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:
“Your toddler is no longer a baby feeling himself as part of you, using you as his controller, facilitator, his mirror for himself and the world. But he is not yet a child either; ready to see you as a person in your own right and to take responsibility for himself and his own actions in relation to you.”
—Penelope Leach (20th century)
“Loosened from the minor’s tether;
Free to mortgage or to sell,
Wild as wind, and light as feather
Bid the slaves of thrift farewell.”
—Samuel Johnson (1709–1784)