The new lower fixed terms mortgage rates on the market at 2.99% for a five year stripped down fixed mortgage and a 4 year fully loaded fixed mortgage are also available for rental properties.

I’ve been getting this question a fair bit in the last two weeks since the the 2.99% five year term hit the market place.

And if you are an investor with rental properties, the programs that are out can be utilized for rental property mortgages, provided that any one specific rental property meets the rest of the lending and funding criteria of the lender.

This is great news for rental property investors as they too have the ability to potentially lower their capital cost and increase the profitability of these properties.

With more lower rate programs expected in the short term, its likely there will be even more market choices to consider before too long.

If you have a rental property that you would like to better understand your rental mortgage refinancing options to take advantage of these lower rate fixed term programs, I suggest that you give me a call so we can go through your situation together and discuss the different options that are relevant to your situation.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Rental Property Financing Options

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The mortgage market has started off 2012 with a bang with BMO leading the way with their 2.99% fixed rate five year residential mortgage.

Added to that the news last week that the Bank of Canada will not change the overnight lending rate which has been sitting at 1% for the last 16 consecutive months (new record), and all near term indications are that rates are going to stay where they are, or perhaps even go lower in the short term.

The advertising of the 2.99% mortgage rate has taken the market by storm with lenders, brokers, and consumers getting caught up in a major mortgage product offering a still lower rate than we’ve gotten used to over the last number of years.

But while the rate is exceptional, the overall mortgage product does come with its limitations.

First of all, this is a closed mortgage with an annual prepayment option of 10% when the industry average is 20% per year.

This mortgage product has other stripped out features that are common in most other BMO residential mortgage products.

But lower rates, mean lower risk, so its not uncommon, and even expected that the lowest rate offerings on the market are going to have mortgage feature trade offs to consider.

That being said, if you can work with the 5 year term as written, then this is an excellent rate which is going to be in place for a full 5 years, regardless of what happens in the mortgage market place during that same time period.

In keeping with the cost benefit argument, we also currently have at our disposal a 2.99% mortgage rate product for a term of 4 years where many of the aforementioned standard mortgage features are not stripped out of the product.

So for those of you who are looking at a great rate and all the bells and whistles, this is a great product to consider for a new home purchase or a mortgage refinancing scenario.

Even though the market place is blessed with a large cross section of mortgage products, each lender is trying to differentiate themselves in the market to some degree, so its important to be able to understand not only the selling features of any given mortgage product, but also how they will be applied in real time once you have a mortgage in place.

Therefore, we always strongly advise that you work with an experienced mortgage broker who can go through the mortgage programs most relevant to your requirements, and take the time to help you clearly understand the trade offs from one product to another as well as how each product may impact you projected financial planning.

If you’re interested in learning more about these lower interest rate mortgages on the market, I suggest that you give me a call so we can quickly go through your requirements and discuss mortgage programs that are the best fit for your needs.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Residential Mortgage Options

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Land development refinancing typically occurs when a project has completed the initial planning stage and requires incremental capital to develop and service all or part of the development, or when the term is up on an existing mortgage and the lender is no longer interested in keeping their funds in the project.

The initial mortgage that is in place may have been a land loan to help acquire the property, or a mortgage acquired post acquisition where funds were used to help fund the planning work required to get all the necessary approvals and zoning changes required to move the project forward.

If the land development refinancing is at the stage where construction development work is going to begin or continue, then the sources of financing that will consider this type of opportunity will be looking very closely at the property owner or developers cash development plan as well as their exit strategy to repay the debt.

From a cash investment point of view, institutional lenders can vary in terms of their interest in funding both hard costs and soft costs. Its not uncommon for the lower cost forms of construction financing to only finance a percentage of the hard costs, requiring the developer or property owner to fund part of the hard costs and 100% of the soft costs as the work is completed.

The exit strategy is also going to be important and its not uncommon for all forms of land development refinancing sources to want to see a significant number of pre sales before they will be prepared to fund a particular project.

Its not uncommon for a development property to appreciate considerably in value once zoning milestones and site plan approvals have been acheived.

However, in order to leverage the incremental market value in the land, the combination of cash investment in the project to date as well as incremental cash to invest and a solid exit strategy are still going to be important aspects of getting land development refinancing.

This is why its important to start working with potential development refinancing sources early on in the process so you can make sure to structure both your cash flow and business model in a fashion that will most likely meet with lender requirements.

Otherwise, land development projects that have a lot of potential can still have a hard time attracting capital due to their inability to sufficiently cover off lender risk.

If you in the planning stages of land development project, or require land development refinancing for a project you are currently in the middle of completing development, I suggest that you give me a call so we go through your requirements together and discuss potential land development refinancing options that may be available to you.

Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Land Development Refinancing Options

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Land development financing either for a subdivision or site development work prior to building construction can be considerably harder to locate and secure at times compared to conventional construction financing.

The main reason for this is the amount of variable that are associated with land development work as compared to building construction that is being performed under a building permit.

With land development financing, the magnitude of risk is much higher due to the unknowns associated with moving earth and working in the under ground. More things can go wrong and/or will take more funds to complete than budgeted. And unplanned items can also crop up that have to be dealt with.

Needless to say, there is a considerable amount of skill required to manage land development projects which is also why builder or developer experience tends to be the first main criteria considered by most sources of land development loans.

And experience can relate to a number of things such as 1) the number of projects the land developer has worked on of similar size and scope to the one requiring financing, 2) the degree of success they have had completing the project within the regulatory requirements and budget, 3) the amount of financial success or failure they have encountered from past projects, and 4) the level of customer service they have extended to those they have sold developed property to.

Outside of developer experience, there are many other critical elements that a construction lender will look at when considering land development financing including the amount of pre-sales that have been made, the source of the budgeting estimates, the amount of equity invested in the project, and the overall timelines and details for both completing the work and reaching the planned point of exit just to name a few.

Also, depending on how the business model for a given project is structured, it may not suit the lending/funding requirements of certain lenders so its going to be important to understand who in particular will be interested in a deal, or how the deal will have to be structured or altered to meet the sources of funding that are available to the developer.

The best way to land development financing is to work through an experienced construction mortgage broker who has access to a broad cross section of commercial mortgage lenders that will consider these types of projections.

If you are in the early planning stages of a land development project, or in the middle of an ongoing project, I suggest that you give me a call so we can go through your requirements together and discuss different land development financing options available to you.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Land Development Financing Options

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Subdivision development financing is arguably the toughest form of construction financing that there is to arrange.

The main reason being is that there can be an enormous amount of requirements and moving parts where if even one cog in the wheel starts to stick, the whole project can become delayed or even collapse.

Compare this to construction financing where a building permit is issued by the governing body responsible for building requirements on the property and development financing becomes a whole different kettle of fish.

In many cases, subdivision development financing is not provided by banks or institutional lenders either. This is largely because the projects cannot provide cash flow debt servicing for large periods of time which is viewed to be a higher risk lending scenario and as a result, does not tend to meet the risk requirements of front line branded lenders.

To provide subdivision development financing, the lending source has to understand the business and have the ability to assess the status of a given project and be able to determine if a deal can be structured that will meet the lending/funding requirements of the organization.

Because of the amount of detail that can go into a development, a non experienced lender or non specialized lender can have a hard time wrapping their head around the deal and typically a confused mind always says no, so its going to be important to be working with someone who knows their way around subdivision development financing.

Aside from the requirement complexity, a suitable lender is going to be focused in on the capital contribution made to the project by the developer or developer group as well as the exit strategy for selling off the development and repaying the construction development mortgage.

Many times, subdivision developers will either sell off the developed lots to builders, or partly sell off lots and partly build out lots themselves.

In either case, the strength of any sale arrangement, including the financial stability of the buyer or buyers is going to be key to any lender that will consider providing subdivision development loans or mortgages.

From an owner or developer financial contribution stand point, the more funds invested in the project by the owner or owners, the stronger the likelihood of acquiring development financing as well.

There is no question that as planning milestones are met that the value of the property goes up in value and over a period of time, the completed regulatory work can add considerable market value to the real estate.

But relying heavily on sweat equity can also limit the number of potential lending suitors as there is no replacement in the risk assessment model for the investment of hard cash.

Developments that are in outlying areas are also going to be more challenging to finance as compared to those in major centers.  But if the lot absorption rates are reasonable and the project timeline not extending past two or three years, then the probability of subdivision development financing being available to your project is going to be a lot higher.

If you have a subdivision development project that you are planning or are in the middle of where development financing will be required at one or more stages of the project, then I suggest that you give me a call so we can discuss your project in sufficient detail and see what subdivision development financing options are available to you.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh

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We are now closing in on one year since the mortgage rules have been tightened up for insured mortgages.

With regular news reports on the high levels of consumer debt in Canada, there has even been some talk about further tightening of mortgage regulations.

While its hard to imagine further changes to mortgage rules at this point, it is somewhat surprising to read news reports that make claims that Canadian consumer debt is higher than American or British consumer debt levels.

Of course we have to take all these reports with a grain of salt as virtually all are done through some sort of survey for which the related accuracy or inaccuracy can be roundly debated.

Regardless of which country’s debt load per capita is higher, the fact remains that the average Canadian is carrying a high debt load and is having trouble getting it paid down.

Reducing debt load is all about paying down the principal loan or debt amount outstanding.

Being that most people are not likely going to be able to suddenly increase the amount of money they make each and every month, the debt reduction exercise has to turn to putting more of the available dollars towards principal reduction.

This is primarily done in two ways.

The first most obvious way is to reduce discretionary spending and put those dollars against debt balances outstanding.

The second most potentially impactful way to reduce debt is through reducing the cost of capital on the debt that is outstanding.

The keys to reducing the cost of capital on debt is to access cheaper forms of capital by leveraging assets that can be pledged for security and your personal credit score.

This is where mortgage financing comes into a play in a major fashion for those that have equity in real estate.

Consumer debt is in many cases unsecured debt which not only tends to provide higher and higher interest rates over time, but also has a negative impact on your credit score when you are utilizing a high percentage of available credit.

And most of the debt or credit that impacts your credit report is unsecured and/or revolving forms of credit, not mortgage credit.

So when you are able to pay down the sources of credit through mortgage financing or mortgage refinancing, you can potentially access cheaper capital through mortgage financing and have your credit score improve through lower credit utilization of the sources of credit that are tracked by the credit bureaus. This will in turn lead to lower cost secured and unsecured consumer debt.

As I stated at the outset, a lower overall cost of capital allows more of your monthly cash to be available for debt pay down.

While this is not going to be a solution for everyone with high consumer debt, for those that have equity in real estate, there is no time like the present to see if you can devise a debt reduction strategy through greater leverage of mortgage financing.

The best way to determine what options are available to you and how to go about taking advantage of them is to work directly with a Toronto Mortgage Broker who has the experience and lender sources required to make this approach work.

Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Mortgage Options

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Your mortgage refinance options are going to depend on the specific circumstances that have lead up to the need for this financing action to be considered or be required.

The first consideration when looking at a mortgage refinance scenario is what is the purpose or need for mortgage refinancing in the first place?

Here are the three most common reasons or needs for a mortgage refinance action.

• The borrower require additional financing against a property and wants to pay out the existing mortgage or mortgages registered against the property with a larger new mortgage.
• The borrower wishes to acquire a better interest rate and/or better mortgage terms from a new mortgage lender which can create the need to acquire a new mortgage (versus transfer the existing one) to payout the existing mortgage held by the current mortgage provider.
• The current lender is not prepared to extend a mortgage renewal causing the borrower to need to seek out a new mortgage provider while using the mortgage refinance process to accomplish this move to another lender.

Regardless of the reason, a mortgage refinance creates the need to create a new mortgage or rewrite or amend the existing mortgage either to change the terms of the mortgage or to transfer it to a different mortgage lender.

The second second consideration when looking into mortgage refinancing options is the structure and requirements of any existing mortgages that would be paid out through the mortgage refinancing process.

Regardless of how a mortgage refinance is funded, any existing mortgage payouts may be subject to prepayment penalties which may not make payout the most cost effective approach.

This is where consideration is given in certain situations to a second mortgage or home equity line of credit as other options to provide additional capital for the least amount of cost.

The third consideration is given to the financial and credit profiles of the borrower or borrowers.

Forced refinance mortgage actions where either the borrower must find another mortgage lender or a certain level of funds are required, can reduce the number of potential options that are available to an existing borrower.

And mortgage refinance actions that take place when cash flow and credit are weak or sub optimal may limit the available choices for mortgage refinancing to short term lending options like private mortgages where financing can be put into place to stabilize a situation and allow time for lending criteria to be strengthened.

Because every situation is somewhat unique, and also because lender programs can change on a regular basis, it can be hard at times to determine what the most cost effective options are for a mortgage refinance requirement.

The best approach for getting a good mortgage refinance result is to work directly with an experienced mortgage broker who can thoroughly go through your situation and requirements and provide you with relevant options for your consideration.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Mortgage Refinance Options

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Mortgage refinancing is not an action restricted to those that either require additional funds from their property or those that are required to find a new mortgage provider.

The reality is that every time a mortgage interest term is coming to its end, mortgage renewal with the existing lender as well as mortgage refinancing with potentially a new lender is something that should always be considered.

The reasoning here is that, depending on who’s statistics you adhere to, mortgage lenders renew about 80% of their existing mortgage portfolio. Or put another way, of the accounts that are paying on time and have not provided any repayment for the lender, the level of renewal is extremely high.

So while getting the renewal is a very important business activity for mortgage lenders, the renewal process is not necessarily approached as a way to renew the customer for their continued loyalty.

In fact, most mortgage renewal offers provided by mortgage lenders to their existing borrowers offer the bank or institutional lender’s posted mortgage interest rate.

This is typically not the best rate that the lender is prepared to offer, but its the starting point for the renewal process.

In most cases, the mortgage holder will sign the renewal for potentially a higher than market interest rate, and continue on with the lender for a further interest term.

Being open to mortgage refinancing is simply developing a mind set that your goal when committing to a new interest term is to get a market rate for your particular situation. Being that everyone’s property, level of income, and credit profile are going to be different, what’s best for one borrower is not necessarily going to even be available for another.

That being said, when you get to renewal time, it makes a great deal of sense to respond to the mortgage lenders offered renewal rates by asking them if they can quote a lower rate.

It also makes sense to go to the market place through an experienced mortgage broker and get competitive rate quotes as well.

And while costs are incurred to switch from one lender to another, the cost savings on interest can far outweigh the incremental cost of moving. Some mortgage lenders even pay for the transfer costs themselves.

After going through a market rate comparison, if you find that your current mortgage lender is prepared to offer you a proper market rate for your new mortgage term, then it likely makes sense to just stay where you are.

But the point here is that its up to the borrower to make sure the relationship stays equitable, otherwise you may end up paying a higher rate which over time can add up to a considerable amount of money that could have been used for other things, such as paying down the mortgage principal.

If you are going through a mortgage renewal process and want to discuss mortgage refinancing options, then I suggest that you give me a call so we can go over your situation and requirements together.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh

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When you have a mortgage term coming do, what do you typically do?

If you’re like most Canadians, the answer would be very little which is hard to understand considering the potential amount of money involved and its impact on your cash flow which directly influences your life style.

Studies have shown that more than half of mortgage holders are likely to renew their mortgage with their current mortgage provider without first making sure that their new offering was competitive in the market place.

There is nothing wrong with being loyal to a lender and vise versa, provided that the business relationship is equally good for both parties.

And because mortgage lenders all know through their own surveys and data analysis that the majority of their mortgage holders review, there is no incentive for them to offer a best in market renewal option or even one that’s close.

That being said, if you a mortgage lender has room to move in their rate and you are prepared to leave for a better one, they are likely going to improve their offering to you to retain your business.

But that also speaks to you understanding the options that are available to you in the market place and how the process works.

Whether it seems logical or not, if you want to stay put with your current mortgage provider and still want to be paying a competitive interest rate, then you’re going to have to do at least some market research, or get someone like an independent mortgage broker to do it for you.

With knowledge in had, the same knowledge that your mortgage lender already holds, there is more likely going to be the opportunity for a fair and equitable deal constructed that benefits both parties.

And also remember that there is a certain level of precision required with these numbers so you also need to pay attention to the details as close enough will likely take more money out of your pockets than you may be aware of.

Take the example of a $300,000 mortgage. If you are able to get your current mortgage lender to reduce their mortgage renewal offering by 1/2% based on competitor offerings, this basically increases your annual cash flow by approx. $1,500 to spend with as you please, including paying down the principal on your mortgage.

Better this amount go into your pocket than the lender’s pocket.

Once again, nothing wrong with staying put with a lender, provided that its equitable to do so.

Click Here To Speak Directly With Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Mortgage Renewal Options

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Taking a similar move to TD Canada trust, ING Direct will now require that all their new mortgages be placed with a collateral charge.

The collateral charge mortgage has made a lot of news lately in terms of how it will impact borrowers and borrower movement from one mortgage lender to another.

If you’re not completely up to speed on the topic, lets walk through a simple example.

If you have a $300,000 property and accept mortgage financing for $150,000, the mortgage lender will register a collateral mortgage for the full property value or $300,000.

From the lender’s point of view, the borrower can now refinance and/or take on secondary mortgage products from the lender without incurring any legal costs.

From the borrower’s point of view, the collateral charge pretty much eliminates the ability to get second mortgage financing or home equity lines of credit from any other lender than your first mortgage provider.

For a more in depth discussion on the topic, here’s a link to a recent article on the ING collateral mortgage move …. http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2011/12/ing-direct-goes-collateral.html

ING appears to be banking on the fact that is going to be better for the majority of its customers and that’s why its making the move.  One can also argue that it may further increase borrower retention as well as provide a spring board or ING’s much anticipated HELOC program launch which would work well with a collateral mortgage for existing clients.

In the article linked to above, there is also the debate as to how the competitive landscape will now change among mortgage lenders.

With a collateral mortgage, once a term is up, it will be interesting to see how the competitive offerings change with respect to paying switchover fees to grab customers.  Right now, there aren’t many lenders that offer it, but that could change in the near future as well.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Mortgage Options

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