Toronto Interest Only Mortgage
“A Toronto Interest Only Mortgage Is Available For Both Residential And Commercial Property Requirements”
A Toronto interest only mortgage is primarily a private mortgage that can be placed in first or second or even third position against residential or commercial real estate.
A private mortgage typically has interest only payments so even though the interest rate is higher, their may not be any negative impact on your cash flow compared to a bank or institutional mortgage at a lower rate as there is no principal repayment factored in with an interest only mortgage.
The main reason for the interest only feature is for private lenders to increase their overall rate of return during the mortgage period. With a conventional mortgage, the amortization of the loan over time reduces the amount of interest that can be charged each and every month. With a Toronto interest only mortgage, the principal amount stays the same through out the term of the mortgage so the amount of interest that can be charged each month stays at the same amount.
Most private mortgages either in first or second mortgage position are for an interest and loan term of one year. At the end of the loan term, the borrower needs to repay the loan or pay a renewal fee if the lender provides this option. The renewal fees and lender fees on mortgage closing are the other key elements in the cost of capital related to private mortgage financing. In order to maximize their return on capital, the lenders want a short mortgage period with interest only payments so that the funds can be reused over and over again and generate additional lender fees when new mortgages are issued.
Toronto interest only mortgages are most common with debt consolidation situations where the borrower has bad or poor credit and needs to access the equity in real estate they own to pay down other more expensive debts like credit card balances. And while interest only mortgages can range from 6% to 14%, they can still be considerably cheaper in many cases to the unsecured debt you may be carrying.
If you’re interested in learning more about your Toronto interest only mortgage options, I suggest that you give me a call so I can quickly assess your requirements and provide private mortgage financing solutions for your immediate consideration.
About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel