A mirror mortgage is a specialised mortgage loan used to fund the purchase of investment properties with secure long-term leases.
The major difference between a 'normal' mortgage and a mirror mortgage is that there is a balance between the income and debt servicing outflows for the life of the mortgage. This often involves capitising interest as the rental income generated does not cover the interest expense. As the rent goes up according to the long-term lease so does the repayments. Therefore the mortgage is 'mirrored'; e.g., an investor borrows $500,000 @ 6 percent annual interest only to purchase a property. S/he will pay $2,500 per month interest. If the rent is only $2,000 per month the other $500 per month will be added to the total debt.
Famous quotes containing the words mirror and/or mortgage:
“I look for the new Teacher that shall follow so far those shining laws that he shall see them come full circle; shall see their rounding complete grace; shall see the world to be the mirror of the soul; shall see the identity of the law of gravitation with purity of the heart; and shall show that the Ought, that Duty, is one thing with Science, with Beauty, and with Joy.”
—Ralph Waldo Emerson (1803–1882)
“We are playing with fire when we skip the years of three, four, and five to hurry children into being age six.... Every child has a right to his fifth year of life, his fourth year, his third year. He has a right to live each year with joy and self-fulfillment. No one should ever claim the power to make a child mortgage his today for the sake of tomorrow.”
—James L. Hymes, Jr. (20th century)