the value of your home. However, this value does not include the unpaid balance of the mortgage loan. The interest rate on it can be variable or permanent, depending on the agreement you have with your financier. Usually, the financier will deposit the money into your bank account as a lump sum payment. Administrative fees are likely to apply.
Borrow Prepaid Amounts
Another possible way of using your mortgage loan is borrowing the amount that you had prepaid. People usually prepay because they want to clear their mortgage as soon as possible. They also do it when they get a considerable amount of unexpected income. However, situations may arise when these prepaid amounts may be more useful than completing the mortgage at a faster rate than expected. In these situations, borrowing the entire amount you had paid ahead of time is possible.
Home Equity Line Of Credit
This line of credit resembles most borrowing terms offered by banks. You can borrow two-thirds to slightly about three-quarters of your home’s value. The interest will be variable in most cases. That means it will change as the markets change. The collateral against this loan is your home. The financier who offered you the mortgage loan is most likely your creditor for this line of credit, as well. Administrative fees such as appraisals and legal costs may apply, but they will be negligible compared to the borrowed amount.
Taking A Second Mortgage
Many people do not realize it, but they can use their current mortgage loan to get a second one. What happens is that you can borrow as much as 80% of the value of your present home. However, this value excludes the balance you still owe for the first mortgage. Then you can secure a new one with the newly acquired funds. That means you would be paying off your first and second mortgage concurrently. It also means that you would have secured two homes using your initial mortgage loan. Click on https://altrua.ca/ to learn more about mortgages.