When approached the right way, purchasing a home is one of the most important investments that you will make in your lifetime. The benefits of homeownership go beyond the financial aspects. You’ll feel happier and more secure when you own your home, especially if you have a clear pathway to financial freedom.
The problem for many Canadians is that a subprime mortgage through a private equity lender can be a barrier to financial freedom, so it’s important to choose a local private equity firm that you can trust.
Homeownership Can be a Pathway to Stability and Success
Anyone paying a mortgage with unfair rates and conditions will struggle to find financial freedom. But, for the families that have fair mortgages that are manageable and achievable within their lifetimes, the gains can be significant.
Whether you’ve already purchased a home or plan to apply for a mortgage soon, understanding the benefits of homeownership can help you to make the right decisions.
- Owning a home often leads to financial gains. Under normal home market conditions, well-maintained properties typically appreciate, creating strong returns for intergenerational wealth.
- A home provides stability, which can make life simpler. Renters move more than homeowners, and this can be disruptive, especially when raising children. It also adds to the cost of renting as moving fees, rent deposits, and the general unpredictability of finances can add up over the years. Rents increase as the economy grows, which puts renters on the back foot.
- With a fair mortgage, you will continue to build equity in your home, which gives you more options for credit on large purchases and loans. The equity you build will increase your financial security and take you towards true financial freedom.
- Owning a home allows you to create your dream home. Improvements can be made over the years to create a space that is completely your own.
Owning a home gives you a point of stability where you can fall back, rest, and revitalize yourself. You can grow your family and create memories that will last for a lifetime and beyond. With a mortgage that is fair and affordable, you can continue to build equity until you own your home outright, giving you a 100% freehold asset that creates financial security and independence.
Mortgage Means Death Pledge, But It Doesn’t Have to Be So
Have you ever considered the meaning of the word mortgage?
Funeral directors are referred to as morticians. Funeral homes are mortuaries. “Mort” takes its origin from the Latin word “Morte”, meaning death.
Mortgage, translated from its combination of old English, French, and Latin origins, means Death Pledge.
Lenders would tell you that in today’s context, it means that the pledge ends when the mortgage is paid, i.e., the death of the mortgage. However, people who are struggling with unfair, overpriced, and predatory mortgages know the term death pledge often reflects the reality.
A mortgage can be made to work for you, but you must start by understanding how a mortgage might be impacting your goal of financial freedom, and you will need the right financial advice to either get out of a predatory mortgage or avoid one altogether.
1: Your Repayments are More Than You Can Afford
It’s possible to find a mortgage even with less than stellar credit. In some cases, these mortgages work out well, but there are times where unscrupulous lenders prey on vulnerable families to offer mortgages that are simply unaffordable. In the excitement of finding a lender willing to extend credit, you may have overlooked the fact that the repayments were unrealistic.
Predatory lenders have strong sales tactics often making it appear that a mortgage will be affordable, even if the numbers don’t quite add up.
If your repayments are more than you can realistically afford, it’s time to step back and reconsider whether your mortgage is manageable long-term. There are penalties for breaking a mortgage contract but there are remedies that can be found with the right financial advice, helping you to get into a position where you can close the mortgage and sign for something fairer.
Is there a magic number for your percentage of income that should go to your mortgage? While every case is different, most honest lenders agree that you should spend only 28% of your monthly gross income on your mortgage, or possibly less depending on other debt that you have.
2: You are Missing Payments and Late Fees Are Adding Up
Another problem with predatory subprime private equity mortgages is that the fees for late payments are often excessive. Predatory lenders are often very friendly when it comes to applying for the mortgage and closing, but become difficult to work with once you start to struggle financially. Fees can add up, limiting the equity that you build in your home, or even taking away from the equity that you’ve already built.
When a mortgage is unaffordable and late fees pile on, you end up throwing money at the lender while getting nowhere on the road to financial freedom.
3: Your Mortgage Has Negative Amortization
Predatory private lenders can market their mortgages as being extremely affordable. Minimal initial payments are appealing, and you might even take this risk expecting that your circumstances will change. However, when you eventually reach the point where the payments are ballooning and the outstanding balance grows rather than reduces, you’ll find it impossible to gain financial freedom.
With negative amortization where repayments don’t even cover interest, a mortgage truly does become a death pledge. An honest local private equity firm won’t ever leave you in this position.
4: The Prepayment Penalty is Abusive
Not everyone who ends up in a predatory mortgage is in poor financial shape. Sometimes, a mortgage appears to be going well. Financial situations change and you may find that you or your partner are earning more, and your household income is up.
You decide to pay your mortgage early but run into an issue. That predatory mortgage you signed for has excessive prepayment penalties that wipe out all your hard work and gains.
If a prepayment penalty is so high that it makes it unviable to pay off a mortgage early, you need to talk to a financial advisor immediately. There are strong consumer protections in Canada, but some predatory mortgages can be borderline to stay just within the law.
There are solutions available to you, so don’t give up hope on escaping the death pledge and gaining your financial freedom.
5: Your Mortgage is Closed with a High Rate
Lenders make their money from the interest that you pay on a loan. Some private equity mortgages have unusually high-interest rates because their signing conditions are more relaxed when compared to mainstream lenders. The conditions of the mortgage are also stricter, helping to protect the bottom line of the lender with no consideration for your financial situation or long-term goals.
Dishonest private equity lenders also focus on the value of the property that you purchase. Their end goal is extracting as much profit from you over your lifetime, or eventually taking all the equity in your home so that you’re left with nothing after years of struggling to make payments.
A closed mortgage won’t allow you to take advantage of lower interest rates. Your mortgage will be inflexible when compared to the wider market. This is a common tactic of unscrupulous lenders, and it will leave you disadvantaged.
Expert Financial Advisors are Here to Help You Gain Your Financial Freedom
Not all private equity lenders rely on unfair practices with predatory mortgage conditions.
3FC Acquisitions Inc. is a local Canadian private equity firm ready to help you make better financial decisions and get your long-term goals back on track. If you’re stuck in a predatory mortgage or if you’re preparing to buy a home, it’s time to talk to financial experts that can give you fair, life-changing advice.
Your homeownership can be a tool to achieve financial freedom and your mortgage doesn’t have to be a death pledge that leaves you financially crippled or unable to do what you want with your finances.
Contact Wendell John-Baptiste at 905-425-2002 and Gaston John-Baptiste at 289-939-2318 or email us at email@example.com to start with a free 15-minute consultation and look to a brighter future with real financial freedom.