Understanding Mortgage Finance

In simple terms, mortgage financing is the process of providing finance to individuals and business entities, to secure properties, and the finance is repaid through timely and consecutive monthly instalments.

To understand the mortgage finance process, you must first try to understand the basic idea behind mortgages.

Mortgage – Definition

It is a legal agreement that conveys the conditional right of ownership of an asset or property by its owner (the mortgagor) to a lender (the mortgagee) as security for a loan with the condition that the conveyance of the title becomes void upon the repayment of the debt.

Are Mortgages Legally Enforceable?

Yes, they are. In order to be legally enforceable, the mortgage must be for a defined period, and the mortgagor must have the right of redemption on payment of the debt or on before the end of that term.

Why is Mortgage Finance Common?

Here is a list of why it is the most common type of debt instruments:

>> They have a lower rate of interest (because the loan is secured);

>> They are straight forward and have standard procedures; and

>> They have a reasonably long repayment period.

What is a Security Document?

The document by which the agreement is effected is called a “Mortgage Bill of Sale” or simply just a “mortgage.”

What are the Common Mortgage Finance Types?

Real Estate Mortgage – Virtually any legally owned property can be mortgaged, although real property (land and buildings) are the most common.

Chattel Mortgage – When personal property (appliances, cars, jewellery, etc.) is mortgaged, it is called a chattel mortgage.

Second Mortgage – There are situations where it is possible to obtain finance when there is already an existing mortgage associated with the property. It is not unusual for real estate laws to require that the holder of the first mortgage agree to the creation of a second mortgage.

Who has the Right of Possession?

For real property, vehicles, and equipment, etc., the right of possession and use of the mortgaged item normally remains with the mortgagor. But, the mortgagee has the right to take possession at any time to protect his/her security interest.

What Happens in the Event of a Default?

In the event of a default, the mortgagee can:

>> Appoint a receiver to manage the property (if it is a business property), or

>> Obtain a foreclosure for a court to take possession and sell the property.

Glossary of Common Terms Used

Mortgagor – the borrower of funds

Mortgagee – the lender/credit provider of funds (e.g. a bank or credit union, etc.)

First Mortgage – a mortgage that has priority over all mortgages and liens except those imposed by law

Second Mortgage – a mortgage that is subordinate to a first mortgage

So, now that you have read this information guide, you should have a good basic understanding of mortgage finance. It will help you in obtaining the right finance for your real-estate property.

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How to Make Your Financial Planner Work for You

Financial planning is an important part of any individual or business success. Staying in complete control of your money, knowing your incoming and outgoing and being able to forecast for the future can provide you and your family with peace of mind moving forward.

A financial planner enables you to set realistic financial goals. These goals must be realistic in terms of income and expenditure. It can also help you determine timeframes in which to reach the goals, helping you manage your cash flow effectively and stay in control at all times.

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Over time you will learn how this process can help you re-evaluate your finances. It’s important to stay up to date, checking back regularly to see how you are doing in terms of the goals and timeframes you have set yourself along with any forecasts you may have worked out, helping you plan better for the future.

With this type of planning you will be able to spend in line with your income, reducing the risk of overspending and finding yourself in debt. While debt is very easy to accumulate, it’s much harder to get out of. This means that knowing what you have available each month can not only help you with your monthly expenditure budget, but can also help you with investment decisions and so much more.

As your plan continues to grow month to month, you will soon learn where you are going wrong and have the opportunity to rectify errors you are making in your financial future. You are able to maximize your money, an important element for both businesses and private individuals.

When struggling with your money, it may be worthwhile hiring the services of a professional and experienced financial planner who can sit down with you working out your income and expenditure and showing you ways to maximize your money, reduce your debts and put you on the right track moving forward.

When hiring a financial planner, there are some important factors you will want to take into consideration. If you have been trying to manage your income and expenditure and still find that you can’t make ends meet, then these professionals may be the solution you are looking for.

Financial planners have the knowledge and experience to help you increase your money by lowering your expenditure through various methods of tried and tested solutions. The good news is that they can provide you with ways to relieve your debt quicker, giving you more cash flow monthly.

They are able to assist you in forecasting your financial future, setting realistic goals which are easily achievable and that make a different to your situation. Ensure that any financial planner you choose to use has a good reputation and years of knowledge and experience. They should be willing to work alongside you, showing you where you are going wrong and helping you achieve financial success.