The worldwide financial crises have left a mark on the housing market and particularly in the USA. It is nigh on impossible for Canadians to get a mortgage without a down payment. Zero down programs have been canceled, many people assume that unless they have five percent available for the down payment, they will not be approved for a loan. The new mortgage finance project with cash back mortgages is quite stringent, however it still allows for zero down.

Canada Mortgage Bonds may be considered as an alternative to Government Bonds. They may yield slightly more and are one hundred percent safe. The principle and the interest on these loans are guaranteed by the Canadian Government and carry a credit rating of triple A/AA1. This program is a housing finance initiative to provide an alternative, competitive financial solution.

This is an alternative for those who want to benefit of the low housing costs in Canada, but are unable to afford the five percent down payment. This is also useful for those who have saved, but do not have enough money. The banks would want you to believe that these two products are the same, but this is not the case. There are in fact significant differences.

The interest rates on zero down loans were the same as on five percent plans. With the new cash back system; the rate is about one percent higher than on traditional products. Since the bank is giving you the down payment, it offsets the fact.

Another difference is the fact that there is a penalty due if the mortgage is broken before the term is up. The term is usually five years and as per a traditional mortgage, the three-month interest penalty applies. You also have to repay a portion of the cash the bank provisioned.

Weighing up your options carefully is key to any financial decision. An average home increases in value by about 5%. This could complicate you saving up for the down payment.

A cash back mortgage works out to be approximately. 25% higher than a traditional mortgage. However, you should consider the fact that you will not be repaying the cash back amount. Therefore, it may be an idea to buy now, instead of waiting for two years, when the value of the home would have increased by 10%. The cash back mortgage would be a cheaper option in this event and therefore an excellent choice for the discerning homebuyer.

However, in being aware of the terms of your agreement, you will see that it will not be a good idea to sell the home within five years. Only take such a loan if you are going to own the house and occupy it for a minimum of five years, or until your loan expires. Not doing this may result in your being liable for the cash portion.

The Canadian Mortgage and Housing Corporation introduced a new mortgage finance project in February, which aims to fund investors, provide investment opportunities, and at the same time reduce mortgage costs.

By: Adriana Noton

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So you’re browsing in an electronic store or on the internet at computers. Maybe you have been in the market for one or maybe you just stumbled along them by chance. Either way, you have eyed a computer system that is just too good to be true. It has everything you’ve ever wanted in a computer. It is chock full of memory on its larger than life hard drive, it has all your favorite programs preinstalled, and it even has the large screen you’ve always wanted. It is truly the cream of the crop when it comes to computers.

What’s the problem? What else but the price. Something so luxurious is bound to be expensive and far above any price you’d be willing to pay. In the event that something is beyond what you can afford, there are other options. You could ask your parents or a friend for the money, you could sell a kidney to pay for it, you could charge it to your credit card, or you could finance.

When you finance a purchase, you are essentially borrowing money to pay for it. It is almost like you are leasing it until it is paid for and then you can keep it. For example, let’s say this computer is $1,000 and you can only afford $500. You can pay $500 and finance the rest, or you can finance the entire purchase. This allows you to take home the computer today instead of having to wait until you have saved enough money at which time the computer might be outdated.

Before you make such a big decision, you need to understand why it’s such a big decision and what effect it can have whichever way you go. When you finance a purchase, you are charged interest. This is where they get you. When you buy a house, you might get anywhere from a 5 to 8 percent interest rate. This is not the case with consumer purchases. I know someone who financed a computer for about $600 and got a 28% interest rate. That is enormous! If they only paid $20 a month, a few dollars above he minimum required, they would be paying between $10 and $14 a month in interest for the first year. If they pay it at the minimum until it’s paid, they will have paid hundreds of dollars in interest!

This interest rate is even more than some credit card rates. If you just have to buy it now, check your credit card rate and compare it to the rate they give you and go with the lesser of the two. Better yet, save your money, put it into an interest bearing account such as a CD, and let it accumulate even faster. You will save a LOT of money.

By: Samantha Asher

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