A mortgage is an ordinary loan from a large financial institution such as a Bank with the specific goal of buying a property. Such loan attracts interest either fixed or varying in rate. The property can be anything from a house to a piece of vacant land. The prospective buyer is referred to as the borrower and the financial institution as the lender. The institution will requisite a collateral from the borrower before loan application approval. Repayments consists of the principle amount plus interest. The lender will take the property in the form of repossession should borrower fail to repay mortgage.

The borrower can decide on either a fixed or variable interest rate. Interest payment can range from minimum six months to maximum 10 years and repayment of principle for maximum 35 years.

Mortgage pre-approval is a very important process for numerous reasons including to determine what the max loan amount is that you qualify for. This way, you can see what property is available in your loan range and to give both property buyers and sellers peace of mind.

They key to saving on your mortgage is to settle your loan as soon as you can. The interest payments are the greatest waste of money, especially if you have variable interest rate.

Financial institutions require insurance when mortgage is approved. The purpose of insurance is to ensure full settlement of the loan should specific events such as death, disability, loss of employment and critical illness occur.

It is very important to note that your purchase price and interest aren’t the only costs related to a home purchase. Inspection, appraisal, legal, survey certificate fees as well as tax adjustments, insurances and moving costs may also apply. Your monthly budget should be stretched to accommodate all these possible costs.

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