First of all, if you’re in search of Ontario private mortgage financing, are you sure you have exhausted all the institutional or bank related mortgage financing options? If you have more time to locate financing, you may be surprised at some of the options that could still work for you that would be more cost effective than private money. There are hundreds of mortgage programs out there, each with their own focus area in the market, which can provide options you may not be aware of.
If you definitely need a private mortgage for a residential or commercial property, then here are some things to keep in mind.
First, in order to secure the best deal, its going to be important to focus you efforts more on the local market where the subject property is located. Private mortgage lenders are very regional for the most part. So the more comfortable a lender is with a property, the more likely they are to approve financing and provide better rates as their comfort level in the property as security will be higher and perceived risk of loss lower.
Second, make sure that you’re working with a mortgage broker that has private money sources in your area. There are a couple of reasons for this. First, private lenders in most cases do not access the market directly themselves and tend to work through brokers either through a network or an exclusive arrangement. Second, a well established broker is more likely to connect you with a private mortgage lender that is reputable due to the fact that the mortgage broker has a reputation to maintain and doesn’t want you to have a bad experience.
Third, make sure that the terms of the private mortgage are going to work with your long term financing plan. For instance, if a private mortgage lender offers you a one year interest term, is that going to be enough time for you to get alternative financing in place to pay the private lender back? Alternatively, if the private mortgage loan is only required for a few months, can you get the private lender to provide you with an open interest term after so many months have passed?
If you need private mortgage financing in southwestern Ontario, give me a call so I can quickly assess your requirements and provide you with private mortgage lending options that are relevant to your needs.
Like anything else in life, experience does account for something and that’s no different when it comes to the mortgage broker business, especially these days.
Perhaps in a more settled market, it’s more possible to collect the basic application information for a mortgage financing request, pump it into the system to a number of lenders, and get back a result that’s acceptable to the borrower.
But now more than ever with the new rules that have come into place on mortgage insurance and an overall tightening down on mortgage commitment policies and procedures by lenders, more finesse and knowledge tend to be required to get deals done and get them done in the time required.
More established brokers on average will have more established relationships with mortgage underwriters. So when there are concerns or questions, a direct conversation can keep a deal a live versus a quick no.
There is also a greater demand on brokers to keep up with the trends among lenders in terms of what they are approving and what they are staying away from and how the information needs to best be presented and packaged for the best results.
This can only come with time in the saddle, doing deals for several years. And speed is not necessarily how fast you move. Its more about making sure that any one particular deal is being presented to the most relevant lender with the best potential positioning.
Obviously, for straight forward deals, this is not going to be required in most cases. But most of the deals these days are not straight forward by definition and therefore require a certain amount of expertise to get the deal done in the time required.
The alternative of not working with someone with sufficient experience is no approval in the time you have to work with and deal failure. And while all mortgage brokers and mortgage agents are fully qualified to provide mortgage placement services, they come with varying degrees of experience which can impact how things go in the current market place.
As a general rule, if you know you’re real estate deal or mortgage requirements are going to be somewhat or a lot challenging, then make sure you’re drawing on a greater level of experience when selecting a mortgage broker.
There is nothing worse than a failed deal or suboptimal deal that could have been avoided with a better approach to the market.
While the best commercial mortgage rates come from the major banks, the process for getting anything approved these days from big bank type lenders can be an exhausting process to say the least. As a result, more and more business owners are moving to the mid market commercial property financing programs which are slightly more expensive, but not quite as elusive to secure at the moment.
What also makes things more interesting in the middle is the increase in private lender funds that are available. Many private mortgage lenders prefer commercial properties, especially with well established companies, as they can place larger amounts of their available funds more quickly versus the intensive process of placing lots of smaller amounts. And because of the amount of private mortgage funds available, the first position commercial rates can get as low as 6%, bringing private funds right into the range of mid market institutional lenders.
For deal sizes at or above $1.0 M, the lender fees due on closing or commitment can be quite similar as well depending on the property and location, making the overall financing packages very comparable.
For companies that require financing at minimal repayment burden on cash flow, the interest only requirements of many private lenders can be preferred. But there are also private lenders that will consider amortized repayment as well, once again providing borrowers with additional choices.
Commercial private mortgage can still shoot up to over 10% on more challenging properties. But for the solid commercial deal, especially ones where there is tenant revenues in place, the rates and fees can easily rival traditional options outside of the big banks.
And because the mid market institutional lenders are also after these types of prime lending opportunities, the competition on rates and terms high, providing considerable options to business owners in many cases.
Just remember that these flexibility and choices come with a rate trade off. Big bank financing is always going to be cheaper, but do you have time to go through all the hoops to get the financing, and will you desire more flexibility down the road in terms of repayment?
If you have a commercial property that requires financing, please give me a call so I can quickly assess your requirements and provide relevant options for your consideration.
Most people who’ve ever gotten a mortgage won’t put mortgage and fast in the same sentence. As we now live in a world of instant gratification and results, it can be difficult to comprehend something that can take days, weeks, even months to accomplish.
So when we speak of fast mortgage lenders, fast is a relative term.
If you’re seeking the bank or institutional mortgage at rock bottom rates, fast would be anything done in 2 weeks. And when I mean done, I mean from the time of application to mortgage disbursement, the whole process would only take no more than 2 weeks. That would be very fast for this type of residential mortgage financing.
But if you’re talking fast as in the fastest possible time period to find a mortgage and get it into place, the answer would be 48 hours or less.
For some people, that still wouldn’t be considered fast, but if you’re on a tight deadline and trying to get mortgage financing arranged quickly, then a getting a deal done from start to finish in a couple of days is equivalent to warp speed in the world of real estate mortgages.
Speed relates to complexity and bureaucracy. Remember that the bigger the company you’re working with, the more moving parts, the longer things are likely going to take. While there are exceptions to just about anything, this rule is pretty typical in the mortgage financing world.
Also remember that low cost mortgage is low risk, so lenders are going to want to see and verify more stuff before they start advancing funds. As a result, cheaper money is also rarely fast.
This leads us to the world of private mortgage lenders. In many cases, these are individuals that are working directly with a lawyer. There are no layers of decision makers and procedures to go through. Decision making is largely based on the lenders existing knowledge of the market and with the aid of today’s online technology, a property can be assessed for value in a matter of minutes.
Once a decision is made, most communities now possess on line mortgage registration allowing a residential property mortgage to be set up right from the lawyer’s office in a matter of minutes.
Just remember that this type of speed does cost more so its relevant only to those who actually do need something done as fast as possible to justify the added cost.
If you need to locate and secure financing from a fast mortgage lender, please give me a call right now so I can quickly assess your situation and provide relevant options to you in the next few hours.
In this age of high consumer debt, debt consolidation strategies for Mississauga based properties are not only popular but plentiful.
The basic premise with consolidating debt through mortgage, is to use the existing equity in your home to acquire additional funds that will be utilized to pay down short term, potentially high cost debts that aren’t coming down on their own.
At the present time, with real estate values at or near peak levels and interest rates staying at near historical lows, this is potentially the best time to be undertaking a debt consolidation action.
There are basically two different debt consolidation strategies that can be employed with different variations to each. The first and most common strategy is to refinance your existing mortgage into a new mortgage with a higher approved amount to allow for the pay down of other debts.
The new mortgage can have a longer amortization term than the original mortgage, allowing for a longer repayment terms which will help reduce the monthly payment requirements.
There are many different options and programs to consider in the Mississauga area for debt consolidation through bank and institutional lending sources due to the strength of the overall local real estate market. And even for cases with weaker credit, the area boasts of a number of private mortgage lenders that are able to refinance an existing mortgage if required.
To maximize the amount of borrowing that can be obtained via a bank or institutional mortgage lender, mortgage insurance allows refinancing for the purpose of debt consolidation to go up to as high as 90% of the appraised value of the property. For private mortgages, the max borrowing level is more in the 70% to 85% of appraised value.
The second debt consolidation loan strategy involves placing an additional mortgage behind what you already have registered and owing against the property. Depending once again on the borrower’s credit profile, the additional mortgage can be an amortized payment program or a line of credit.
The rationale typically for securing a second mortgage is to either protect the interest rate of the first mortgage which may be lost through refinancing, or to allow for fast mortgage repayment if the borrower expects their short term financing need to be retired in the short term.
Private second mortgages are very common for debt consolidation, but typically offer only a one or two year term, requiring a future solution to be arranged to pay off the consolidated debt.
If you want to know more about Mississauga Debt Consolidation Strategies, please give me a call so I can quickly go over your requirements and provide relevant debt consolidation options for your consideration.
If you’re considering refinancing your Toronto based residential mortgage, then you’ll be happy to know that your Toronto refinance mortgage options can be better and considerably more in number than if you lived most anywhere else.
The reason for this is directly linked to the Toronto real estate market place, which tends to be one of the strongest and most liquid in the country. Sure, the Toronto market is going to experience ups and downs like any real estate market, but it’s always going to be full of active buyers, which is the main ingredient for a large supply of real estate mortgage lenders, including the more aggressive side of the mortgage market.
On average, both residential and commercial real estate in Toronto is more likely to be sold quicker and for a more predictable value than real estate just about anywhere else in Canada. As a result, mortgage lenders have less fear of loss or having to hold property they have had to take back for long periods of time.
The net result is a higher level of competition for mortgage financing opportunities. For strong or weak credit applicants, this can lead to better loan to value ratios and rates and more lending choices.
Obviously, the higher quality the property is to begin with, the more the above will hold true. But even for less spectacular properties, there typically will be more active mortgage lenders available than you would find in other locales.
Probably the largest advantage for mortgage refinancing comes in cases where private mortgage financing is required. The reasons for needing to refinance via a private mortgage can be considerable including bank mortgage foreclosure, construction mortgage failure, debt refinancing, etc.
Many times private mortgage refinancing offers can be hard to locate or be very hard on rate due to a lack of interested lenders. But many times with Toronto based deals, private mortgage lenders will show a greater interest level for these refinancing deals, even in high distress situations due to the strong re-marketability of the underlying property. And because of the large private lender supply focused on the Toronto market, there is a better chance that someone is going to be interested in your deal.
If you need to better understand your Toronto refinance options, give me a call today and we’ll work through your options together.
There can be many reasons for needing a fast mortgage loan… The bank is foreclosing and you’re trying to save your home; there is a great real estate deal that you are trying to close; you have a commitment to purchase a condo and your original mortgage commitment has fallen through; you’ve run out of time trying to get the best bank mortgage deal; your construction project has run out of money, etc.
It doesn’t really matter what the circumstances are. Bottom line, you need a mortgage and you need it now.
A fast mortgage loan comes from a private lender. Private mortgages are typically the only type of mortgage than can be put in place in 48 hours or less.
If you don’t need it that fast, then there may be other options to consider. But if your time requirement is less than a week, then a private mortgage loan is going to be your option for a quick mortgage solution.
Fast private money will almost always be local, meaning that the lender will have to be situated in your geographic area. By having an existing knowledge of the local market, a private lender can make a decision fast and hopefully be able to provide what you’re looking for.
If you start talking to private lending sources that are not doing business in your locale right now, then the process is not going to be as fast so make sure that the financing source your spending your precious time on is local.
The hard part about locating fast private money is that many private lenders do not directly advertise their programs and instead work through mortgage brokers to gain access to the market.
So you’re likely going to have to find a mortgage broker that has this type of resource in your area.
You’re also going to want to work with a mortgage broker that is used to providing a fast turnaround and is good at managing the overall process versus someone who may attempt this occasionally. You only have so much time, so its important to be working with people who are really good at getting a fast mortgage loan approved and in place in a few days.
If you are in the Greater Toronto Area and are in need of a fast mortgage loan, I suggest that you give me a call right now so I can quickly assess you situation and provide the most relevant options quickly so you’re not wasting any time.
If you have a deal that needs to close right away and you can’t wait weeks or months for mortgage financing, then a fast mortgage closing is what you’re looking for.
Do you fall under one of these scenarios?
If your situation sounds like any of the above, give me a call right away so that I can quickly assess your situation and provide immediate options for you to consider.
I have successfully gotten funding in place in as little as 48 hours for some of my clients.
If you have your information in order and have a property that has some equity in it in a decent market area, then there are likely going to be options we can look at in the next few hours.
Give me a call right now and lets see if we can put something together in the time you have to work with.
There is no cost or obligation for this initial discussion and if I can’t help you, I’ll tell you right away so I don’t waste any of the time you have to work with.
Its not uncommon for mortgage financing to fall apart prior to the purchase being completed, leaving the buyer/borrower scrambling for money to close the deal.
This can be more common than you think and is probably the most common in condo market where a buyer can enter into a purchase agreement and get financing arranged years in advance of when the condo can actually be sold.
Over the time of condo construction, which can take three or four years in some cases, the buyer’s credit rating or level of earnings has eroded to the point that he or she no longer qualifies for the mortgage. Many times this is not discovered until the buyer is in the closing process, leaving very little time to find an alternative method to close the deal.
And the cost of not closing on time can be considerable. First, the buyer can lose their deposit that they paid years in advance to secure the purchase in the first place. Second, the seller can sue the buyer for breech of contract creating more cost and hassle.
The most challenging aspect of this whole scenario is that the buyer can literally have a couple of days to secure alternative financing. And while they may vary well be eligible, an institutional lender is not likely going to be of any help as they can’t move fast enough to accommodate the buyer’s requirements.
If time is literally of the essence where you may be down to your last 48 hours, a short term real estate bridge loan is likely going to be your best option to save the deal. Once in place, you can restart the process for looking for a lower cost institutional mortgage that will pay out the bridge loan when it is located and secured.
The key to getting a bridge loan in place in time is to know where to look for one. Most real estate bridge loans are provided through private mortgage lenders that place their money through mortgage brokers. So the key is to work with a mortgage broker that deals with these types of financing emergencies and has the types of funding sources readily available so funds can be arranged and advanced in the time available.
If you find yourself in similar circumstances to those described above, then give me a call today so I can quickly assess your requirements and lay out your options. I work with these types of requests all the time and have been successful in getting bridge loans in place in just a matter of a few days.
Over the past several months all the residential and commercial mortgage rate increases and projections of more to come have pushed consumers and business owners into a mortgage shopping and mortgage rate following frenzy.
But in the last week or so, mortgage rates have back peddled a bit and the pressure has been let out of the balloon in terms of ongoing rate increases … at least for the moment.
I can understand this to some degree, but all the fundamentals and economic forecasts speak to rates more likely to go up than down in the coming months.
So if you’re in need of a new residential mortgage for whatever reason, it would still make sense to hold the course and try to get the best available deal in place versus waiting for rates to jump up again (which they are more likely to do than not right now) and start the frenzy all over again.
I guess part of the rationale for running hot and cold on rate shopping relates to trying to hit the market bang on so you are always paying the lowest possible rate. For the pure speculator that really focuses on the market and its rate movements, this is just the way they approach interest rate optimization.
But for most of the rest of the crowd, the logic doesn’t hold, at least not for me. During an obvious period of mortgage interest rate stability, it doesn’t really matter how you approach managing interest rate risk in that as rates go up a little or down a little, the gains and losses balance out.
However, when most of the signals that the markets are providing indicate rates going to higher levels, then it now becomes necessary to either do something about it or take your chances.
And while a small percentage of the market will lock in their rates at exactly the right time, most will not and end up paying more than they need to.
No one has a crystal ball with respect to mortgage interest rate movements. But if your cash flow is going to be highly sensitive to higher rates in the future, you may not want to play it too close to the vest when protecting yourself against rate increases, otherwise it could be too late.
My advise? Stay the course. If you need financing or you’re cash flow is rate sensitive, keep working through your options regardless if the rates are going slightly up or slightly down right now. If you can afford to be on the losing side of future rate increases, you may want to continue to speculate on the market.
In the world of finance, especially these days, there is a group of words that’s seldom used when speaking about getting commercial financing in place. If you haven’t already guessed it, I’m talking about words like speed, quick, fast, immediate, right away, in the bag.
Business financing takes time to get in place and in many cases its time you don’t have.
Here are a few examples.
The bank calls your demand loan for no reason other than they can. Your suppliers cut back your credit because they feel like it. You’ve got a purchase order in hand that can double your business, but you don’t have enough money to cash flow the deal. You’re behind on your government payments that you’ve got 60 days to pay up or they’ll seize your bank accounts and call your customers directly for payment of your receivables. The property you’ve been dreaming about getting finally has come on the market, but you only can hold on to the right to buy for 30 days. You’re in the middle of a construction project and you’ve run out of money. etc. etc. etc.
In all these cases, money is required and its required fast, quickly, right away.
And one of the only truly fast ways you can get money these days is via private mortgages on real estate.
Now of course you need to have a piece of real estate that someone is interested in mortgage financing that has some equity in it. And you should have a basic package of information together including a recent appraisal and potentially an environmental report. These two pieces of information are something you should always have done in the last 5 years so you can quickly leverage a property.
You also have to have the willingness to pay more than prime plus one on the mortgage. Private lenders are not cheap, but when you consider the costs you may be incurring for not getting the money in time, or the opportunity cost being lost, the price of a private mortgage can pale in comparison.
So how fast is fast.
Well, for some private mortgage scenarios where everything is readily available to the lender for review, a commitment and disbursement can happen in a matter of days. That’s right, days. Not weeks and months, but days.
Of course, in most cases the process may take a week or two, but compared to the alternative, you’re talking about a rocket sled on rails.
If you have a need for cash right now and need a source of bridge financing for a piece of real estate you own or are trying to acquire, then give me a call right away so I can quickly assess your requirements and come up with relevant options for your review.
Buying a house is a big decision for 95% of the population so the process for locating and securing a mortgage program that best meets your requirements is also extremely important, considering it will be the largest single financial obligation most people will ever have.
So while we’d like to believe the process is super simple and quick to take care of, do you really want to make such a big decision on less than complete information? Even if you can easily qualify for a mortgage, how do you know you got the best deal and how do you know what the best deal is? Is it the lowest interest rate? … relevant to what term? Does the amortization and prepayment options match your financial goals? Did you get pre-authorized for a mortgage approval to allow you to lock in a rate early in the process while still being able to keep your options open related to rate declines? Do you know how to keep your options open? Did you have time to research all the hundreds of mortgage programs on the market to figure out which one is the right one for you? How do you know if your current bank can provide the best options for your situation? Have you been checking your personal credit to make sure its as strong as it can be prior to an application? Do you know how to improve your credit quickly in order to provide for the best mortgage programs? What do the best mortgage programs require in terms of credit? If you don’t have a lot of cash to work with, do you understand the rules related to acquiring mortgage insurance? If you’re credit is not the best, are you focusing on the institutional lenders that still provide the next best rates for less than perfect credit score?
The list can easily go on and on and on. Residential mortgage financing is a process that needs to be customized to each person at a given point of time looking to purchase a specific property.
Learning about how it all works is important. And while many would say its impractical to be able to gather all this knowledge for something you only will ever draw on every once in awhile, the next best option is to work with an experienced mortgage broker who can 1) make sure that you understand what information and considerations are relevant to you, 2) provide you with the coaching it takes to accomplish your ultimate goal.
its not unusual for me to work with clients for several months before the process is complete. Its not unusual for it to take that long, depending on your circumstances. And the sooner you start working on your residential mortgage financing requirements, the more likely the results will work out in your favor.
For low rise or high residential projects, retail developments, industrial developments, or revenue earning real estate that has long term profit potential, financing packages can be hard to put together.
Regardless of the size of the project, the typical required equity portion that a construction lender will require in the deal is 25%. As the project size increases, so does the amount of the equity requirement in terms of dollars.
If the project is sound and can withstand the risk associated with a higher degree of leverage, the builder or owner may need to utilize mezzanine construction financing to make the numbers work.
Depending on the project, Mezzanine financing can be as high as 75% of the equity component of the development. While the funds are being used to cover off the equity requirement, the capital is still registered as a mortgage behind the senior lender position and any other mortgage loans on title. These types of transactions can take on a number of different forms and can be quite complex. But if the project is large enough as well as the potential profit, there is a good chance that different mezz funds will take a good look at the deal.
There are some other requirements to remember as well for mezzanine financing. First, the mezz fund requirement would have to be at least $2 million for most funding sources. Second, the cost of capital would likely need to be between 20% and 30%. Third, if the project was a condo development, there would need to be pre-sales of between 20% and 50%, depending on the project. Fourth, the geography will be critical to the project’s eligibility for mezz financing. This is likely only going to be available in larger centers, or high end resort locations where the real estate market is very active.
Mezzanine loans can be arranged for period of 1 to 5 years, again depending on the nature of the project. There will need to be a clear exit strategy in place as well to secure this type of funding.
If you have a large commercial project that requires additional equity to make the capital structure work, give me a call so that we can discuss your project and capital requirements in more detail.
Yes, we have been on the rate increase band wagon now for several months and by the way, I’m still on it.
All indications are that interest rates in general are going to continue to rise which means more future mortgage rate increases coming your way.
But with this week’s mortgage rate reductions of 15 basis points with most major mortgage lenders, we are reminded of how complex and interrelated the global financial markets are.
With the financial crisis in Greece, the global domino effect has generated a positive interest rate impact in Canada. Don’t ask me how all the math and money movement plays out to give us a short term interest rate increase reprieve. Just don’t get caught up in any thinking that this is a new trend with interest rates going down.
At the same time, rates right now are lower, so if you can take advantage of this short term rate reduction, it can mean dollars in your pocket over time.
If you have been looking at locking in a rate for 120 days or refinancing strategies, this may be a good time to re crunch all the numbers to see if there is an opportunity for you to save some money going forward.
Its also really hard to say how long it will last. All indications are that the Bank of Canada is likely to increase its bench mark lending rate on the first of June. It has been sitting at 0.25% now for over a year and is expected to start going up this summer.
All indicators are still pointing to the continued rise of long term residential mortgage rates so you would still be wise to consider what you’re going to be comfortable with going forward in terms of the mortgage risk you are likely going to be exposed to if you’re in a soon to be expiring interest term or a floating interest rate term.
If you’d like to quickly see what types of rates we can lock in for you today, I suggest that you give me a call so I can provide you with your relevant options for immediate consideration.
One of the challenges with trying to lock in a long term interest rate when you already have one in place is that the prepayment penalty associated with paying out the existing mortgage with a new mortgage is cost prohibitive in many cases.
This is because most mortgages charge an interest differential penalty that calculates the difference in the current rates versus your existing mortgage rates times the amount of time left in your existing mortgage term (the math is a bit more involved, but what I’ve described above provides the basic idea).
Just from a logical point of view, this type of penalty does make some sense as the mortgage lender had to acquire the funds from somewhere in order to provide you with a mortgage. Those funds came at a cost, and the mortgage lender needs to maintain a margin between their own cost of money and the interest rate they loaned the money out at. If they didn’t do this, every time borrowers wanted to move to a lower interest rate, the lender would lose their shirt as they would still need to pay the same original cost of financing on the money they borrowed, but would not be able to re-lend it out at the same rate that your original residential mortgage was written at due to the fact that rates are now lower.
Conversely, as rates rise, the interest differential calculation will drop as the gap between the current rate and your existing mortgage rate will narrow.
So if I’ve totally confused you, I apologize. All you really need to understand is that if you are locked into a higher interest rate term on your existing mortgage, you’re likely going to have to pay a penalty for paying out the existing mortgage early if the current market rates are lower than your mortgage rate.
So other than paying the prepayment penalty, what else can you do to lock in a lower long term interest rate?
One strategy is to ask your mortgage lender if they have any mortgage rate averaging or blending programs available. These programs, which can fall under a variety of names, essentially take your current mortgage term and average it with their posted long term rates to come up with a combined rate that is lower than what you’re paying now and can be locked in for years into the future, depending on the length of time you pick.
Under this type of strategy, you’re undergoing rate averaging, not mortgage refinancing.
The net effect is that you still end up paying the interest owing for the remainder of your current mortgage term, but get to take advantage of the existing lower term rates for the future period you’ve chosen without having to shell out any cash in the form of a prepayment penalty.