Mortgages Are Actually A Good Thing

Mortgages get a bad rap. Many people don’t have a strong familiarity with exactly what it is and the potential it can provide. It’s the lessened percentage of the entire payment of the property paid over the course of many years. In Ontario, it’s generally 10–20% initial down payment, followed by a decided percentage paid out over time. The vast majority of people are unable to pay off their property right away as it’s always an exceptionally large sum of money. The amortization period is the time in which you pay off the loan as well as the interest. This is paid off usually between 15–25 years, depending on your funds and comfort level, as interest does accumulate each time you have to pay. The interest is an unattractive aspect of this process, and is why most intend to pay it off as quickly as possible.

People have this impression that having a mortgage is a negative thing. It’s very design is to assist anybody with affording a place to live. It’s a tool of access to make people financially stable in the future.

Let’s say you have all the funds to buy your property completely. It seems logical to have no mortgage and not worry about the accumulating cost of interest. This appears to be a stressful decision, but if you’re looking to develop a portfolio it is a wiser course of action. This is something that you can leverage for future success in real estate.

Unlike other types of investments (like stocks or bonds), it is the only kind that lets you jump in with a fraction of the full payment (leverage). When you have a tenant, they are paying the monthly mortgage payments. This can you provide you with so much leverage in developing your portfolio

Buying property is an investment, if you can afford to pay off the entirety of the home you can definitely utilize those funds to expand your wealth. Let’s say you’re able to outright purchasing the property for $300,000. Instead, you can get three properties with a down payment of $100,000 each. You went from no mortgages to three. This is definitely a time investment, but now you have three eventual sources of income.

Comfort is definitely what people are seeking when they want to eliminate the mortgage. It’s attractive to not have to pay off any interest, but you have options to gain potentially so much more in passive income. It depends on if you’re goal is to have more money in your pocket on a monthly basis or to create wealth long term.