A mortgage is a type of loan that is often used to purchase a home or other property. A mortgage allows the lender to take possession of your property if you do not repay the loan on time. The property therefore serves as collateral. Usually, a mortgage is a large loan, and its repayment is made over several years.
When you get a mortgage, you are the mortgagor. The lender is the mortgagee.
According to the Consumer Agency of Canada, if you have a mortgage, you must make regular payments to the lender. Mortgage payments, also known as mortgage payments, pay off the interest on the loan and the principal (the amount of the loan). Municipal and school taxes, insurance and other fees may be included in payments.
Your mortgage payments are used to pay interest first, then principal. In some cases they also cover taxes and insurance. When you start paying off a mortgage, only a small amount is applied to the principal. The amount then gradually increases until the loan is fully repaid. The part of your property that is paid for — through the down payment and your mortgage payments — is called your home equity.
Reference: Consumer Agency of Canada
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