Strip Mall and Retail Plaza financing can come from a number of different lending sources, but regardless of the source, there are going to be some challenges that you’re going to need to address or overcome to get the financing you’re looking for.

While there can be a lot of unique commercial financing challenges to any one deal, here are the four most common challenges we come across with strip mall and plaza financing applications.

The four most common financing challenges relate to cash flow, tenant profiles and lease terms, vacancies, and building age, condition. and location.

Let’s start with cashflow.

Many times a strip mall location is going to be acquired because of the future profit potential from lowering vacancies, increasing rents, and so on.

But from the lender’s point of view, the cash flow from operations that will be considered for debt servicing is going to be historical in terms of what is reported in the last several years financial statements. So its going to be important to match up the available cash flow to the right financing scenario and lender to get financing in place to complete an application.

When cash flow improves in the future, then other lower cost, higher leverage financing options may be able to be considered, but at the time of purchase, you have to be best positioning the cash flow that is already in place with the most relevant commercial property lending sources.

Similar to cash flow, the existing tenant mix and leasing terms are going to be important to the application assessment of a commercial property financing source.

For instance, if you do not have any well established anchor tenants, or all existing leases or rental terms are all short term in nature, then it can be difficult to either get financing in place from a preferred lender, or get an interest term longer than a couple of years as most lenders want the lease terms to be at least as long as the interest term extended.

In terms of vacancies, you will likely be projecting a certain amount of cash flow from vacant units in the coming year for debt servicing, but commercial property lenders, who will always take conservative approaches, may discount future rents from the vacancies to zero, taking a worst case scenario into account. This again will impact your ability to meet the debt servicing requirements of certain lending groups and institutions.

The final of what I am calling the largest financing challenges is the age of the building, its location, and condition.

Commercial lenders will look at the building both from a security and unit marketability perspective.

From a security point of view, is there an active market for this type of property in the location in which it resides? How long on average does it take for one of these properties to be listed and sold on the market.

With respect to unit marketability, lenders are going to take note of the age of the building relative to other similar properties in the area. Newer developments are likely going to be able to command higher market rents and will have a greater advantage in attracting tenants due to newness/modernization factors. So market area capacity, vacancy, and rents can play a large role in determining who the most suitable lender will be and what they may be prepared to offer to you.

The best way to proactively address these challenges and/or overcome them is to work with an experienced mortgage broker who can quickly assess your situation and requirements and get you working with the most relevant lending sources for your deal as soon as possible.

Click Here To Speak With Toronto Commercial Mortgage Broker Joe Walsh For A Free Assessment Of Your Strip Mall And Plaza Financing Options

Technorati Tags: retail plaza financing, retail plaza loan, retail plaza mortgage, strip mall finance, strip mall financing, strip mall mortgage, strip mall refinance

Multi unit residential property mortgages are available through a number of our commercial property lending sources.

The key to getting a multi unit property financed is to clearly understand and then proactively addressing what are typically the major concerns with this type of commercial mortgage financing request.

More specifically, the main financing challenges related to multi unit commercial mortgages are cash flow, down payment or equity in the building, and the condition of the building.

So lets start first with cash flow.

When a commercial lender looks at a multi unit residential application, one of the first things they will focus on is the net cash flow available for debt servicing.

This is going to vary among lenders in terms of how much net cash flow is enough, and each lender will have their own additions and subtractions to the operating cash flow statement you provide, but in the end “A” lenders will require a higher net cash flow than “B” or “C” lenders so its going to be important to understand where the available cash flow that you have to work with will fit among lenders that do this type of financing.

And because the lender will typically only rely on historical cash flow, the fact that you may increase rents or reduce vacancy rates in the future will not likely be factored in so you have to work with the existing cash flow when trying to qualify for a commercial mortgage.

The second major financing challenge is the equity in the building for a building you already own, or the down payment you are prepared to make to acquire a multi unit residential property.

The minimum equity requirement for a commercial mortgage on a multi rez is going to be 15% of the value of the property, and at a 15% equity level the building will need to be insured.

In situations where insurance is required, it can be challenging to get the insurer, such as CMHC to insure based on your assessment of fair market value or even the actual purchase price. It’s not uncommon that they make adjustments to the gross value of the property which can reduce the amount of the mortgage that they are prepared to insure, requiring you to need to come up with more cash to put into the property as equity.

The third major challenge when trying to arrange financing for a multi unit residential property is the condition and age of the building.

Older buildings, or ones that require a certain amount of repair, can be closely scrutinized by the lender and/or the insurer which can result in a deficiency list that you will have to rectify before they will advance all the funds approved for financing.

Once again, this tends to be more of a challenge in situations where a high loan to value commercial mortgage is going to be required due to the fact that the lender and/or the insurer want to make sure that the equity they are relying on for security will be maintained during the term of the loan.

If you are looking for multi unit residential property financing for a purchase or refinancing scenario, it can make a great deal of sense to work with an experienced mortgage broker who can help proactively help you overcome the three challenges mentioned above and get financing in place in the time you have to work with.

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

Technorati Tags: multi unit commercial financing, multi unit commercial mortgage, multi unit financing, multi unit loan, multi unit mortgage, multi unit residential financing, multi unit residential mortgage, multiunit financing

When we’re talking about a restaurant property loan, we are referring to a commercial building that is being used as a restaurant by the owner or the building has a tenant that is utilizing it to house a restaurant operation.

In either case, the main lending criteria are going to focus on the brand of the restaurant and the location. Most “A” and “B” lenders will only finance commercial restaurant properties that are branded under a national franchise or a well known restaurant chain.

This is not to say that standalone restaurant operations cannot secure commercial mortgage financing for their operations, but a commercial mortgage is likely going to be harder to come by unless a lender believes there are strong alternative uses for the building in the location where it is situated.

For business owners and property owners looking to secure a restaurant property loan or mortgage, we work with a cross section of commercial lenders that can collectively fund a variety of different restaurant mortgage applications.

All the lenders we deal with can be placed into one of the three following categories.

The first and lowest cost category would include banks and other institutional lenders such as trust companies and credit unions. Lower cost from this group also means lower risk, so the lending and funding requirements will also be the tightest.

The second group or category of commercial mortgage lenders for restaurant real estate properties would include investment funds, hedge funds, and other quasi institutional lenders whose focus is on deals that do not quite qualify with group #1 above. These “B” lenders will still be focused the restaurant brand and cash flow, but will also provide greater consideration for the equity in the property and other risk mitigation factors to get the deal done. Their rates will also be higher, but that will be offset by providing terms and conditions that are more flexible than what you would be able to secure from an “A” type commercial mortgage lender.

The last group is private mortgage lenders which can be an excellent source of short term financing. Once again, the rates are going to be higher, but the application and funding process tends to be shorter in comparison to the other two groups, which can make a private commercial mortgage a preferred option in situations where you have a very tight timeline to work with to close a deal, generate incremental capital, or refinance an existing mortgage.

Application Process For A Restaurant Building Mortgage

To apply for a restaurant property loan, you’re going to need to complete a commercial mortgage application form detailing out the property and potential borrowers for the mortgage.

At least three years of accountant prepared financial statements are also going to be required with more value attached to review engagement or audited statements.

All commercial mortgage lenders will require an AACI property appraisal as well as an environmental audit as well.

Resumes and backgrounds of the owners and operators of the restaurant will also be reviewed by prospective lenders as well as any other information pertinent to a particular application, restaurant brand, and location.

If you are in need of a restaurant property loan or mortgage financing facility, I suggest that you give me a call so we can go over your requirements together and discuss different options that may be available to you in the market place.

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

Technorati Tags: restaurant building financing, restaurant building loan, restaurant building mortgage, restaurant property financing, restaurant property loan, restaurant property mortgage

If you require a commercial mortgage for an existing student residence, or one that is in the process of being built or renovated, we welcome the opportunity to discuss your mortgage financing needs directly with you.

One of the key lending criteria for financing a student residence will be location. Lenders will want to know the distance from the residence to the school, historical vacancy rates, student housing capacity in the area, comparable student housing costs in the area and vacancy rates for similar facilities.

Basically, the local market supply and demand statistics are going to be important to any lender considering long term mortgage financing on a student housing facility.

Mortgage Application Process For a Student Residence

When applying for a commercial mortgage, lender’s will want to first have a full application completed that outlines the ownership structure for the property as well as all the related property information.

For instance, there will be a great interest in the rent roll for the residence as well as any other management information reports that are available to provide data on rents paid, vacancies, seasonality in the occupancy and so on.

From a debt servicing point of view, the application will need to provide accountant prepared financial statements for the last three years if possible as well as well supported set of projections that include a detailed listing of assumptions used to create the forecast and the source documents and logic that support the source documents utilized.

In terms of the physical property, an appraisal is going to be required along with an environmental audit from a lender approved environmental engineer.

Timelines To Completion For A Commercial Mortgage To Finance A Student Residence

From the time of application to funding, most applications for this type of financing can be completed in a 30 day to 60 day period of time.

That being said, the timelines can get extended if additional time is required to complete outside or third party work such as the completion of financial statements, property appraisals, environmental audits, market studies, and so on.

The goal is always to try and cover off all requirements as quickly as possible, regardless of the source for any one particular lender requirement.

The reality at times, however, is that the coordination necessary to meet all lender requirements to first get an approval and then get the deal funded can take longer than anticipated, due mostly to the number of people that can be involved in the application process.

So while 30 to 60 days is a good guide to work from, the sooner you can start the process the better to allow for potential timing issues down the road.

If you require student residence financing right now for a property you own or are trying to acquire, I suggest that you give me a call so we can go through your requirements together and discuss different commercial mortgage funding options that can meet your business needs.

Click Here To Speak Directly To Commercial Mortgage Broker Joe Walsh For A Free Assessment Of Your Student Residence Mortgage Financing Options

Technorati Tags: financing for student residence, mortgage for student residence, student residence financing, student residence loan, student residence mortgage, student residence mortgage ontario, student residence mortgage toronto

Today we’re going to talk about retail property financing for structures such as strip malls, plazas, big box stores, and so on.

When commercial mortgage lenders are considering a retail building mortgage application they immediately are going to focus in on things such as the location, the strength of the retail rent and lease market in that area, the strength of your tenant rent roll if you are renting, or your business financials if you are self occupied.

Commercial mortgage lenders that will look at providing financing for a retail building will typically fall into one of three different categories.

The first category would banks and other institutional lenders. While the cost of financing is going to be the lowest from this group of commercial lenders, the lender requirements are also going to be the highest to assure that rate and risk are in proportion.

The second category of commercial mortgage lenders for retail building financing would be sub prime or quasi institutional lenders such as investment banks, hedge funds, and other forms of organized investor capital interested in commercial real estate financing. This form of financing is ideally suited for those applicants that are just below the requirements of bank financing, or for applicants that are not going to have sufficient time to complete or meet the lending and funding requirements of a bank or institutional lender in the time that the applicant has to work with.

The rates for a sub prime retail building mortgage are going to be slightly higher, but the requirements are also going to be less stringent as compared to an institutional lender.

The third category of lender for retail property loans is from private mortgage lenders, which are effectively short term bridge loans to deal with some combination of tight timelines and funding constraints that can’t be satisfied by the first two categories of lenders.

Application Process And Timelines
For Completion And Funding

The application process is going to include a general disclosure of business owner information, financial statements, appraisal reports, environmental reports, rent rolls, tenant profiles, and anything else that is relevant to a particular situation.

Even though an “A” lender may require more information, fundamentally all lenders will require the primary information listed above. Sub prime lenders and private lenders may be more flexible in working with the information provided which can result in funding approvals that may otherwise not be possible with a bank or institutional lender.

The timelines to completion from application to funding will typically fall in the 30 to 60 day range. This can also go beyond 60 days if additional time is required to get third party reports in from accountants, appraisers, consultants, etc., as each of these service providers will be working within their own work schedules which may not always correspond with your own planning timeline.

Keys To Retail Property Financing Success

The two main keys to retail building mortgage financing is to 1) make sure you have sufficient time to work through the process, and 2) work with an experienced commercial mortgage broker who can get you working with the most relevant lenders as quickly as possible so that you are able to meet your funding requirement in the time you have to work with.

If you require retail property financing, I suggest that you give me a call so we can go through your requirements together and discuss different commercial mortgage options that are available to you.

Click Here To Speak Directly To Commercial Mortgage Broker Joe Walsh

Technorati Tags: retail building financing ontario, retail building financing toronto, retail building mortgage ontario, retail building mortgage toronto, retail property financing alberta, retail property financing british columbia, retail property financing ontario, retail property financing toronto

Office Building mortgage financing or Professional Building Mortgage financing can be placed through a wide variety of lenders, depending on the specifics of any particular application.

Each lender is going to have their own lending criteria, but for the most part, all commercial mortgage lenders that fund office buildings are going to pay close attention to the age of the building, location of the building, and the rent roll or tenant lease contracts in place or expected to be in place in the near future.

For the lower interest rate commercial mortgages, lenders are looking to see that the tenant lease terms match up to the interest term being sought. The quality of the tenant can also be very important in terms of their credit and financial stability that will increase the probability that they will be able to pay their rent on time through out the lease term.

Vacancy rate is also a key consideration as well as the marketing plan in place or to be put into place to reduce existing vacancy.

Lender’s will also look at the average market rent for similar buildings and prefer funding deals where the professional building in question is at or very near market rents as well. When landlords provide leases below market rent, there is a risk that if the tenant were to leave that it may be difficult to replace that tenant at market level or even at the discounted level the previous tenant was at, depending on the vacancy level in the building and the space availability in the area.

That all being said, different scenarios will qualify with different lenders and different lender categories.

There Are A Number Of Different Office Building Mortgage Financing Options Available

If a particular application package cannot qualify with a bank or institutional lender, then there are sub prime options that will be slightly more expensive for the most part, but also somewhat easier to qualify for.

And if short term financing is required to complete a purchase or meet a deadline that would not allow the financing process to be completed with an institutional lender even if the borrower would qualify, private mortgage financing can be a good option to get funds into place quickly, providing you with time to arrange your preferred longer term mortgage funding option.

The office mortgage loan financing options you consider will also be a function of the time you have to work with.

For instance any bank or institutional lending deal will require 30 to 60 days to close and its not unusual for the time period from application to funding to exceed 60 days.  This is largely due to the amount of third party information the lender will require from the likes of accountants, commercial property appraisers, environmental consultants, and so on.  Each of these third party providers will have their own work schedules to manage which can cause delays in getting your requests completed in the time you have to work with.

When the available time is 30 days or less, then private commercial mortgage financing is likely going to be the best option.  This is short term financing which typically only covers a term of one year, but can be a key commercial mortgage financing component to acquiring a property, refinancing an existing mortgage, consolidating debt, or funding construction and/or renovation work.

The key to getting an office building mortgage or professional building mortgage in place is focusing in on the right commercial mortgage lenders with a solid information package.

Its easy to waste considerable amounts of valuable time focusing in on lending sources that have a low probability of being able to fund your deal.

In order to increase your probability of success with office building financing, you should consider utilizing the services of a commercial mortgage broker who can help guide you through the market in terms of who can fund your deal at the point of time you require financing as well as putting together an application package that will proactively answer the questions of interested lenders.

If you have an office building or professional building that requires financing either for purchase, refinance, or construction, I suggest that you give me a call so we can go through your situation together and discuss different commercial mortgage financing options potentially available to you.

Click Here To Speak With Commercial Mortgage Broker Joe Walsh

Technorati Tags: office building financing, office building loan, office building mortgage, office building mortgage alberta, office building mortgage british columbia, office building mortgage ontario, office building mortgage toronto, professional building financing, professional building loan, professional building mortgage

For hotel property financing from a commercial lender, the key criteria for lending is going to start with cash flow, followed closely by vacancy rates and the seasonal use patterns that impact the cash flow of the hotel operation.

Other key lender requirements can revolve around the type of hotel and category. For instance is the hotel property under the flag of a national or international hotel chain? Is the hotel classified as a three, four, or five star hotel? Is it linked into a national reservation system and so on.

Each type of lender will have their own lending/funding criteria related to hotel financing, making it critical to be applying to a funder that is interested in your particular hotel profile.

Lender Categories For Hotel Commercial Mortgage Financing

When it comes to hotel property financing, there are basically three lender categories that can be looked at.

The first category, or lowest rate category would be a bank, credit union, or other form of institutional lender which could include life insurance companies, trust companies, pension plans, and so on.

While category #1 will provide the best rates on the market, their financing requirements will also be stringent and difficult to qualify for at times.

The second lender category for hotel commercial mortgages is would be more of a “B” lending category where the financing target of the lenders are hotels that cannot quite qualify with a bank or institutional lender.

This group would include quasi institutional lenders such as investment bankers, hedge funds, and other forms of investment funds.

The rates will be slightly higher, but lending requirements also not as rigid as you will find in the lower rate lender category.

The third category would primarily include private mortgage lenders which could range from an individual investor to a mortgage syndicate to a mortgage investment corporation.

Once again, the rate is going to be higher than what you would get from a bank or institutional lender, but the qualifying criteria will also be easier to achieve.

Private commercial mortgage financing can be an excellent source of short term funding for a hotel property.

Hotel Financing Application Process

The application process for securing a commercial mortgage on a hotel property is going to start with a completion of a standard application that clearly outlines the ownership of the hotel as well as the guarantors for the proposed mortgage.

Most commercial mortgage lenders are going to want to see at least three years of accountant prepared financial statements as well as three years of operational data to clearly understand the room and service pricing, vacancy rates, and so on. The property will require an AACI appraisal as well as an environmental audit. Financial projections will be required for the next three to five year period with all assumptions clearly outlined.

If the hotel has a marketing plan, this would also be useful for assessing the business viability of a funding application.

The resumes of the owners and managers will be required to better understand the experience that is available to the business.

There can be several other lender requirements in a hotel financing application, but the above items represent what would be required in any application.

Timelines For Completion Of A Hotel Property Financing Application

The average time of completion from the point of application to funding typically ranges in the 30 to 60 day range. The process timeline can extend even further depending on the amount of time it takes to receive all the third party requested documentation such as financial statements and appraisals.

Depending on the area and time of year, third party experts such as accountants, appraisers, and consultants may have a back log of work which can take them longer to complete your requirements.

This is another reason why the process for hotel financing should be started as soon as possible so there is plenty of time to fully explore all the relevant commercial mortgage financing options available to you.

Best Approach For Securing Hotel Property Financing

Compared to other forms of commercial property financing, a hotel finance solution is one of the more complete to arrange due to the fact that the lender or funder needs to assess both the hotel property and the business operating within it.

Commercial mortgages for tenanted properties can be much more straight forward to assess in terms of the cash flow and debt servicing requirements now and in the future.

From a lender point of view, it can also be hard at times to identify which lenders are funding hotel applications and what their lending/funding requirements are.

Commercial mortgage lenders typically are in and out of this market, depending on the strength of the economy and the strength or weighting of their portfolio.

As a result, its easy to waste valuable time working through an application with a lender that has a very low probability of actually funding your deal at the point in time you require funding.

So from both a application complexity and positioning point of view, and lender market understanding, it can make a great deal of sense to work with a commercial mortgage broker who has a good understanding of the market place an is experienced in putting an effective application package together for any targeted commercial lenders.

If you have a hotel property financing requirement for acquisition, construction, or commercial mortgage refinancing, I suggest that you give me a call so we can go over your situation in detail and review commercial mortgage financing options that available to you.

Click Here To Speak With Commercial Mortgage Broker Joe Walsh

Technorati Tags: hotel financing, hotel mortgage, hotel mortgage financing, hotel mortgage loan, hotel property financing, hotel property financing alberta, hotel property financing british columbia, hotel property financing ontario

Collateral mortgages are getting more air play as some of the main line mortgage lenders are slowly or quickly moving to them.

Unlike a standard mortgage that results in a charge being placed on the property title, a collateral mortgage is actually a promissory note with a lien registered against the property.

In the past, collateral mortgages in the mortgage financing world were mostly used with secured lines of credit, but now there is a greater interest in using them with conventional mortgage lending.

The reason for this is two fold. First, because normal regulatory limitations on loan to value do not apply, a mortgage lender can register a lien for an amount greater than the property value, at a rate higher than current market rates. This allows the lender to be able to provide additional advances as well as increases to rate during the life of the mortgage without having to pay out the existing mortgage or re-register mortgage security.

So on the one hand, the collateral mortgage provides borrowers with potentially easier access to future borrowings at lower mortgage placement costs. On the other hand, the collateral mortgage also serves as a barrier to the lender to get a second mortgage from a different lender as the collateral charge will not provide any security value to another lender, regardless of the amount of money owing on the original mortgage.

As a mortgage tool, the collateral mortgage and be a great fit for a borrower, provided they understand how it works and the benefits it does offer are things that the borrower thinks they may be able to take advantage of in the future.

That being said, a lack of full understanding of how the collateral mortgage will function can cause problems down the road, especially if the borrower is not able to qualify with their existing lender for incremental borrowing at a time when funds are required.

But even if incremental funds cannot be secured, the borrower can still take advantage of the prepayment options provided in their collateral mortgage, refinance with another mortgage lender and discharge the collateral mortgage in the process. This will incur incremental legal costs and in most cases a collateral mortgage cannot be relocated to another lender so a new mortgage will need to be underwritten and charged on title.

The best course of action to find out more about a collateral mortgage or a specific mortgage program that may or may not have a collateral mortgage charge associated with it is to work with an experienced mortgage broker who can serve as an independent adviser to you for no cost in most cases.

Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh

Technorati Tags: collateral mortgage advantages, collateral mortgage draw backs, collateral mortgage pros and cons

Commercial mortgage appraisals are a critical part of getting a commercial property in place.

And depending on the scope of a given commercial property appraisal and the activity or demand for commercial appraisals in a given area during a given time period, the completion of a commercial property appraisal can take several weeks or even months to complete and can add considerable time to the commercial mortgage application process.

A commercial real estate appraisal can also come with a significant cost to complete, so time and money are both going to potentially come into play.

As a result, there are a number of watch outs and considerations for anyone applying for a commercial mortgage.

First of all, most commercial mortgage lenders will have their own accepted or approved list of commercial property appraisers. Any appraisal presented to them that was completed by an accredited or non accredited appraiser from outside their list will not be considered.

This creates a bit of dilemma in that some property owners, knowing the amount of time that it can take to get a commercial appraisal completed, will want to get an appraiser working on their property prior to even applying for financing.

This is truly a risk in that if the appraiser selected is not on the approved list of the lender you’re trying to work with, the appraisal may have to be redone which is going to take time and money. That being said, if you have a good idea of the lender or lenders that you are likely going to be working with or applying with, you can do some checking and find the appraisers that are approved on all or most of the targeted lenders’ lists.

A second challenge with commercial mortgage appraisals is that they are going to have to be made out directly to your targeted lender, even though you are paying for them. As a result, the commercial lender will get a copy of the appraisal, but you may not. This is something you will want to discuss in advance with any lender you want to apply with if you will want a copy of the appraisal for your own use and potentially have one or more copies of the appraisal sent on to other lenders if your financing request is not approved.

The lender may also have an agreement with their approved appraisers that any appraiser they receive from a given appraiser cannot be re issued for a period of time, say 60 days. This restricts the amount of shopping you can do with a completed commercial appraisal.

Third, it can be a good idea to find out how busy the appraisers in your area are at a given time. There can be periods of time when commercial activity is high that it may take a month or more before an appraiser can even start working on your file. Because there are significantly fewer certified commercial appraisers than residential, the demand for appraisal services can outstrip the available supply, and when you further limit your choices to lender approved appraisers, there can be a considerable back log in getting the work completed.

Of all the aspects that can go into a commercial mortgage, the commercial real estate appraisal can be the most difficult to accomplish and can add the most time to the overall process, which speaks to the need to closely manage this requirement, even before you formally apply for commercial property financing.

Click Here To Speak With Commercial Mortgage Broker Joe Walsh

Technorati Tags: commercial mortage appraisal considerations, commercial mortgage appraisal issues, commercial mortgage watch outs

By November, 2012, all mortgage lenders governed by the department of finance are going to have to provide more clear and concise mortgage prepayment penalty information which will need to include how the calculation will be made, calculation sheets for borrowers to utilize, where to find the different inputs into a calculation, and even how to prepay the mortgage without incurring a prepayment penalty.

This move has been promised for the last two years by the department of finance and now its finally coming into practice.

While greater transparency is welcomed by all mortgage holders, some would argue that the finance department has not gone far enough and in fact should require all mortgage lenders to follow a completely standardized prepayment penalty policy and calculation.

The argument against this is that each lender has a different set of costs they are trying to protect themselves against, and forced to follow a single prepayment policy, there could end up being higher rates in the market place and a reduction in the number of different mortgage programs that exist in the market today, which effectively is a reduction of choice to the consumer.

And while a standardized prepayment policy and payment is not likely to be legislated any time soon, the implementation of more transparent prepayment language is definitely a step in the right direction and will provide consumers not only with better tools to avoid prepayment penalties, but to also make better decisions with respect to selecting a mortgage in the first place as prepayment penalty is typically one of the least focused on an understood aspects of a mortgage contract.

But even with greater disclosure, potential prepayment calculations can still be difficult to understand fully. Which is why its always good to work with an experienced mortgage broker who can help you compare and fully understand the potential prepayment penalty that you could be facing with different mortgage options you are considering.

There can at times be a trade off between rate and prepayment in order to meet your preferred mortgage repayment strategy, so its definitely a good idea to go through the exercise of fully understanding this item before signing up for any mortgage program.

If you would like to better understand your prepayment options for a mortgage you have right now, or for a mortgage you are looking to get in place, I suggest that you give me a call so we can work through the lender’s prepayment policy and calculation together and help you determine which course of action makes the most sense for your situation.

Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh

Technorati Tags: calculating mortgage prepayment, mortgage lender prepayment policies, mortgage prepayment disclosure legislation