Archive Monthly Archives: November 2011
Reverse Mortgage Stats And Considerations
“Here Are Some Reverse Mortgage Statistics And Discussion Points”
Here’s an article I can across this morning about Reverse Mortgages that I wanted to share.
The article provides some basic statistical information on the target market for reverse mortgages to provide some insight as to the average borrower profile for those that sign up for reverse mortgage financing.
Here is the link to the article… http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2011/11/reverse-mortgage-facts.html
In addition to the article itself, there is also an interesting discussion from readers underneath with some differing options on reverse mortgage products.
As the discussion goes, on a direct comparison with other strategies that seniors or retired individuals can pursue to fund their retirement, a reverse mortgage product is not likely the best potential choice they can make.
But other choices like selling your home and investing, or taking out a home equity line of credit, take a certain level of knowledge, execution, and administration that not all individuals possess or have the confidence in being able to complete.
The reverse mortgage is an option and it certainly has a market for this “done for you” mortgage product.
One of the key take aways from the discussion is that individuals considering reverse mortgages consider consulting with their own family members before making a final decision, but that of course is always going to be up to the individual.
If you’d like to get more information on reverse mortgages, give me a call and I’ll make sure you get all your questions answered right away.
Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh
Commercial Mortgage Amortization
“Commercial Mortgage Amortization Can Have A Significant Impact On Cash Flow”
Commercial mortgage amortization can in many cases make or break your cash flow.
Which is why in many situations amortization can even be more important that the interest rate being charged, at least in the short term.
For instance, if you can get a great rate from a commercial mortgage lender but only receive a fifteen year amortization, which is not all the uncommon with commercial property financing, the drain on your cash flow can be considerable.
With commercial mortgage financing in general, there are longer amortization terms available, but this is going to depend on the mortgage lender and the property type.
And sometimes the best commercial mortgage rates are tied to shorter amortization periods due to the fact that the lender is wanting to get capital back as quickly as possible to lower their risk and strengthen their security position.
Sometimes the challenge of a shorter amortization period is only going to be an issue for a few years. This can be a common occurrence with newer companies that are trying to get into their first owned space or established companies that are in a growth mode, want to conserve capital, but also want to acquire commercial property for space and cash flow saving on rent or a host of other reasons.
In these types of situations where the borrower is confident that tight cash flow for debt servicing is only short term in nature, sometimes it actually can make good sense to get a private mortgage on the commercial property even if you qualify for a bank or institutional commercial property loan.
The reason for this strategy is that private lenders typically charge interest only for debt service which eliminates the principal repayment amount from the monthly mortgage payment.
Yes, by doing this you are not paying the mortgage down in the short term, but it is allowing you to acquire or refinance a commercial building and manage the debt servicing requirements with the present level of cash flow that exists.
And while most private mortgages are only for a period of one year, it is possible to get a two year term or perhaps an option to renew after one year. You may also be able to negotiate favorable prepayment privileges as well so when the time comes that you are in a position to refinance with a bank or institutional lender, you can pay out the mortgage without any added costs being incurred.
The other option of trying to get a longer amortization period with an acceptable rate is to start the process for locating and securing a commercial mortgage sooner. The time it can take to get a property financing commitment in your hand can be considerable so starting early will increase your chances of success.
Another thing to consider is working with a commercial mortgage broker who can help you zero in on commercial programs and options that you may not have been able to find on your own with the time you have to work with.
Four Year Vs Five Year Fixed Mortgage
“Are Borrowers Starting To Move To Four Year Fixed Rate Mortgages And Away From Five Year Fixed Rates?”
This was a question that was recently asked to me by the The Mortgage Broker News.
Or as they put it, is four year fixed the new five year fixed?
Here’s a link to the article which includes my take on the subject… http://www.mortgagebrokernews.ca/news/breaking-news/is-the-four-year-fixed-the-new-five-year-fixed/107206
Lately, mortgage lenders have been pricing four year terms very aggressively and are seeing considerable uptake in the market place for the 4 year fixed term.
But to say this is becoming a permanent or long term trend would be a stretch at this point.
Basically, mortgage hunters will always react to the best pricing options on the market. And right now with four fixed mortgage terms being priced as close as they are to variable rates and considerably lower than 5 year fixed rates, it makes sense that this type of rate opportunity is going to be taken seriously.
However, if mortgage term pricing changes further, so will the actions of the consumers … just like you would see in any other market.
For now, 4 year fixed terms are very attractive and will continue to gain buyers.
Mortgage Broker Services
“First Hand Account Of Mortgage Broker Services”
In a recent article in the Globe and Mail, one of the writers for the Globe provided a first hand account of a consumers experience working with a mortgage broker.
The person in question was a first time home buyer, so had never gone through the process of acquire a mortgage previously.
But the article points out the benefits of using a mortgage broker for refinancing or renews as well in order to get market representative rates and terms and fit your requirements.
Here’s a link to the article. http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/why-use-a-mortgage-broker/article2232577/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Report%20On%20Business&utm_content=2232577
While as a mortgage broker I am obviously a believer of the value we provide to our customers, but its always good to have someone else making the case for what we do and provide consumers with a third party account of the benefits of using a mortgage broker in the first place.
If you are in need of a mortgage for any residential or commercial need, I suggest that you give me a call and we’ll go over your requirements together and discuss different options that are available to you in the market.
Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh
Creating Mortgage Fit
“There Can Considerable Work And Skill Required To Get The Right Mortgage In Place”
The process of locating and securing a mortgage for your home or commercial property is easy in some aspects and hard in others.
For instance, there are many situations where you can qualify for mortgage financing at a number of different places, but the subtle differences in the mortgage commitment offering can make one deal better than the others. I many situations, borrowers end up getting a good mortgage solution when a better solution might have been available.
For the more straight forward deal, this can have a lot to do with the mortgage companies a mortgage broker is working with. Some brokers will work with a limited number of mortgage providers which will limit the amount of choices you provide by the broker. There is nothing wrong with this pure say, but its not the same as taking a broader market approach when more financing programs are being considered.
Creating mortgage fit is even more of an issue in situations where there aren’t a lot of choices and borrower is having a hard time finding sold options to consider.
Especially with commercial properties, where essentially every single properly is unique in some way or another, and the borrower financial and credit profile will be unique as well, it can be hard to secure credit, even from very interested lending sources.
The reason for this is that all types of lenders have very rigid lending criteria where the amount of gray area or wiggle room to make a deal work can be very limited.
Add to that the fact that all of the interpretation and implementation of the lender’s rules and regulations are preformed by human, each potentially taking a slightly different approach from the other, and the challenges in figuring out what can actually get approved and funded can be considerable.
This can be where the skill of an experienced mortgage broker can make all the difference in the world between getting mortgage financing and not getting financed.
A seasoned mortgage broker knows that its both art and science at times to get a deal completed. More specifically, knowing the particular lending and funding criteria of a specific lender is science for the most part, but trying to figure out a way to meet all the lender’s requirements can many times be about the art and creativity of the broker.
This type of creative deal making approach typically only comes with many years of experience working through deals with lenders and developing a communication style and is more likely to engage a effort to make the deal work than getting a flat turn down.
If you require mortgage financing for a challenging residential, commercial, or industrial property, I suggest that you give me a call so I can go over your situation in detail and discuss different financing strategies or approaches that may be available to you.
Standard Charge Terms
“Make Sure You Clearly Understand Both Borrower And Lenders Responsibilities Before Signing A Mortgage Contract”
When you accept a mortgage offering from a mortgage lender, you are also accepting the standard charge terms created by the lender and outlined in the mortgage contract.
The standard charge agree outlines the rights and responsibilities of the borrower during the time the mortgage is outstanding.
Failure to comply with all the listed requirements can put the mortgage into default, allowing the lender to exercise their rights which are also outlined in the document.
Once the mortgage contract is signed by the borrower, the borrower agrees to and promises to uphold each of obligations or covenants that are outlined in the mortgage contract.
Here are a list of the basic mortgage covenants that are likely to appear in the standard charge terms that a borrower will need to sign to receive mortgage funding.
- Loan Repayment. The borrower agrees to repay the loan based on the repayment schedule that is outlined in the mortgage contract.
- Property Insurance. The borrower promises to keep adequate property insurance in place in order to protect the value of the real estate and concurrently protect the lender from any loss due to fire or other event that would damage the property and reduce its value.
- Property Maintenance. The borrower agrees to keep the property in a good state of repair and basically maintain it in a good saleable condition.
- Waste Management. The borrower agrees to not perform an actions or conduit that would result to waste being present on the property which could create damage to the property.
- Property Taxes. The borrower agrees to pay all property taxes in full and when do. If the borrower fails to pay the property taxes, the lender can pay them for the borrower and then add them to the total balance owing.
Failure to comply with any and all of these covenants will result in the lender considering the borrower to be in default at which time the lender can exercise its rights which have been agreed to by the borrower when the mortgage contract was signed.
The lender also has a number of covenants that they must agree to as well.
- Certificate Of Discharge. Once the borrower or mortgagor has paid off the mortgage in full, the lender or mortgagee is required to provide the borrower with a certificate of discharge to officially communicate that the mortgage was paid in full.
- Assignment Of Mortgage. The borrower has the right to assign an outstanding mortgage to a new lender, provided the borrower or mortgagor is in good standing and that the borrower has the right to redeem the mortgage.
- Provide Quiet Possession. Other when in situations of default, the law provides the borrower with the right of quite possession which basically means the borrower can possess the property without any interference from the lender or mortgagee.
While the above borrower and lender covenants are going to be standard in just about any mortgage, the important thing to understand is your obligations as a borrower and the rights of the lender that you are agreeing to on signing.
You may not be able to alter any of these covenants or requirements, but you do need to understand them and comply with them in order to avoid the lender taking action against you in a situation of covenant default.
Toronto Construction Mortgage Broker
“A Toronto Construction Mortgage Broker Can Provide Access To A Variety Of Construction Loan Financing Options”
A Toronto construction mortgage broker can be a great asset to a construction project in a number of ways.
First, and foremost is the ability to connect builders, developers, and property owners with relevant sources of construction financing. When we speak of relevant sources, we’re talking about lenders that are going to be highly interested and competitive when looking at a specific construction project financing request in a specific geography for a specific borrower profile.
There are basically three different categories of construction financing and within these categories will be different lending and funding requirements from one lender to another.
At the lower cost end of the spectrum is construction loan provided by banks and institutional lenders. The key with this type of financing is making sure you are able to properly qualify for it which is another area where a Toronto construction mortgage broker comes into play.
In what we will call the mid market for construction financing are the sub prime construction lenders or quasi institutional lenders which can include investment bankers, private mortgage funds, and so on. The cost of financing is going to be slightly higher than a bank, but the qualifying terms and draw advance requirements not as complex in most cases.
At the other end of the construction financing market is private mortgage lending, which will likely be higher cost than the other two, but come with a greater degree of speed and flexibility with respect to loan qualifying and draw administration.
Once again, each of these lender categories have their own unique fit and getting the right borrower to lender match can be key to successful cash flow management in any construction project.
So not only can an experienced Toronto Construction Mortgage Broker introduce you to suitable lenders from each of these categories, they can also help you establish which lender offering will be the best fit for your project at a given point in time.
Another major benefit of working with a Toronto Construction Mortgage Broker is having the ongoing support available to you during the project to deal with any lender funding issues that may arise.
Draw management at times can be complex and its not unusual for issues to arise that can slow down draw advances or even see draws reduced. Having a good construction mortgage broker on your project team will help increase the likelihood that these issues will be resolved quickly if they do arise, and that the impact on the project will be minimized.
If you have a construction project you’re currently planning or are in the middle of in Toronto or Southern Ontario, I suggest that you give me a call so we can quickly assess your situation and provide construction financing options for your consideration.
Click Here To Speak With Toronto Construction Mortgage Broker Joe Walsh For A Free Assessment Of Your Construction Financing Options
Understanding Closed Mortgage Prepayment Options
“Depending On The Lender, Closed Mortgage Prepayment Options Can Mean
Different Things”
In the most technical of definitions, a closed mortgage prepayment option would only exist if there was a bona fides arms length sale of the property.
Outside of property sale, there basically are no options for full prepayment and the borrower is going to required to continue on with the mortgage until the end of the term.
Depending on the lender, partial prepayment in different forms may be an option such as increasing the mortgages periodic payment or making lump sum payments from time to time.
The key point in discussing this is that the term closed mortgage is often used to explain a mortgage with a fixed interest rate.
In many of these situations, there are prepayment options available to the borrower.
So its going to be important to clearly understand the prepayment options that are available on any mortgage option in order to avoid any problems down the road.
While the standard definition of closed mortgage alluded to above is not the most common form of mortgage offered in the market, it is available through a number of lenders.
For mortgage lenders that do offer a truly closed mortgage with respect to prepayment, there are some potential benefits to the borrower.
As an example, in these situations where the lender is nearly certain to be receiving payments on closed mortgages funded, the mortgage lender may offer a very attractive interest rate.
So from the borrower’s point of view, if the borrower thinks he or she has little to any need to prepay the mortgage during a proposed interest term, the trade off of not having any prepayment options may be more than offset by a lower interest rate.
Once again, because there is to standard terminology in the industry with respect to how the phrase or closed mortgage is used from a marketing and product identification point of view, its going to be important to thoroughly understand any lender’s prepayment options prior to committing to a mortgage product.
Milton Private Second Mortgage
“Milton Private Second Mortgage Financing Can Be Arranged Quickly On Qualifying Properties”
Milton private second mortgage financing is available through our private money lending sources on a wide range of commercial and residential properties.
The key for getting a private 2nd mortgage approved and funded is going to be solid equity in the real estate property offered as security.
Our private lenders are interested in solid real estate mortgage investment opportunities and typically provide one year terms for Milton private second mortgages.
In order to apply for a private second in Milton, you will need to complete a basic application form and list out your personal net worth and outstanding debt obligations.
And even though your personal credit may not factor into the lending decision, a private lender may still want to review your credit profile to get a better sense of who he or she may be dealing with.
A real estate appraisal recently completed is also going to be required.
For commercial properties, some of our private lenders will consider relying on an existing commercial appraisal that is one or two years old, if they believe it is still representative of the market. This not only is a cost saving to the applicant as commercial appraisals can be quite expensive, but also a time saving in that commercial appraisals can take more than a month to complete.
For residential properties, and a current appraisal is going to be required and typically can be completed in a just a few days.
For fast closing requests, a Milton private second mortgage can be put into place in two to five business days providing everything is in order and you have a lawyer at your disposal who can enroll in the process on short notice.
Most Milton private second mortgages take ten to fifteen days to get in place from the time of application to the day of mortgage funding.
Funds are available for a wide variety of uses including debt consolidation, mortgage refinancing, and construction financing.
The loan to value ratio typically provided is in the 75% to 85% range.
If you require a Milton private second mortgage, I suggest that you give me a call so I can quickly assess your situation and provide private 2nd mortgage financing options for your immediate consideration.
Strip Mall Financing
“Strip Mall Mortgage Loan Financing Is More Specialized Lending”
It’s not a given that every commercial lender is going to provide strip mall financing.
Even for commercial lenders that do fund strip mall mortgages, they are likely going to be ruled somewhat by the percentage of their portfolio that can be committed to this type of commercial mortgage.
What can then end up happening with these strip mall funding sources is that they are in and out of the market depending on their portfolio mix at any given point in time.
From a leverage point of view, strip malls are typically financed between 50% and 75% of the appraised value of the strip mall, which the lender may want to consider on both a market and income approach to value. The wide range for loan to value ratio is due to the large variability that exists among strip malls including age, condition, location, layout, and so on.
From a cash flow qualifying point of view, most banks and institutional lenders will be looking at a debt coverage ratio of 1.20 to 1.30 (debt servicing requirements divided by cash flow). Debt service will be greatly influenced by interest rate and amortization, both of which are going to vary by the lending funding group looking at the deal.
In the market, the lowest cost form of strip mall mortgage loan financing is going to come from banks and institutional lenders. The next best option from a rate perspective will come from private bankers, investment groups, and other quasi institutional lenders that occupy the sub prime lending space. While the interest rates may be slightly higher, these groups can be slightly easier to qualify with and tend to focus on the applicants that are either just out of the reach of bank financing, or don’t have the time to go through the typically long debt funding process that you will find with most bank and institutional lenders.
As a short term form of strip mall mortgage financing, private mortgage lenders can also be a good source of funds in terms of both speed in getting a strip mall mortgage in place and the flexibility to get out of the private mortgage when other funds are available or lower cost financing can be arranged.
Each strip mall and borrower profile is a unique situation that will have a specific fit in the market place.
To determine where to apply for strip mall financing at any given point in time, applicants should consider the services of a commercial mortgage broker that has access to all the different categories of strip mall lenders in the market place.
If you have a strip mall financing requirement, I suggest that you give me a call so we can go over your situation and discuss potential strip mall loan financing solutions that may be available to you.