When you are able to secure a new mortgage even though you have bad credit and are able to consolidate some or all of your outstanding short term credit (credit cards, lines of credit, demand loans) in the process, you will likely see a positive jump in your credit score.
While there are a whole bunch of things that impact your credit score, the three most common items are 1) late payments, 2) frequent inquiries, and 3) high utilization of existing credit.
Late payments and inquiries will stay on your credit report for years. But by paying down your unsecured or on demand credit facilities, the change on your credit score is quite fast, increasing your credit score in the process.
How fast? Typically a pay down of short term credit, without impacting the total amount available, can see a positive change to your credit score in 30 to 60 days.
The amount of the change to the score will vary considerably from one person to the next and will be related to the amount of the pay down in terms of total dollars and per cent of available credit.
While every situation is unique, its not unheard of for these pay downs to net the creditor a credit score gain of 50 points or more. This can push you from the ranks of bad credit to good credit, depending on your starting point.
Once this credit score gain has been realized, keeping it there is up to you and your ongoing credit practices. This may also allow you to apply for additional credit or lower cost credit.
One major benefit would be if you used a short term private mortgage to consolidate your debt. This mortgage will likely need to be repaid in one years time, so if the consolidation process gets your credit high enough to be considered by a bank or institutional lender, you have effectively used the private mortgage to put yourself in a position to qualify for a longer term, cheaper mortgage financing solution.
If you’re in need of a bad credit mortgage for real estate purchase, mortgage refinancing, or debt consolidation, give me a call so I can quickly assess your situation and provide bad credit mortgage financing options for your consideration.
From a commercial property financing point of view, it has produced a bit of an odd mix.
On the one hand there is hyper competition for the grade A deals as large commercial property investments will always be a sought after asset for any major lender’s portfolio.
On the other hand, commercial property mortgage financing deals that are just the slightest bit off in certain lender assessment areas are having a hard time getting bank or institutional mortgage commitments in place.
Even for the better deals, the turn around time from application to funding can be several months as lenders work hard to avoid making any financing mistakes. This has resulted in more detailed assessments, more third party verifications, more of just about everything.
The net results are 1) it can be hard to tell who will fund your deal if its not Grade A quality, and 2) its hard to know how long the funding process will take.
This has increases both the supply and demand for private mortgage or non institutional lender financing for commercial properties where borrowers are prepared to pay a little higher interest rate in order to just get the deal closed, get the old mortgage paid out, or secure additional working capital for their business.
Private mortgage financing options also tend to be short term in nature, providing the property owner with the opportunity to continue pursuing a longer term bank or institutional lender solution that will eventually pay out the private financing arrangement.
The hard reality for many commercial property owners is that the path to ideal long term mortgage financing can be a two step process where a short term private mortgage instrument is required in the near term to provide the capital and time required to figure out a longer term commercial property financing option.
This of course leads to additional costs that anyone would want to avoid. But if its either the two step or no step option, paying a bit more through multiple mortgage options in a relatively short period of time is something that has to be seriously considered, at least until the capital markets settle down and things become more predictable.
When we are speaking of private lenders in Toronto, we’re talking mostly about individuals or small corporations that provide real estate mortgages for residential, commercial, and industrial purposes.
The growth of private lenders in recent years has been significant as more and more investors become disenchanted with the stock market and the lackluster returns they have gotten over the past decade or more.
The result has been a growing supply of private mortgage financing sources that more and more people are taking advantage of.
Traditionally, a private lender was considered to be a hard money loan provider that would basically only lend on bad credit cases for very high rates of interest.
But the business of private mortgage financing has evolved into the main lending stream, providing competition and real alternatives to banks and other institutional lenders.
While there’s lots more of them around, and the use of their services can be applied to a lot of different situations, they still aren’t that easy to find.
Mortgage investment corporations that are created to manage and place mortgages for private lenders do advertise and have store front locations for the public. But this represents a very small percentage of the overall Toronto private lender market.
The majority of private lenders work through mortgage brokers and allow the mortgage broker to be the front line contact with the customer, many times not wanting to be directly involved with the borrower themselves.
And while there is a well developed mortgage broker network, with most mortgage brokers having at least some direct or indirect access to private lenders, the best access to private mortgages is through Toronto mortgage brokers that maintain very active relationships with their private mortgage sources.
The reason for this is that a private lender will have their own unique way to look at a deal as well as the information they want to see and the manner in which they administer mortgage requests. Having a working relationship with a number of private lenders provides a much stronger connection to the money you’re looking for versus through a mortgage broker who knows where to refer private money requests only.
Because of my strong private lending relationships here in Toronto, I recommend that you give me a call if you have a private mortgage financing requirement or have one that you would like to discuss with a mortgage professional that specializes in this area of mortgage financing.
The diversity of Ontario’s Cottage country also can produce a diversity in mortgage program options from one location to another.
Cottage mortgage programs will also vary by type of structure, its access to water and sewer, as well as where its situated in its local market. For instance, properties that are in a more populated or filled out cottage area are going to have a stronger resale market on average than properties that may be in the same general locale, but are sitting more on the outskirts in a more remote setting.
Mortgage lenders, both institutional and private, will have differing opinions of one cottage market to the next as well. Stronger markets will command higher loan to value ratios in certain situations and greater overall lender interest.
Bank and other institutional mortgage programs also offer insured products to allow you to acquire the same sort of higher leverage, lower cost residential mortgage that you could perfect in a larger urban area.
From a private mortgage point of view, the amount of lender interest and the mortgage rates and fees are going to depend largely on the resale market for similar assets. The more remote and unconventional the cottage property is, the less likely it will able to attract any type of financing.
While not common, there are also situations where cottage loans can be secured on land that is leased. National parks and first nation’s reserves can sometimes provide long term leases to occupants which do not allow a mortgage to be registered, but due to the strength and length of the lease in place, some lenders will provide a cottage loan on the value of the building only.
The key point here is that there can be considerable variability with Ontario cottage mortgage financing from one location to another and from one cottage structure to another.
So in order to make sure you’re getting the best available deal in your neck of the woods so to speak, the best solution would be to work with a mortgage broker who can help you more effectively navigate the cottage mortgage market.
If you have an Ontario cottage mortgage financing need, I suggest that you give me a call so I can quickly assess your situation and go over the cottage mortgage options most relevant for the area and property you’re looking at.
I’ve been writing quite a bit lately about quick close mortgages or fast close mortgages to deal with situations where time is short and you’re running the risk of losing out on a deal or incurring some additional costs for not having mortgage financing arranged in time.
To avoid the need for a fast close mortgage in the first place, you need to have a basic understanding of the residential mortgage financing process and the related timing.
Remember that I’m only providing basic guidelines as requirements can vary considerably from one mortgage lender to another and even among offices of the same mortgage lender.
For the application process, especially if you’re going to be doing any amount of comparative rate and term shopping, you should be allowing 2 weeks to have a commitment in hand. This will allow time for the application to be processed, an appraisal to be completed, and commitment papers to be drawn up and reviewed.
Once the terms and conditions are agreed to, most mortgage companies will have a closing schedule so that they can manage their overall work flow. A typical closing schedule will be 10 business days after the commitment is in place. Mortgages can be closed much sooner, but its hard to depend on that from one mortgage company to the next. Larger organizations are typically going to be slower as they have more moving parts and people to manage the open files as well as more open files in general.
So if you’re in need of a residential mortgage for real estate purchase, mortgage refinancing, construction, or debt consolidation, make sure you’re working backwards from the date funds are required and adding 4 weeks to the process so you’re going to be starting with enough time to get things done without getting into a mad scramble, or worse yet, falling into the quick close mortgage category that I’ve been talking about in recent issues.
If you need assistance with a residential mortgage for any purpose, just give me a call and I’ll go through your situation and options with you.
The process of getting a mortgage in place in the time you have to work with can be far from a perfect process.
Approvals can fall apart. Borrowers can have trouble qualifying with the mortgage lenders they are applying to. Mortgage providers take too long processing the application. The borrower does not allow enough time to get a bank or institutional mortgage in place. And so on and so on.
Regardless of the reason, the reality is that time is running out and you need a quick close mortgage solution to save a deal or avoid additional costs in some fashion.
Well I may very well have the solution for you.
First of all, how quick is quick?
If all the relevant information pertaining to a mortgage application is available, a quick close mortgage can be applied for and disbursed within 48 hours. The average turnaround time is three to four business days. If your looking for a 24 hour miracle, I’m afraid I can’t help you.
But if you have a solid residential or commercial real estate property to finance and have 3 to 5 business days to work with, then its very possible we can get a private mortgage in place in the time you have to work with.
Toronto quick close mortgage solutions are based on private money due to the speed with which a private lender can move. I also have working relationships with lawyers that can perfect a quick mortgage registration with limited advanced notice.
The key to getting these deals done in the time you have to work with is providing all required documents up front and being available to answer any questions or provide any additional documentation that may be required.
If you’re in this type of situation and want to better understand what Toronto quick close mortgage solutions may be available to you, give me a call so I can quickly assess your situation and provide you with relevant quick close options within a couple of hours. If I can’t help, I’ll tell you right away so I don’t waste the time you have to work with.
If you’ve got a bunch of short term, high interest rate debt that you’re having trouble paying down and getting on top of, now is a great time to consider Toronto debt consolidation, utilizing your home equity to fuel the consolidation process.
There are lots of reasons why debt consolidation via mortgage financing or refinancing makes a lot of sense. But on top of all the very good reasons and strategies to get rid of higher interest costs, there is not likely to be any better time to actually get it done than right now for a number of very good reasons.
First and most obvious is the low interest rates we have been enjoying and continue to enjoy. That being said, there is no guarantee that the current rates will continue at these unprecedented levels. Any future increases, which are more likely than not, will be taking money out of your pocket of your future debt consolidation activities.
Second, the housing market, largely driven by the interest rates is over heated at the present time with properties being sold fast and furious at sometime inflated values depending on where you live. Because debt consolidation via mortgage refinancing is based on equity in the property, you’re likely going to see strong housing prices in most areas at the present time, providing the greater potential to have more available equity for a refinancing, debt consolidation action.
At the same time, news reports are now talking about the housing market cooling off in the coming months. And any cooling off may directly impact the available equity you have to work with. Remember that when housing prices fall, so does the amount of equity, so right now could be the best time in the foreseeable future to get the most additional money in your hands to pay down or pay out short term debt.
So for people living in the GTA, there is no better time than the present, for a whole bunch of reasons, to get busy with your Toronto debt consolidation process.
If you are considering debt consolidation and need some assistance, I suggest that you give me a call so I can quickly assess your situation and come up with a variety of relevant refinancing options we can go over together.
The bigger the job, the more difficult it is to manage cash flow of a construction project.
In fact, of all the construction financing aspects that are going to be important to an Ontario builder, the one that is viewed to be the most critical by many is draw management.
Being able to rely on the predictability and timing of construction draws is something that long time builders don’t take for granted and can easily be ranked as more important than the financing rate being charged to some extent.
If you’ve been a builder for any length of time, you will know first hand what its like to have to fight with your construction mortgage lender about draw advances in terms of getting them paid out on time and not having them be reduced by what appears to be very arbitrary assessment criteria at times.
The reality is that almost any construction project that requires construction financing is going to have a certain amount of draw management grief. The key is to minimize it and keep the project on track as much as possible.
For larger construction projects in competitive markets, builders may be able to create significant deal competition among lenders as each one tries to win to the business. This can potentially result in better rates and terms for the resulting Ontario builder loan.
The key watch out however, is making sure you end up dealing with a construction mortgage lender that has a reputation for being there when the draws are required versus someone who is known to be aggressive on rate to win jobs at times, but can be difficult to work with or unpredictable when it comes to advancing money.
If you’re going to take a flier on a new source of construction financing that you haven’t previously worked with or don’t know much about in an attempt to shave some of the interest cost out of your budget, just beware of the potential trade off you could be making and what the down side of such a move could cost on the flip side.
Its pretty much like anything else in life…the more predictable something is, the more its worth and worth paying for.
Perhaps its just sometime in our DNA, but it seems that most people will leave mortgage financing needs to near the end of their acquisition, refinancing, or development planning process.
I guess the working assumption is that locating and securing an appropriate mortgage is going to be relatively easy and fast to do. At least that’s what a lot of the advertising your read and see are basically screaming at you.
And while it may very well be possible to get a mortgage in very short order, is it going to be able to meet all your requirements and provide the best available terms in the market?
When it comes to getting a mortgage for either a residential or commercial application, there are two key things you should consider that can save you a lot of money and headache over time.
The first thing I have already alluded to and that’s to start early. When I say early, I’m talking months in advance. For residential mortgages as an example, you can lock in an interest rate on a preapproval for 120 days which is basically 4 months ahead of when it may be required. The beauty of these pre-approvals is that if the rate drops further during the 4 month locked in period, you still get the lower interest rate.
The second key thing to consider is to find and select a mortgage broker that you’re 1) comfortable with, and 2) has a focus in the type of mortgage you’re going to be needing. More lead time is more time a good mortgage broker has to shop the market and try to figure out the best possible deal you can secure. No matter how good a mortgage broker may be, if the process is “under the gun” to get completed, the deal secured will rarely be the best deal due to timing.
And if you’re working with commercial real estate, the lead time becomes even more important as the commitment and closing processes for different commercial mortgage applications are almost always longer than you can imagine.
Even if you’re working on a development project that won’t be starting for 6 months or more, its still a good idea to get started on the project financing process with a suitable mortgage broker so that there are no surprises in the future and if the available commercial mortgage financing is going to be demanding certain requirements prior to funding, you will have sufficient lead to time to get everything in place and avoid the mad scramble when the project is about to start.
This is a question I get asked every once in awhile.
Is there really any difference between mortgage brokers that work on residential versus commercial properties.
From a licensing and regulatory qualification point of view, there really isn’t. All mortgage brokers, regardless of the areas of the mortgage market they choose to focus on, will have the same basic training and qualifications.
The real difference lies in their chosen area of focus and the experience they gain from focusing more on commercial properties versus residential properties.
Taking it one step further, while residential mortgages are by far the larger of the two in terms of shear numbers of mortgage issued each year, residential mortgage programs tend to be much more similar than their commercial mortgage counter parts.
In the world of real estate mortgages, there basically is residential mortgages and everything else which is thrown into commercial. And each of the different types of commercial real estate applications has its own lending requirement, lender programs, and even unique lenders that specialize in that particular type of commercial building in a particular location.
So not only are there many potential different facets of the commercial mortgage market, each can have its own unique requirements, and on average, commercial deals have more requirements than residential mortgages.
So, yes, there is such a thing as a commercial mortgage broker. But if you want to get the best level of service from these professionals you need to take it one step further and zero in on commercial mortgage brokers that frequently work on mortgage applications similar to your commercial property financing requirement.
Each slice of the market is going to have its own set of lending requirements, lender relationships, best practices, industry standards, and so on. The more a mortgage broker is focused in on your type of property the more likely they are going to be able to provide you with the best possible service and results.
If you have a commercial property that requires commercial mortgage financing, give me a call so I can quickly assess your requirements and provide relevant solutions that we can go through together.
It doesn’t always have to be hard, but on average, a commercial real estate mortgage is much more difficult to get into place than a residential mortgage. There are a number of reasons why this is the case.
First, commercial properties, on average, carry larger acquisition price tags, so lenders are naturally going to be more cautious before they start writing bigger checks.
Second, the resale market for commercial properties in most situations is less active and less predictable than a comparable residential market area. If a mortgage goes into foreclosure, the lender may have to sit on the real estate for an extended period of time and the longer it sits, the more it can drop in value, making it hard to get the loan repaid.
Third, residential mortgage repayment assessments are mostly based on borrower wages and reported taxable income which is pretty easy to verify and get comfortable with. Residential mortgage even go one step further and have standardized debt servicing ratios that are based on significant statistical data. Commercial mortgages on the other hand are based on profit and loss statements which can vary considerably from one business to another, making it difficult for commercial mortgage lenders to quickly and comfortably assess the repayment potential of the borrowing entity.
Fourth, most commercial real estate now require environmental assessments before lenders will finalize a commitment to fund. These assessments can not only be costly, but can drag on and on if lab testing of soil and water are required. If any environmental issues are identified, then the applicant is going to have to clean it up, prove that the clean up was done correctly, and potentially get a further environmental assessment before a commercial mortgage can be secured.
Fifth, commercial appraisals are much more involved and costly than the residential property equivalent. And because there are less appraisers qualified for commercial work, which also take longer to complete, it can take weeks and even months to get a commercial appraisal completed at certain times in certain areas where there is a lot of appraisal demand.
Sixth, mortgage brokers that focus on residential mortgages may not be a lot of help with your commercial mortgage application as they don’t regularly deal with the different lenders and their requirements.
To get mortgage financing for An industrial use building and/or property, you’re going to have to make sure you have a number of things in order to get the best deal or get financed at all.
The first thing that every industrial mortgage lender wants to know about the subject property is the historical use that’s taken place and if there is any environmental liability.
Even if the building and/or property itself did not house a use that would be considered environmentally unfriendly, the neighboring business area history will be important to as air, water, and soil can transfer pollutants from one location to another over time.
The best way to prepare for this requirement is to proactively get an environmental assessment completed. This can require multiple phases of work, depending on the property use and what may get detected in the initial site visit.
To improve you chances of getting a clean report and minimizing the overall cost of assessment and testing, make sure that you clean up the building and property and keep it clean. Garage and debris that sits around can create the perception that contamination may exist due to the manner in which the property is being maintained.
Building on the last point, another key aspect of industrial mortgage financing is the current condition of the real estate and the state of repair. The property is only going to be valuable as security to a mortgage lender if the lender views it to have a valid resale market, based on the conditions its in. The more work required, the less likely you’re going to be able to attract lender interest and the interest you do attract will be for lower loan to value mortgage amounts and higher interest rates.
The third key to industrial mortgage financing is demonstrating strong repayment either through the revenues received from tenants or from your own business if you are occupying the building yourself. The stronger the repayment is, the more likely you will get lender’s interested in the mortgage opportunity.
If you have an industrial property that you’re looking to purchase or refinance, give me a call so I can quickly assess your situation and provide relevant industrial mortgage financing options for your consideration.
First of all, if you’re looking for a mortgage product for a new real estate purchase or refinance, it makes a great deal of sense to utilize the services of a mortgage broker.
For most residential mortgage programs, the lender is going to pay the broker for any fees resulting from placing a mortgage, so you get the benefit of their expertise without incurring any cost.
This allows you the ability to shop the market and get your application in front of mortgage lender you may not otherwise be aware of. Even if your bias is towards your existing bank or lending institution, the advantage of working through a mortgage broker is that you can quickly compare what the overall market has to offer compared to the programs from one source.
As much as your existing bank or mortgage company is always going to want to keep you, the reality is that they may not have the best offer at a given point of time which can cost you money in the long run.
So back to selecting a Mississauga mortgage broker, assuming you’re from the Mississauga area.
The first thing to consider is the type of mortgage product you’re looking for. Is it a residential mortgage, commercial mortgage, construction loan, etc. While all mortgage brokers are licensed to provide all these different types of mortgage products, not all mortgage brokers and mortgage agents are automatically going to have a focus or experience with the type of mortgage you require.
The second thing to consider is the category of mortgage that you’re likely going to qualify for. If you’re credit is significantly strained, or you need to arrange a fast mortgage closing, then a private mortgage may be the best fit for your needs. Not all mortgage brokers will have access to private lenders and even many of the ones that do may still not be able to either meet your requirements or provide the best available deal.
The third consideration is your comfort level with any particular individual. While the first two criteria are always going to be important, don’t over look the importance of working with someone that you trust and feel confident in their approach and abilities. Other than just listening to you’re own instincts, you can also ask for references and follow up with past customers to get a first hand opinion of what others found when working with a given individual.
If you are looking for mortgage assistance in the Mississauga area, I recommend you give me a call so I can quickly assess your requirements and provide relevant mortgage options that we can go over together. If I can’t help you, I’ll tell you right away so that you don’t waste any time as well.
Ok, so you’re construction project is strong enough to attract multiple bank or institutional construction financing options.
But now you have to decide which option to take?
And how do you decide?
Is it all about the interest rate and lender fees?
This is a hard question to answer in an absolute sense, but I will start out by saying that’s its definitely not all about the rate.
Sure, we all want to pay the least amount of financing costs for anything that requires third party debt financing. But a construction financing commitment, especially on larger projects, will have a number of terms and conditions to consider by the borrower or builder.
For instance, what is the proposed draw schedule and what is the exact process for verifying draw amounts and meeting the requirements of the all important first draw?
Does the project owners have any available cash to deal with any draw short falls or cut backs imposed by the lender?
If advances are required against the property in its current pre-construction state for site or infrastructure development, what will be required to get the advance issued and how long will the process take?
A very important and many times underestimated consideration is the bank or institutional lender you’re working with, the people that will be administering your mortgage, and the organizations processes, procedures, and reputation related to the construction financing of similar projects. If the lender has a tough reputation related to draw requests, a cheaper interest rate thrown out to win the business may result in significantly higher overall costs if any incremental sources of bridge financing end up being required to offset draw reductions and/or draw advance delays.
The people involved in administering the mortgage are not an insignificant part of the process either. I would even take it one step back to the people you’re dealing with at application stage. The larger the institution, the more likely you’re going to be working with a front line marketing person who is going to be big on promises but short on lending authority. So before you start leaning towards one particular lender, make sure that you actually have a commitment in hand that will bind the construction mortgage lender versus a thinly disguised letter of interest or intent or term sheet that has more outs than a 9 inning baseball game.
This is also why its important to work with a construction mortgage broker with some gray hair (probably caused by working through lots of these types of deals) as determining what the best overall offer is for a given project can be difficult to determine, especially if you’re not working through this every day.
If you have a limited partnership that needs real estate mortgage financing for a project you’re either planning or in the middle of, you likely already know that this type of financing is not everyone’s cup of tea.
Many mortgage lenders, including several of the majors will either not be interested at all, or put you through an exhaustive application process that’s not guaranteed by any stretch to go anywhere.
That being said, there are mortgage lenders that do these deals and I work with with a number of them. Obviously lender interest is going to be based on location, project type, business plan, exit strategy, equity investment, builder profile, and the general partner’s resume.
Like any type of commercial mortgage project, its important to focus your efforts on relevant mortgage lenders that are going to be the best suited for your deal, time line, and business requirements. Spending time talking to the wrong lenders can lead to a massive waste of time and potential project delays.
The benefits of working through an experienced mortgage broker that has access to these types of lenders is not only in the sourcing of relevant options, but also in getting the commitment in place, and working along side the principles during the mortgage administration process to help manage through any issues that may arise with draw advances and lender requirements.
Alternatively, you can waste a great deal of time trying to figure all this out yourself or working with mortgage brokers or agents that are out of their element when trying to deal with limited partnership mortgage financing requests.
If you have a project you’re planning or in the middle of, I would that you give me call so I can quickly assess your situation and requirements. If I can come up with relevant mortgage financing options, I will provide them for your consideration and you can decide if any of them are worth pursuing with me and my team. Alternatively, if I don’t have a highly relevant mortgage financing source available, I’ll tell you right away so that I don’t waste your time.