Archive Monthly Archives: February 2013

Private Mortgage Supply

“Private Mortgage Supply Can Quickly Come And Go For Any Given Deal”

I have written previously about not only how quickly a private mortgage can be approved and funded, but also how quickly the commitment put forward and disappear.

Let me explain with the assistance of a real life example.

The other day we took on a new private lender who has money they wish to place in the Ontario market at this time.
private mortgage lending
The individual is a seasoned private lender with a very clear idea of what they’re looking for in terms of providing private mortgages.

And right now, they have $3,000,000 to invest in mortgages.

Many times private lenders will get a lump of cash from the payout of a mortgage, or their primary source of revenue produced additional revenues that now need to be investment.

In any case, the good private lenders approach is always the same…they want to get their money out in the market as quickly as possible because its not making much for them sitting in their bank account.

So for a period of time, a lender with money will intake deals and put out term sheets and commitments to fund.

If a borrower does not act on an issued commitment quickly, the private lender will move on to the next opportunity and place their money.

Supply Availability Can Be An Issue
With Private Mortgage Financing

For every private lender out there, there will be times when they have money available and times when they don’t.

And for the larger market as a whole, this is not a big problem as lending opportunities gravitate to those that have money available at a given point in time.

If there is a surplus of available cash among lenders in a certain geography, the cost of funds can do down and the reverse can hold when the money supply gets tight.

But where private mortgage money supply can become a major issue is when you have very specific financing requirements that the average private lender is not prepared to meet.

In these cases, when you get a commitment provided to you that is within your acceptable range, you’d be well advised to take it and take it quickly as the private lender is not likely to wait for you.

If you come back to them at a later date, they may not have any money to put out at that time. And you might have a hard time finding a suitable and acceptable alternative.

This is also a good reason to work with a private mortgage broker that has access to lots of private lenders as there will always be individual lenders that are in and out of the market at any given time.

So if you’re going to utilize the expertise of a broker, you want to make sure he’s going to be able to direct you to lenders that have money to lend when you need it.

 Click Here To Speak Directly With Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Private Mortgage Options



90% Stated Income Mortgages

“You Can Secure A Stated Income Mortgage For Up To 90% Of The Purchase Price”

self employed mortgage

The stated income mortgage market is continuing to evolve with more lenders breathing new life in this lending space which for the most part had been abandoned by several lenders over the last year or so, or at least the available programs have failed to resemble what was previously available to self employed individuals.

At the present time there are some solid and continuing to develop products in the market with the best in class providing up to 90% loan to value on new home purchases.

You can get up to 65% loan to value without mortgage insurance and anything over 65% to the 90% ceiling will require mortgage insurance.

Both fixed and variable rate options exist as well to provide greater flexibility to each borrower.

The main qualifying criteria are that you need to be able to prove that you’ve been in business for at least two years, that you have very good credit, and the cash you’re putting in for the down payment is from your own resources.

There is some greater flexibility today in the documentation lenders will accept to support your stated income. The key is that there must be a certain amount of reasonableness in the income declared and the means to which it can be supported. Gone are the days when the lender will take your word for it which only makes sense in terms of anyone making a proper lending decision.

One of the bigger challenges to some business for self individuals is the maximum loan amount they can secure.

For larger urban centers such Toronto or Vancouver where real estate pricing can be fairly high, some of these programs will not be able to provide enough financing to fit your requirements even if you could otherwise satisfy all their other lending and funding requirements.

The upper limits to stated income mortgages are also likely to increase provided that lenders experience a low occurrence loss, default, and payment arrears.

One of the real keys to getting the best stated income mortgage deal available to you is to put forward a very strong and complete information package to targeted lenders. This increases the possibility of greater flexibility being provided on acceptance of documents that you have available to support your earnings.

In order to put together a solid application package, it can make a great deal of sense to work with an experienced mortgage broker who can not only help you put everything together, but also identify the self employed mortgage programs in the market that best fit your particular circumstances and requirements.

There definitely is a certain amount of art and science to stated income mortgages, so being able to draw on some know how and experience can make a big difference.

Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh For A Free Assessment Of Your Stated Income Mortgage Options

Subprime Commercial Mortgage Challenges

“Getting Acceptable Pricing On A Subprime Commercial Mortgage Can Be Challenging”

commercial property financing
I have previously defined the sub prime commercial¬† mortgage space as an area of the market that is just below the qualifying requirements of “A” lenders.

One of the challenges of securing a sub prime mortgage is finding rates and terms that are acceptable to the borrower.

Borrowers that have this type of deal, have a hard time believing that they can secure an “A” mortgage rate, so they persist in earnest trying to get financing that is just not available to them.

When sub prime options are explored, and because there is always more demand than supply, lenders tend to try and charge more due to limited available funds.

So there can be quite a gap between the “A” rates that you can almost qualify for and the “B” rates that are available to you.

In most cases, a subprime mortgage is short term property financing facility that will provide the capital necessary to move forward and provide the time necessary to work into cheaper money.

So in the end, sub prime rates are never going to be optimal, but they do allow financing to take place.

The challenge is finding a subprime interest rate that is acceptable to you and can be “cash flowed” somehow until cheaper money can be made available.

But unlike most “A” lenders, subprime lending sources tend to work through brokers, which means that the access to them can be harder to come by.

Even if you end up working with a mortgage broker that works in this part of the market, there is certainly no guarantee that they can place your deal as there can be great divergence among the financing programs offered by the secondary market.

So selecting a broker to work with that has broad access to what we can also call the alternative commercial property mortgage market is going to be important.

Even more helpful still is being able to provide a solid and complete lending package to a broker for review so they can more quickly determine if they are in a position to provide financing assistance to you.

Precious time can be lost trying to understand the deal and putting in applications to lenders that are not highly relevant.

In the end, getting an acceptable subprime commercial mortgage rate is going to start with understanding the rate you can afford versus focusing on a certain rate range you feel justified in asking for. From there, its all about working with the right professionals that can not only lead you to subprime commercial money, but also to a deal structure that can work in your budget.

And focusing on sub prime options sooner than later will provide a greater probability of getting a reasonable rate versus spending a larger chunk of your available time pursuing an unlikely “A” credit solution, and then be left scrambling to try to secure a subprime commercial mortgage with time running out on your deal or requirements.

If you are exploring subprime commercial mortgage options, I would welcome the opportunity to go over your situation and see if we have any potential solutions for you.

Click Here To Speak With Toronto Mortgage Broker Joe Walsh For A Free Subprime Commercial Mortgage Assessment