While the concept of a mortgage may seem relatively simple — involving a lender, borrower and collateral — the reality is that mortgages can in fact be complex entities with many facets and associated regulations. That’s why mortgage investment corporations (MICs) such as ASCEND MIC exist. We simply know the complexities, regulations and various other technicalities involved in the mortgages market.
Knowledge is power
However, this shouldn’t prevent investors — or anyone else, for that matter — to learn more about mortgages than just the basics. As the saying goes, knowledge is power. With respect to mortgages, knowledge empowers people to make confident financial decisions that lead to investment returns and growth.
One area of the mortgage market that more people should become familiar with is financing. More specifically, construction financing. There are various measures in place that allow people to build homes, or engage in other construction projects, that have mortgage lenders provide the financing. Let’s briefly look at these.
In general, a construction mortgage is a loan made to help finance a new construction project. Only interest payments are made during the construction period. Once the construction is complete, the balance due becomes the amount of the new mortgage.
A simplified process
The advantage of a construction mortgage is that it essentially combines two separate processes into one. There is the construction phase, and then there is the “normal” mortgage phase. Yet, there is only one approval process. Once the terms of the original mortgage are established, the rest essentially falls into place.
There are construction mortgages available for people that will hire a contractor to build a new home, or a contractor that will renovate an existing home. There are also construction mortgages available for people who want to be their own builder, so to speak.
The key to getting any of this mortgage construction financing is adhering to the various regulations that are in place. For example, if a contractor will be hired to build a new house, that contractor is subject to various standards and guidelines in order for the construction mortgage to be approved.
ASCEND MIC is a mortgage investment corporation that specializes in offering investors high returns at low risk in Canada’s mortgages market. Please contact us to learn more.