You might have heard of the term first mortgage before, but what does it mean exactly? It doesn’t only apply to first-time home buyers and there’s much more to it that we’ll explain in this article.
What is a first mortgage?
A first mortgage is defined as the primary loan on a property. In the event of a default, it takes priority over all other loans on a property. It’s important to note that the first mortgage is not necessarily the first loan the borrower gets on his or her first home. It is the original mortgage taken on any single property.
How a first mortgage works
When someone decides to buy a property, whether commercial or residential, they will seek out a loan from a lending institution called a mortgage. This loan is repaid to the lender in monthly instalments that include a portion of the amount you borrowed originally, interest, property taxes, and insurance. These monthly payments go towards the original loan until it has been repaid to the lender in full.
First Mortgage vs. Second Mortgage
We’ve discussed what first mortgages are. Now we’ll discuss what second mortgages. Second mortgages are a secondary loan that is taken out in addition to the first mortgage that’s already in place. A second mortgage, sometimes referred to as a junior lien, comes second to first mortgage. For example, if you were to sell your home, all proceeds of the sale would first go towards the primary mortgage, followed by the second mortgage.
Borrowing with Gentai
We provide first and second mortgages, together with bridge, mezzanine, and conventional term mortgages, to borrowers seeking to purchase, refinance, refurbish, or develop commercial and residential and commercial real estate. We currently offer lending in British Columbia, Alberta, and Ontario.
To learn more about our lending services and how the application process works, click here.
Gentai Capital Corporation is a specialized asset manager and non-bank lender that was founded over a decade ago. Gentai has a national portfolio of residential and commercial real estate mortgage loans to go with a diversified pipeline of lending opportunities.