Mortgage debt

What is mortgage debt?

Mortgage debt is the amount owed to a bank or financial institution as part of a real estate loan secured by a mortgage. This mortgage constitutes a security on the property, allowing the creditor, in case of non-repayment of the loan, to seize and sell the property to recover the loaned funds.

Mortgage loan: A risk or a good debt?

When the purchase price of a home or land is in line with the buyers’ financial capacity and mortgage payments do not consume too much of their income, a mortgage loan is a good debt because it allows you to build an asset that generally increases in value over the years.

The repayment of mortgage debt usually extends over a period of 15 to 25 years (30 years maximum) and has a much lower interest rate than a regular loan since the house serves as collateral for the financial institution in case of non-payment.

With the rising fluctuations in interest rates we are experiencing, the risk of a mortgage loan is real and caution is advised. If your budget is based, for example, on an interest rate of 4.5%, you may be in for unpleasant surprises if it increases.

Before committing to a real estate purchase, keep in mind that your mortgage will represent the largest expense in your budget and will extend over many years. We encourage you to establish a realistic budget before signing a mortgage agreement. Thus, small compromises on the choice and value of your home could save you significantly in the long term.

How to choose the best solution for my mortgage debt?

By consulting a firm of licensed insolvency trustees, such as the specialists at Jean Fortin & Associés, you will benefit from a free information meeting that will not only review each of the possible solutions for you but also allow you to ask questions about your mortgage. Thus, you will be able to make an informed decision regarding your residence and regain financial stability.