While most of us, would like to finance, while we are buying a new home for us, some of us do have the cash to make a cash deal or a transaction, and the source of the cash may be many things. For example, the property that you are buying is relatively inexpensive, and you happen to have the cash from savings, or you might have also sold you old house, or you might have a lot of liquid assets, which you can sell at any point of time. Having cash in hand, when you are buying a house, is great, since you do not have to resort to a mortgage or a loan in order to buy the house. So, this article is not applicable for them, who have enough cash to buy the house. But this article, will obviously be helpful for the people, who are not flexible with the idea of mortgages, but they still have to opt for a mortgage in order to buy a house. In this article, we will talk about five of the advantages of carrying a mortgage.
Opportunity Cost of Money
Everybody who have been wandering in the market has heard this term, “Opportunity Cost of Money”, but, most fail to understand what it really is, and even if they understand, they think that this doesn’t apply to them. It really doesn’t make sense to maintain your finances and invest them elsewhere just to take out your mortgage. Especially, on the standpoint we are standing, where the mortgage rates are still in the vicinity of historic lows, why would you pay off your mortgage. Moreover, it makes more sense to diversify your portfolio to position yourself for a brighter financial future. Well, there are many factors that might be impactful while taking this decision, such as, future plans, age, comfort zone and expectations. But, Opportunity Cost of Money is really essential, and you should keep that in mind while mortgaging.
So, for instance, if you are paying approximately 4.5% as your mortgage rate, and to be honest, you are paying a bit less, owing to several tax conditions, and on the upper hand, if you believe that you can generate more from this investment in the future, a mortgage actually makes a lot more sense. Now, what if you are not sure? There is always the chance of giving a huge down payment, and pay a meagre amount monthly, and also enjoy the benefits of a mortgage.
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Mortgage is in compliance with the tax, and is tax deductible. Therefore, mortgage costs you much lesser than any other form of loans.
Here’s another advantage of the mortgage. You can actually get dividends from it. There is an escrow account whenever you take a mortgage. Though, you do not have to take any hassles for escrow accounts, because the loaner will take care of everything.
You can Pre-Pay
People who take mortgages often ask that, what mortgage period should they take, the 15 year or the 30 year. Experts say that, people should always take the longer term when it comes to mortgages. They should pay small monthly interests, and whenever they want, they can make principle payments.
If you are planning to buy a new property, understand the mortgages, and the options that you have got. Do whatever makes the most sense to you!
Expert Mortgage in Toronto provides the best mortgage rates. Visit the website to know more about the current mortgage rates. You may also get a free phone appointment.