Archive Monthly Archives: February 2012
Retirement Home Loan Financing
“Retirement Home Loan And Mortgage Financing For Purchase, Renovation, Construction, And Refinance”
Retirement home loan financing in the form of a mortgage registered on real estate is available from a number of our lending sources.
One of the things that bodes well for these types of commercial propertyfinancing applications is that retirement homes, facilities, and communities are a growth industry with supply not always keeping up with demand in all geographies.
This is a good thing from a borrower point of view as there is considerable interest among lenders to provide retirement home mortgages and loans.
That being said, each situation will have its own unique aspects, which will ultimately determine the specific lenders that will be interested in financing the deal.
Like any type of commercial property financing application, retirement home financing is going to take some time and effort to arrange in order to meet all the requirements of an interested lender.
This is also why its going to be important to be contacting and working with lenders that are the most relevant for a given retirement home loan request, otherwise a considerable amount of valuable time can be lost going through the application process for a lender that may only be marginally interested, or has lending/funding criteria that inevitably will be too difficult for the borrower to meet.
Retirement home lenders will also have different focuses when it comes to the different types of potential financing requirements.
For instance, a lender that will provide construction financing and short term bridge loans to a retirement home project may not have any interest in providing long term financing for a purchase or mortgage refinancing. And if you are looking at financing multiple steps such as purchase, renovation, and then long term mortgage refinancing, this may require coordination with more than one lender as each stage may require a different financing facility.
Lining up multiple lenders is of course doable, but more challenging, especially when it comes to hitting all the milestones in a project timeline.
This is why it makes a great deal of sense to work with a commercial mortgage broker who can first accurately assess the requirements of the project and then get you working directly with the most relevant retirement home financing sources as quickly as possible.
If you have a retirement home loan financing requirement right now, or will have in the near future, I suggest that you give me a call so we can go through your requirements together and discuss different financing strategies available to you.
Nursing Home Financing
“Nursing Home Financing For Purchase, Expansion, Construction, and Refinancing”
Nursing home financing can be required for a number of different applications including financing a purchase, a facility expansion, new construction, or refinancing and existing nursing home mortgage that may or may not require incremental capital for debt consolidation.
For each type of nursing home financing application and geography, there are going to be different lender solutions potentially available in the market place.
As an example, a well established nursing home with solid cash flows can acquire mortgage financing directly from “A” lenders provided that the loan to value fits within their criteria.
Some “A” lenders will require the nursing home owners to acquire mortgage insurance to help cover off the risk of loss for deals up to 85 loan to value.
When nursing home properties cannot quite cover off the debt servicing requirements of “A” lenders, there is also a secondary market that can be available to the borrower to secure financing at slightly higher rates.
In cases where there may be slightly lower cash flow, the lending risk can be offset by larger equity in the property, further protecting the lender from any potential future loss.
With respect to construction, depending on the specific requirements for the project and funds available to invest, nursing home construction financing solutions can come from bank or institutional lenders, sub prime lenders, and private mortgage lenders.
The key in all cases is to clearly understand the requirements of the borrower and the project and then match them up with the most relevant nursing home financing options available on the market.
The best way to do this in most cases is to work through a commercial broker who has access to variety of different lenders that would potentially be interested in debt financing for a nursing home property.
If you’re starting the process to look for nursing home financing, or are in the middle of a project and have an immediate need, I suggest that you give me a call so we can go through your requirements together and discuss potential nursing home mortgage loan financing options available to you for your consideration and review.
Click Here To Speak With Commercial Mortgage Broker Joe Walsh For A Free Assessment Of Your Options
Land Servicing Loans
“Providers Of Land Servicing Loans Primarily Focus On The Value Of The Land And The Exit Strategy For Repayment”
We arrange land servicing loans for our clients in Toronto, the Greater Toronto Area, and parts of Southwestern Ontario.
While there is a considerable list of items that a lender for land servicing will focus in on, the primary areas of initial interest are the current fair market value of the land and the exit strategy that will drive repayment of the loan.
With respect to market value, its not uncommon for a particular development to be in the middle of a planning process with either a draft plan of subdivision in place or something that would resemble the same.
In these situations, the construction financing source is going to be looking to determine what the value of the land is today in the current state of planning, what the land is going to worth when final plan approval is in place, and what it will be worth upon installation of services.
For installation of services, if there are multiple phases of construction, unless all phases are going to receive land servicing at the same time, a commercial appraisal should reflect the market value of each phase individually versus providing a market value for the entire development once services are installed.
This is due to the fact that lenders will likely structure their draws to align with phases of development and want to know that at each completed phase that the property has appreciated in value sufficiently to provide the security they require to move forward with further advances.
At the other end of the equation is the exit strategy to repay the loan in the future.
All land development exit strategies are going to involve the resale of all or part of the property requiring the land servicing loan, so the strength of the exit strategy has a lot to do with who the potential buyer or buyers are, and how strongly they are contractually committed to a purchase once land servicing is completed.
Taking this one step further, in situations where there a single builder prepared to acquire lots over a period of time, the financial strength of that individual company will be extremely important to any lending/funding decision.
While not automatically the case, more arranged buyers or conditional sales to financially strong buyers, presents a stronger, lower risk exit strategy to potential lenders.
Once again, there are many other aspects of the development that a lender will focus in on, but if the market value and exit strategy cannot support the deal, the other factors will not make much difference.
If you require a land servicing loan, I suggest that you give me a call so we can go through your requirements together and discuss potential land servicing loan options available to you.
Mortgage Financing For The Self Employed
“Self Employed Mortgage Financing Programs Have Suddenly Become More Difficult To Acquire”
Self employed mortgage financing has evolved considerably over the last decade with most major lenders and many second tier mortgage lenders offering different types of self employed or stated income mortgages to self employed individuals who could not easily provide support for their annual income as compared to an employed person with T4 slips and pay stubs.
With some stated income approaches, the applicant was basically signing an statement of what their annual income was.
Certain other lenders were doing stated income mortgages under insured programs.
Much of this changed in the first week of February, 2012 when mortgage lenders altered or removed their stated income programs altogether.
There are a number of reasons for these changes, including some potential changes to lender access to CMHC insurance for these types of deals.
Regardless of the why, the reality is that if you are self employed, or cannot support proof of repayment of a mortgage through employed earning documentation, then, for at least the time being, its going to be more challenging to get a self employed mortgage approved.
That being said, the higher the equity in a property and the stronger the credit profile and net worth of the applicant, the less likely these changes are going to impact them.
But for the more common scenarios where stated income declarations and/or mortgage insurance were required to get financing in place, the process for locating and securing mortgage financing is now going to be a bit more challenging.
For instance, most of the lenders that were doing stated income are now requiring a greater degree of financial proof of earning and over a longer period of time, say three years on the average.
So its going to be more important to be able to have supporting documentation to show you have generated sufficient funds as a self employed person, regardless of how it gets reported for tax purposes, to service a given mortgage amount. And the manner in which this is further assessment is performed can vary from lender to lender as well.
If you are in need of a self employed mortgage, or would like to better understand your options and how to go about the process of acquiring one, I suggest that you give me a call so we can go over all the changes in the market together and review different approaches for meeting your mortgage requirements.