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page 20 THE LEGAL ‘POINT OF vnsw -â€"-JANE MONAGHAN Real Estate ~ Mortgages chase of a home and this month I will tell you a bit about financing such a purchase. The law divides mortgages into two basic types ~ just as there are two basic types of property â€" land and chattels. This article will deal with land or real property mortgages, which are loans taken to buy a house. In return for the loan, the borrower (the mortgagor) promises the lender (the mortgagee) to repay the loan and pledges the property as security. If the borrower does not repay the loan, the lender can take over title to the property. When buying a house you may "assume" a mortgage. This means that you take over responsibility for the payment of a mortgage which the vendor al- ready has on the property. When you do this you should carefully look at the terms of the mortgage to make sure they suit your needs and you must obtain approval from the lender in order to assume the mortgage. Instead of assuming a mortgage you may arrange your own financing. This would result in you paying cash to the vendor for the house and then re~ paying the mortgage lender in monthly installments. If you need to arrange i Last month I wrote about the pur- 1 l financing you should make sure your offer to purchase is conditional upon finding acceptable financing, so that if financing cannot be found you will be able to get out of the deal with- out too much trouble. Another way of getting mortgage financing is what is known as a "mortgage/back". This is where the vendor agrees to take a mortgage on the property and monthly payments are made by the purchaser to the vendor. A second mortgage may be obtained in situations where the amount covered by the first mortgage is not quite enough to finance the purchase of the house. The second mortgage falls behind the first mortgage, and i5 not as well secured. Therefore, the interest rate charged on a second mortgage is usually higher than on a first. , Mortgage Terms The amount of the monthly payments of a mortgage are based on the prin- Ciple amount of the mortgage and on the rate of interest charged on that amount. Monthly payments consist partially of principle, and partially of interest. The amortization period of a mortgage is the length of time over which monthly payments have been calculated on the assumption that the mortgage will be fully paid at the end of that period. The common amortization period is 25 years. The term of a mortgage is the length of time which the mortgagor (borrower) will actually have to repay the mortgage. This is commonly 5 years. At the end of the term the balance of the principle and interest owing on the mortgage becomes due and pay- able. At this time you must either pay off the mortgage or negotiate a new financing arrangement with the lender. Most mortgages contain a prepa ent privilege, which allows you to make lump sum payments Athens SIMPLE GIFTS FARM SOLAR Doug and Andrea Green flak leaf Road, 8.8.1 against the principal, thereby re- ducing your total interest charges. Some mortgages stipulate that a bonus or penalty must be paid if this is done and you or your lawyer should check to see whether thisi:sb, Also many mortgages will require that if the property is sold the mortgage must be paid off and cannot be trans- ferred without the lender's approval. Interest rates on mortgages may vary from time to time and different lending institutions may charge different rates, particularly on second mortgages. Therefore, it may pay to compare before entering into a mortgage agent with any particular lender. .. Alternative Comp for Children The SECOND ANNUAL ALTERNATIVE CAMP for children ages 7-13, located at the Grindstone Island Centre in the Big Rideau Lake, half way between (Jttawa and Kingston. Program will include the usual summer fun (swimm- ing, boating, A & C , campfires, etc) and enjoyable social learning exper- iences in music and movement, non- competitive games and ecology and nature. June 28-July4 and July4-10. One week: regular rate-$150., family rate, per child â€"$135 (includes all costs). Limited number of camper- ships available. For information: Grindstone Co-op PO BOX 564 Station "p" Toronto, Ont. M53 2T1 1 Bedding Plants 8 Vegetables ZZZ/m WBM/ 928-2145 m i ~niyn >-_~â€"-â€",-z-,¢-,~gm n-r/r- '..v- -, _-., .0. m , . ,. , "Wes-awe m ‘.g “Hint-win. ._. >..- ' ._ ya?‘ 1 ‘aldfiismafiifiizfm'w ‘v: ~11“ . .13» ‘i PM!" v ‘L "film