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Seminar Report on Impulse Buying


Seminar Report on Impulse Buying

Conceptual Definition

Impulse buying is defined as a buying action undertaken without the problem having been previously recognized or a buying intention formed prior to entering the store.

Operational Definition

Based on the literature review we plan to follow the following definition for the purpose of our research.
The items purchased whose decisions were made after entering the store are impulse purchases .Consumers might not always be able to articulate their purchase selection process but it does not mean a selection process is not happening .

Factors Affecting Impulse Buying Behavior

Impulse buying is influenced by a variety of economic, situational, personality, time, location and even cultural factors. Researches have also been conducted to understand the underlying motivational factors behind impulse buying. Similarly researches have been conducted to study factors that moderate impulse buying behavior.

Gender Differences in Impulse buying

Several previous researches on impulse buying have paid some attention to the role gender plays in determining this behavior. These researches show that men’s and women’s shopping behavior differs on many levels.

Shopping List and Impulse buying

One of the factors that affect impulse buying is the presence of a shopping list. This only holds true if the transaction size is greater than 15. When more than 20 or 25 products are purchased, shoppers having a list make a smaller percentage of unplanned purchases. However, when less than 20 or 25 products are bought, the shopping list does not affect the percentage of unplanned purchases. In order to study the effects on the presence of a shopping list on impulse purchase behavior, we present the following proposition.

What and Why leads to Impulse Buying?

According to The Yankee Group, the top reasons people make impulse purchases are: special
sales prices, free shipping, and holiday or seasonal promotions. Many of the sites we tested
featured promotions, primarily on the home page. If The Yankee Group’s survey results
reflect reality, we should’ve seen many of the observed impulse purchases result from these
In reality, very few impulse purchases resulted from promotions. The impulse buys were
spread across 41% of the sites in our study. These included everything from pet stores to
apparel stores to computer accessory stores. All the impulse purchases were for different
items, none of which were special promotions or products on sale. Instead, they were all just
items that the shoppers thought of while shopping for other items.
This finding implies that shoppers aren’t really aware of the reasons why they impulse shop.
As in all our previous studies, we found that what people say turns out to be very different
from what people actually do. These results show that shoppers are not aware of the actual
drivers of impulse purchases. They imagine it is because of price, because they can’t see what
the real reasons are.

 Power Distance Belief (PDB):

I found that discusses the concept of Power Distance Belief (PDB) and its impact on impulse buying. I am not sure if I fully agree with it, or even understand it, — but it’s a really interesting and novel take on the subject. Power –distance belief — is the degree of power disparity that the people of a culture expect and accept. Higher the PDB, the more a person expects and accepts disparity in power.   Western cultures like America have a low PDB. A low PDB results in greater impulse buying, and a high PDB results in lower impulse buying. The reason for that people is eastern cultures who expect more power disparity, are also brought up to practice self restraint much more than people in western cultures who don’t expect so much power disparity.

3. Prosperity: 

I really don’t need research to tell me that prosperity leads to impulse buying. During the peak of the recession – impulse buying was not even something I thought about, let alone engage in. Now, that the situation has markedly improved, — a lot of people are engaging in it, including myself.

4. Shiny stuff causes impulse buys: 

According to this piece, things that are sparkly, noisy, furry, fuzzy, or have any other feature that makes them draw attention will sell well on impulse. This makes sense too, because the more attention something draws, the more likely it is that you will think about it and end up buying it.

5. Price:

This factor is the most talked about when it comes to impulse buying. A lot of people say that they indulged in impulse buying just because something was on a discount.  I am sure deals and discounts contribute to impulse buying, and when we see something priced much lower than what we are used, — that triggers a desire to get that thing and save money.
A large part of all purchases are attributed to impulse buying, this is undoubtedly good for retailers, but it’s not as good for consumers. I say that because a lot of my own impulse buys don’t end up getting used at all, and I regret spending any money on them.

Avoid impulse buying

The secret sauce to avoiding an impulse buy is to bring your brain back into the situation and refocus on the decision you’re about to make as well as its impact on your budget.  There are a lot of helpful tips to avoid impulse buying (see other articles below).  However, there are two key tips that I particularly think are helpful in avoiding these types of purchases.  They help make sure logical thinking and planning are a part of the picture.   But ultimately, I think you have to find what works best for you.

1.  Don’t enter into a store without a plan.

If you’re going to buy something, make sure you know what you’re going to buy and stick with it.  If you have a lot of items to buy, such as groceries, make sure you’re taking a list.  Grocery stores are great sources for impulse buying.   Side note:  Is it an impulse to buy when you get to the store, see ketchup on the aisle, realize it’s not on your list and buy it?  I say get the ketchup you need, but avoid want versus need items
At the same time, if you want to go to the electronic store to browse for entertainment, fine. But know that your plan is to browse and even if the latest gadget is on sale at its all time low price, it’s not in your plan to make a purchase.  I could say avoid these stores all together if you don’t have the cash, but real life is that we all find our way in these stores one time or another, so have the plan when you go.

2.  Wait it out.

If you feel the want or need for a purchase, especially a large cost item, give it some time.  Usually, waiting it out 24 hours helps.  Some say wait a week or month, but just find what works for you.  Think logically and know that it’s not worth blowing your budget, or using a credit card without a means to repay.  Sure, this type of discipline requires practice, but you can quickly learn when your emotions have been tapped into if you can begin to recognize the feeling.

Final thoughts

Writing this article is great for me too.  Just this past weekend, I found myself making a few unplanned purchases at Target (great place for unplanned purchases).  Although they were not budget busters, these little things add up from time to time and can certainly slow progress of debt reduction, savings or other goals.
The truth is that we’re all enticed by items dangled before us each day.  Having wants is natural, but timing your wants with wise, thoughtful decisions is managing money wisely for everyday life..

Marketing  mba seminar topics

Seminar Report on GRAY MARKETING

Seminar Report on Customer Loyality

Seminar Report on Buying Center

Seminar Report on Impulse Buying

Seminar Report on Marketing Myths

Seminar Report on Marketing Myths

Marketing Myths


 A traditional sacred story, typically revolving around the activities of gods and heroes, which purports to explain a natural phenomenon or cultural practice
We are in the muck of a recession. Business is slow. The stock market keeps draining away billions in wealth. Companies are acting from fear. Advisers suggest they increase their marketing, to build share and exploit opportunities in the vacuum created by their competitors' inaction, but they look at you as if you just landed from Pluto. Why? Because they don't really place much value in marketing. Why? Because most of the marketing they have done in the past has failed to meet the acid testthe only test that counts—to generate more profits than it costs. ROI!ROI!ROI!
Which begs the question: why does most marketing suck? No cold fusion here. Because it falls victim to a series of myths:

Myth 1: Marketing is advertising and Sales

Reality: Marketing is about educating your target market about your products and services and why they should buy from you. Marketing is everything you do to reach this target audience, whether it is advertising, direct marketing, Internet Marketing, events, public relations, strategic partnerships or networking. Take advantage of all the options available to your business that make sense in terms of applicability and budget to your business and you will see an increase in awareness of your products and services.

Myth 2: Lower prices encourage more people to buy

Reality: If that were true (and in some cases it may be), no one would buy a BMW verses a Ford. Differentiators are what the prospect perceives is valuable to them. The reason for so many options among types of products is that people have different views of what is valuable to them. That is why it is so important to target your product or service correctly so that you can provide the maximum value at the right price, not an artificially discounted price because you are trying to reach the wrong audience.

Myth 3: Offering a broad range of products and services ensures more sales

Reality: Too many options confuse your buyer. Making your prospect make too many decisions will kill the sale. By offering a convenient package at a perceived valuable price, you will sell more product and service than you would by trying to sell lots of giblets. Take a look at today’s computers. They are not longer kits that you assemble yourself. The manufacturers offer a line of products in small, medium and large – price points that please most consumers. In fact, the lower priced models are probably not the most valuable and when you actually go to buy, you end up buying the higher priced version because it offers more for the money.

Myth 4: Email marketing is no longer effective due to SPAM

Reality: Email marketing is still effectively if done properly. People always want information and providing it through an opt-in marketing program is a way to reach people you normally would not reach. However, buying a list from a less than reputable broker and sending out lots of email to people who are not interested in what you have to offer is SPAM and should not be done. But building your own in-house email list by encouraging visitors to your web site to sign up for your newsletter or other type of correspondence should be done and is ok. Just because some people abuse a very good medium to reach people with your message does not mean you should abandon it all together.

Myth 5: Great marketing works instantly

Reality: Although marketing can shorten the sales cycle, and some tactics can produce instant results, marketing is about sustained contact with your target audience to ensure they know who you are when they are about to buy. Marketing is an investment and like all good investments, they take time to achieve the greatest gains.

Myth 6: Successful marketing campaigns win awards

Reality: If your ad agency or web design agency is more interested in winning an award than helping your business thrive, then run as fast and far as you can and find an agency who is concerned with results for YOU, not for them. Yes, we all like customer success stories and awards for our work if it is available to us, but that is secondary. You are paying them for their services, not to do something that will get them recognition. Keep in mind that advertising and web design that is artistically wonderful could send the wrong message, not deliver the message clearly to your prospect, or mislead your prospect if the visual is contradictory to your brand.

Myth 7: Internet Marketing is all you need for marketing programs

Reality: Internet marketing is a wonderful tool for all businesses today. Its ability to reach your prospects when they are most ready to buy is a cost-effective means of getting your message out. But Internet marketing is not the only game in town. We often refer to “integrated marketing” plans because it is the integration of many different types of marketing activities that drive visitors to your web site, to call you or to buy. Don’t overlook the value of direct marketing, advertising, public relations, events, partnerships and networking to round out your marketing plan.

Myth 8: Messages need to be changed often, otherwise your marketing gets old

Reality: Consistency and repetition is marketing’s best friend. Just when you are bored to tears with your marketing message or marketing campaign is just about the time your messages may resonate with your target audience. Changing your messages, brand, or marketing campaign for the sake of change is a waste. Be sure you plan a strategy that has options. For example, if you are doing advertising, you can start a theme and change the image throughout the campaign, sending the same message to you clients. This eliminates potential boredom and increases interest.

Myth 9: Advertising sells product

Reality: Advertising builds awareness and generates leads. If you try to sell within your ad copy, you run the risk of turning off prospects that are currently information gathering. You need to attract prospects first and educate them on your products and services. The education process would include regular contact with them about your business, services, products and special offers you may have. This develops a trust relationship with your prospect will make it easier for them to eventually buy from you. An add that sells skips the building trust stage which becomes an obstacle to a prospect responding to your ad for information.

Myth 10: Partnerships and Alliances are for big companies

Reality: Partnerships and alliances are extremely important for all companies. We can’t do it all and having partners you trust there when you need them, to offer a service or product you can’t, helps your customer get what they need from you. Just because you are in the same business does not necessarily mean you are competition. Join forces to increase your resources, find areas they are stronger than you and utilize that aspect of their business, or package some services together to offer your clients more value for their money. Yes, these activities are part of marketing and can help you get more visibility, more clients, and more revenue.
If you are a deer or elk farmer developing a marketing program for your animals or related products and services, here are some research findings that you should keep in mind. 

  Facts about  Marketing Myths

1. Most purchasing decisions are made in the unconscious.
2. Repetition is the secret to accessing the unconscious mind of people. The most important rule in marketing is repetition. Too many marketing programs give up too soon. On average, you have to have seven to nine repeats before you will see results in your marketing program.
3. Your marketing can be twice as effective if you aim it at both right-brained (emotional, aesthetic) and left-brained (logical, sequential) people. The North American population is about evenly divided, so if you use only one approach, half your advertising budget will be wasted.
4. The more data you have, and the more you know about your customers, the better your marketing will be. This data is available from many published sources, or you can collect your own by asking your customers lots of questions.
5. Children are influencing family purchases more today than ever. These are the results of more mothers working and children's greater access to media.
6. You can't rely on consumers to provide accurate information on their buying behaviour. They don't always do what they say they will! Therefore, be careful in interpreting consumer surveys.
7. There are two bonds to make a sale - the human bond and the business bond. People would much rather do business with a friend than with anyone else. So become their friend.
8. People are human beings and like to be treated as such. Don't treat people as prospects; don't treat them as demographic groups.
9. People have a basic need to belong. Let them belong to your club. Recognize the 20% of your customers that give you 80% of your business.
10. Getting a person to say yes to a sale works best if you establish momentum first with lesser questions to which it is easy to answer yes.
11. Your customers will be buying a lot more than merely your product or service. They are buying your personality, your reputation, your service, and your status in the community.
12. People will remember the most fascinating part of your marketing and not necessarily your product or service. That is why you need to be very careful every step of the way.
11. The purpose of marketing is to generate maximum sales volume. Fact: Wrong, the purpose of marketing is to generate maximum profits.
12. Quality is the main determinant in influencing sales. Fact: Confidence in the business is the main determinant; quality is second.
13. It makes a lot of sense for a small business to retain the services of an advertising agency. Fact: No it does not. Better work at more reasonable prices is available from marketing consultants.
14. Once your business has a solid customer base, it can cease marketing. Fact: Perhaps you can cut down on general marketing but you must maintain contact with your customer base or someone will take them away.
15. Repetition of a marketing message is boring. Fact: It may be boring to you, but it won't be boring to your prospects and customers.


Marketing is about educating your prospects and customers about you, your products and services, and how you can help them solve a problem. Marketing should educate, inform, announce, enlighten and influence human behavior. All the ways you can think of to accomplish this for your company is a marketing activity. Marketing is truly an investment in time, creativity, resources, and energy. The more you 

Seminar Report on Financial Institution click here to show/hide 

Seminar Report on Financial Institution

Financial Institution

An establishment that focuses on dealing with financial transactions, such as investments, loans and deposits. Conventionally, financial institutions are composed of organizations such as banks, trust companies, insurance companies and investment dealers.

Investopedia explains Financial Institution

Since all people depend on the services provided by financial institutions, it is fact that they are regulated highly by the federal government. Such as, if a financial institution were to enter into bankruptcy as a result of controversial practices, this will no doubt cause wide-spread panic as people start to question the safety of their finances. Also, this loss of confidence can inflict further negative externalities upon the economy.

Financial Institution Stocks.

Financial institution stocks are normally good stocks to have in a portfolio and platform. They all boast pretty good dividend yields and their top managers have very good knowledge of the market and what they need to do to adjust in tough financial times. Financial institution stocks are also very risky because they are highly levered and bearish markets can lead to bank failures.

 Black Rock JP Morgan Chase   and PNC are three financial institutions that I believe are good buys in recent market because they all boast good dividend yields, trade at low P/E ratios, and have low betas compared to the rest of the market, so an economic crisis is much less likely to send their stocks plummeting.

Black Rock is a top investment management firm that generates revenue off of client business. It has assets under management of round about $3.66 trillion. It's among the best at what it does and is experiencing very strong growth, which is rare in the financial sector. Analysts expect Black Rock’s earnings per share to increase 16.5 percent to $12.74 in 2011 and another 14.4 percent to $14.58 in 2012, with revenue estimated to grow at an annualized rate of 9.8 percent.

JP Morgan Chase is one of the four largest banks and one of the best banks in the industry. It has large market shares in both commercial banking under the Chase name and investment banking under the JP Morgan name. JPM is trading at a very low price right now and the stock is much less volatile than competing banks' with a beta of 1.13.  

It has a dividend yield of 2.73 percent and trades at a P/E ratio of 7.81 even though it has very little chance of going bankrupt in the wake of another financial crisis because it historically makes safe investments. Analysts expect a 26.6 percent increase in EPS in 2011 and a 12.4 percent increase in 2012. Out of the Big Four banks, it's the safest investment and has the most growth potential.

All three of these financial institution stocks are currently good investments because they have good business models and trade at low prices for the earnings that they are expected to achieve. We typically stay away from financial institution stocks because they are too volatile and overly leveraged, but We are    big fan of Black Rock, JP Morgan, and PNC, and I expect to see their stock prices rise over the next year.

What Are The Types Of Financial Institutions?

1. Banks
2. Credit Unions
3. Insurance Companies
4. Finance Companies
5. Mortgage Companies
6. Trust Companies
7. Savings and Loan Associations

With respect to the Government.

There are basically two types of Financial Institutions with respect to the Government; those that fall under direct state authority and those that are private. Another basis of classification would be based on the institutions that are mainly involved in traditional banking activities related to deposits and the issuance of loans and those that are concerned primarily with loans, insurance, finance and credit, mortgage, stock and other functions related to the World of finance. 

major difference.

The major difference in the above mentioned institutions is their modus operandi in the issuance of loans or the way in which finance is generated. State run institutions generate the resources from deposits and sale of shares; while private institutions generally act as intermediaries in generating finance by offering investment opportunities to people or establishments with excess capital and thus making it easy for companies and businesses to obtain the necessary funds. 

Top 50 US Financial Institutions

The top 50 financial institutions in the USA are the leading names in the financial scenario of the United States of America. These organizations have been doing stellar business over the years in the country and have continued to serve millions of people and address their financial issues through their services. They have also played an important role in the context of the US economy through their services.

Bank of America is one of the major financial institutions of the USA. It is headquartered at Charlotte, North Carolina. In 2007 the Bank of America earned revenue of 19.19 billion US dollars and the net income of the company was 14.98 billion dollars. The total assets held by the Bank of America amounted to 1.72 trillion dollars. As of 2006 there are 203,425 employees of the company.

Following is a list of the top 50 financial institutions of the USA: 

1.      TD Bank USA, National Association
2.      Bank of America
3.      E*TRADE Bank
4.      JP Morgan Chase Bank
5.      Bank of the West
6.      Wachovia Bank
7.      Citibank (South Dakota) N.A.
8.      Wells Fargo Bank
9.      Manufacturers and Traders Trust Company
10. Citibank
11.  Harris National Association
12.  Washington Mutual Bank
13.  The Bank of New York
14.  SunTrust Bank
15.  Chase Bank USA,
16.  U.S. Bank
17.  Marshall and Ilsley Bank
18.  Regions Bank
19.  TD Bank North
20. Branch Banking and Trust Company
21.  Fifth Third Bank
22. National City Bank
23. USAA Federal Savings Bank
24. HSBC Bank USA
25. Citizens Bank of Pennsylvania
26. World Savings Bank
27.  The Huntington National Bank
28. Countrywide Bank
29. Citizens Bank of Massachusetts
30. PNC Bank
31.  LaSalle Bank Midwest
32. Key bank
33. Compass Bank
34. ING Bank, fsb
35. First Tennessee Bank
36. Merrill Lynch Bank
37.  Charter One Bank
38. Sovereign Bank
39. Capital One
40. Comerica Bank
41.  Discover Bank
42. Union Bank of California
43. UBS Bank
44. Commerce Bank
45. Morgan Stanley Bank
46. North Fork Bank
47.  Colonial Bank, National Association
48. Fifth Third Bank
49. Banco Popular de Puerto Rico
50. LaSalle Bank National Association
JP Morgan Chase bank is one of the major financial services providers of the world. Its products and services are available all over the world.  The market capitalization of JP Morgan Chase is 145.881 million dollars. The revenue of the company was 116.353 billion dollars.

Seminar Report on Mortgage Loan click here to show and hide

Seminar Report on Mortgage Loan

Seminar Report on Mortgage Loan

Mortgage loan

is a loan secured by real property through the use of a mortgage note which evidences the existence of the loan and the encumbrance of that realty through the granting of a mortgage which secures the loan.

Basic Concepts and Legal Regulation.

 A mortgage occurs when an owner   pledges his interest   as security or collateral for a loan. Therefore, a mortgage is a limitation on the right to the property just as an easement would be, but because most mortgages occur as a condition for new loan money, the word mortgage has become the generic term for a loan secured by such real property.

As with other types of loans, mortgages have an interest rate and are scheduled to amortize over a set period of time, typically 30 years. All types of real property can be, and usually are, secured with a mortgage and bear an interest rate that is supposed to reflect the lender's risk.

Mortgage lending is the primary mechanism used in many countries to finance private ownership of residential and commercial property. Although the terminology and precise forms will differ from country to country, the basic components tend to be similar:
                  Property: the physical residence being financed. The exact form of ownership will vary from country to country, and may restrict the types of lending that are possible.
                    Mortgage: the security interest of the lender in the property, which may entail restrictions on the use or disposal of the property. Restrictions may include requirements to purchase home insurance and mortgage insurance, or pay offoutstanding debt before selling the property.
                   Borrower: the person borrowing who either has or is creating an ownership interest in the property.
                    Lender: any lender, but usually a bank or other financial institution. Lenders may also be investors who own an interest in the mortgage through a mortgage-backed security. In such a situation, the initial lender is known as the mortgage originator, which then packages and sells the loan to investors. The payments from the borrower are thereafter collected by a loan servicer.
                    Principal: the original size of the loan, which may or may not include certain other costs; as any principal is repaid, the principal will go down in size.
                    Interest: a financial charge for use of the lender's money.
                   Foreclosure or repossession: the possibility that the lender has to foreclose, repossess or seize the property under certain circumstances is essential to amortgage loan; without this aspect, the loan is arguably no different from any other type of loan.
Many other specific characteristics are common to many markets, but the above are the essential features. Governments usually regulate many aspects of mortgage lending, either directly   or indirectly, and often through state intervention. Other aspects that define a specific mortgage market may be regional, historical, or driven by specific characteristics of the legal or financial system.
Mortgage loans are generally structured as long-term loans, the periodic payments for which are similar to an annuity and calculated according to the time value of money formulae. The most basic arrangement would require a fixed monthly payment over a period of ten to thirty years, depending on local conditions. Over this period the principal component of the loan would be slowly paid down through amortization. In practice, many variants are possible and common worldwide and within each country.
Lenders provide funds against property to earn interest income, and generally borrow these funds themselves. The price at which the lenders borrow money therefore affects the cost of borrowing. Lenders may also, in many countries, sell the mortgage loan to other parties who are interested in receiving the stream of cash payments from the borrower, often in the form of a security.

Mortgage Loan Types

 Pre-Approved Mortgage:
A Pre-Approved mortgage is a Free and No-Obligation deal that lets you know before you go looking for your home or signing an offer to purchase, how much you can afford to borrow based on your qualification and personal credit rating. We'll arrange for you the most competitive rates with longest rate guarantee period that goes up to 120 days - if rates go higher, your rate will not be affected, and if rates go lower, you get the lower rate.  

Too often in the past, the mortgage was left to the very end, but with our Online Pre-Approval or by simply e-mailing us, we can take care of this important process within hours. Once you are Pre-Approved, you can confidently negotiate an offer on a home. A seller also prefers to negotiate an offer of a purchaser who has been pre-approved. With more lenders, lower rates, and no-cost, no-obligation; make us your choice for your pre-approval.


A conventional mortgage is a loan that does not increase to 75% of the purchase price or appraised value of the home, whichever is less. This type of mortgage does not have to be insured against default.


A high-ratio mortgage is a loan that is above 80% and up to 95% of the purchase price or appraised value of the home, whichever is less. These mortgages must me insured against loss by either Canada Mortgage and Housing Corporation (CMHC), a Federal Government Corporation, or GE Capital, a private insurer. The premiums can be added to the mortgage amount or paid at closing, and are as follows:
  • For Mortgages Up To 80% --- No insurance required
  • For Mortgages between 80.1 and 85% --- Premium is 1.75% of the mortgage amount
  • For Mortgages between 85.1 and 90% --- Premium is 2.00% of the mortgage amount
  • For Mortgages between 90.1 and 95% --- Premium is 2.75% of the mortgage amount (dropped from 3.25% in early 2005) and can be reduced to 2.75% with the new "Traditional Down payment" program.


When interest rates fall, many borrowers want to renegotiate their mortgages but few of them have the right to do so, unless their mortgages are fully open. But if you obtained a longer-term mortgage, insured by CMHC, you can prepay it on payment of 3 months interest penalty - a lot cheaper than the Interest Rate Differential (IRD), which is the difference between the mortgage rate and current rates, on the outstanding balance, for the rest of the mortgage term. For example, if the difference in the interest rate was 2%, and the outstanding mortgage amount was $100,000 (which is locked in at 8%) and it had 2 more years to go until maturity, the IRD penalty would be approximately $4,000, whereas the 3 months' bonus would be $2,000. (To help you with the payment of the penalty, we have "cash-back programs" that will give you up to 3% of the mortgage amount). 


A First mortgage is the first debt registered against a property that is secured by a first"charge" on the property. If a default on the mortgage occurs, the first lender has first right on the property to recover the outstanding principal and interest costs, and any other costs incurred during the process. Second Mortgages: A second mortgage is a debt registered after a first mortgage has been registered. In most cases, the interest charged on the second is higher than the first, reflecting the higher risk to the lender, but over a short term, still more cost effective than paying the high cost of the CMHC/GE Capital insurance premium. They can be used to finance up to 90% of the purchase price or value of the home.


An open mortgage allows you the flexibility to repay the mortgage at any time without penalty. Open mortgages are available in shorter terms, 6 months or 1 year only, and the interest rate is higher than closed mortgages as much as 1%, or more. They are normally chosen if you are thinking of selling your home, or if you are expecting to pay off the whole mortgage from the sale of another property, or an inheritance.


A closed mortgage offers the security of fixed payments for terms from 6 months to 10 years. The interest rates are considerably lower than open, and if you are not planning on any one of the above reasons, then choose a closed mortgage. Nowadays, they offer as much as 20% prepayment of the original principal, and that is more than most of us can hope to prepay on a yearly basis. If one wanted to pay off the full mortgage prior to the maturity, a penalty would be charged to break that mortgage. The penalty is usually 3 months interest, or interest rate differential (I.R.D. - please refer to glossary for detailed explanation).


With a fixed-rate mortgage, the interest rate is set for the term of the mortgage so that the monthly payment of principal and interest remains the same throughout the term. Regardless of whether rates move up or down, you know exactly how many your payments will be and this simplifies your personal budgeting. In a low rate climate, it is a good idea to take a longer term, fixed-rate mortgage for protection from upward fluctuations in interest rates.


The Adjustable Rate Mortgage (A.R.M.) provides a lot of flexibility, especially when interest rates are on their way down. The rate is based on prime minus 0.375% and can be adjusted monthly to reflect current rates, and for the first 3 months of the mortgage, a large discount on the rate is given as a welcoming offer. Typically, the mortgage payments remain constant, but the ratio between principal and interest fluctuates. When interest rates are falling, you pay less interest and more principal. If rates are rising, you pay more interest and less principal, and if they rise substantially, the original payment may not cover both the interest and principal. Any portion not paid is still owed, or you may be asked to increase your monthly payment. This mortgage is fully convertible at any time without any cost to you, if you choose a 3 year term or greater, and offers a 20% prepayment privilege at any times throughout the year. While traditionally, banks offer variable mortgages up to 75% of the purchase price or the value of the home, we can go up to 90% with this product.


Use the equity in your home that you have built up to purchase investments (where interest costs would be deductible against the earned income), finance home renovations, buy a car, or any other reasonable needs, with rates as low as prime. They can be arranged up to 75% of the purchase price or value of the home, and should you need more, we can arrange another secured line of credit as a Second mortgage up to 90%. Accessing the available credit is as simple as writing a cheque, or using the issued credit and/or debit card. You do not have to draw the money until you need it, and once you make a withdrawal, you can pay of your balance at any time or make monthly payments as low as interest only. As you pay down the balance, you have that much more available credit (revolving credit).Being a secured product, there are the normal legal and appraisal fees that are applicable. From time to time, there are promotions where a lender will cover for part or all of these costs. A word of caution: Although these lines are very flexible and versatile products, great caution and care should be taken. It is very easy and very tempting to use it for everything whereas normal restraint would have been exercised, and suddenly, there are thousands of dollars more that have to be repaid.


These are mortgages that are assessed on the equity of the home (market value minus the mortgage amount). They can be as high as 80% of the purchase price or value of the property and if more is required, we can look at a small Second mortgage. These are generally offered to applicants that do not meet the normal income and/or credit qualifying guidelines. You may have little or no income verification, self-employed, and/or your credit may be less-than-perfect.


If you wanted the lower rates of a short term mortgage but wanted the security of a long term, why not choose both. Yes, "build your own mortgage" product. You can split your mortgage in to as many as 5 parts, all having different terms, rates, and amortizations, but one total monthly payment. This way, you are spreading the risk. But, be prepared to be "hands-on" and watch the market very carefully here. This is not for everyone, as the time and stress levels are quite high.


When rates are on their way down, or you may feel that they will in the near future, a 6 month convertible mortgage offers you the short term commitment at fixed payments, with an added advantage that while within the term, the mortgage is fully convertible to a longer term from 1 year to 10 years. At the end of the 6 month period, the mortgage becomes fully open, where one can renew with the existing lender or transfer to another lender. Even though it is offered at many financial institutions, there are differences from one to the next.


The AIM mortgage takes care of everything automatically. For Purchases, it includes: Solicitor's legal fees and standard disbursements to close the purchase and mortgage; Title transfer; Title Insurance from Land Canada for the clients; CMHC application fee or Appraisal fee; 1% Cash-Back to cover Land Transfer Tax; Registration of Deed and Mortgage. For Refinances, it includes: Legal fees and standard disbursements to prepare and close the mortgage; Title Insurance from Land Canada; CMHC application fee or appraisal fee; 1% Cash-Back; Registration of new first mortgage; Registration of discharge of existing first and second mortgage. The minimum term available is a 5 year term.


Bridge financing refers to a special, short-term loan needed to cover the time gap when two properties, both firm sales, are involved and the closing dates don't match. The property being purchased closes before the one that was sold. There is a small set-up fee charged by the lender to have the bridge loan arranged, plus the cost of the interest as now you are carrying both properties for a short time. The rate charged on the bridge loan is about 2-3% above the bank's prime.



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