OTHER IMPORTANT options AND choices THAT YOU’LL WANT TO consider TO HELP customize YOUR MORTGAGE.
Assuming an Existing Mortgage
Vendor Take Back (VTB) Mortgage
This means the vendor lends you the money to purchase the home. It’s basically a second mortgage.
You take over the vendor’s mortgage as part of the price you pay for the house. Assuming an existing mort- gage is quick and saves you money on the usual mortgage arrangement fees, such as appraisals and legal fees.
When you assume a mortgage,
you don’t have to arrange financing from another lender and the rate on an existing mortgage may be lower than the prevailing market rate.
For example, on a home that costs $150,000, if the vendor has an existing mortgage of $70,000 that you can assume and you have $40,000 for a down payment, the vendor may lend you the outstanding $40,000,
which you pay back monthly.
The vendor may be able to offer this loan at less than bank rates. Some vendors will sell this mortgage to a mortgage broker instead of hold- ing it themselves.
Sometimes, if it is specified in the original mortgage agreement, a mort- gage can be assumed automatically. If not, you may have to qualify with a lender first.