What a mortgage can do for you…

First off, let’s define the meaning of the word mortgage. A mortgage is simply an agreement between a financial institution and a borrower where the financial institution  lends money to the borrower against the value of  a specified property which is used as collateral/security for the loan. You can apply for mortgage financing for any of the following:

Buying a Home/ Buying Landmortgage_house

Some people choose the option of buying a home, or they may buy land in hopes of building on it at a later time. Here at First Citizens, first time home owners can benefit from significant cost savings to make home ownership affordable.

Building a home

If you already own land or you are thinking of buying land with the intention to build your own home, you will require Bridging Finance.

Bridging Finance is a special type of financing, ensuring that funds are made available in a timely manner during the construction phase. Once the dwelling has been completed, you will need to submit a completion certificate along with an updated valuation report so that the bridging financing can be converted to a long term mortgage loan.

How does this work?

Funds are released in draw downs, based on site visits conducted by the bank officer and the submission of quantity surveyors’ reports which highlight the progress of construction.

Interest is charged by the Bank only on the funds actually utilized during construction. Principal repayment is not required during the bridging phase.

The building must be constructed in accordance with approved building plans.

Home equity mortgage

If you already own your home, it is important to note that you can take advantage of the equity in your property to finance another goal.

This equity can be accessed to fund renovations, consolidate debts, expand your investment portfolio, purchase another property, go on vacation, pay off medical bills or finance tertiary expenses for your children.

Here’s an example:

If the present market value of your property is $1,000,000 and the present balance on the mortgage is $300,000 then the equity in the property can be calculated as follows:

Market Value – $1 million

Bank’s maximum lending value – 75% of $1,000,000 = $750,000

First Mortgage balance – $300,000

Then equity in the property – $750,000 – $300,000 = $450,000

Switch mortgage for cost savings:

A switch mortgage is a legal transfer of the mortgage on a property from one financial institution to another. If you currently have a mortgage at another financial institution, you can “switch” your mortgage to benefit from significant savings as most times the switch mortgage is done at a lower rate.

As you can see in the examples above, there are many things you can get accomplished with a mortgage. You can also take a mortgage for business purposes which we would explore in an upcoming post. If you are interested in a First Citizens mortgage you can always contact our experts at: http://www.mymortgagefirst.com/mortgage/mortgage-experts.html or visit any one of our conveniently located branches.

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