All posts by Joe Walsh
Commercial Bridge Loans
“Commercial Bridge Loans Secured By Real Estate Property Can Be Key
Sources Of Financing”
When I speak of a commercial bridge loan, I’m referring to a mortgage on commercial property that is no longer than 18 to 24 months in duration.
The primary source of commercial bridge loans is private mortgage lenders.
There are two basic categories where a commercial loan for bridge financing would apply with category one being for the direct financing of land for purchase or refinancing of an existing mortgage, and category two being where a commercial mortgage is registered against a property in first or second position to pull out a certain amount of equity for some unrelated purpose.
In both cases, the amount of funding required is only for a short term, either to complete a transaction or buy time until a cheaper form of financing from a bank or institutional lender can be secured.
In many cases, a commercial bridge loan may not just be the best option available, but the only one available in the time period you have to work with.
Commercial property from bare land, partial construction, to completed real estate assets can be used for security for bridge financing, keeping in mind that the less developed the property, the lower the lending amount as a percentage of the property value will likely be.
For a private mortgage lender, the keys to bridge financing is quality and amount of equity offered as security, and the plan for repayment of the loan at the end of the commercial bridge financing period.
Private money sources can provide commercial bridge loans from as low as $100,000 to as high as $10,000,000. Sources for larger deals will be fewer as most private lenders work in a funding range below $2,000,000.
The key benefit of commercial bridge financing is the ability to get a certain amount of funding into place within a defined period of time. Many times with commercial properties, banks and institutional lenders can take considerable time assessing the deal which may take longer than the time you have to work with.
A private mortgage commercial loan will typically take much less time to get approved with funding to follow shortly there after.
While private money typically is going to cost more than a bank or institutional bridge loan, lower cost money won’t do any good if it can’t be put in place in a timely fashion which typically is a requirement of a commercial bridge financing transactions.
If you need to secure a commercial bridge loan or want to know more about your potential options for commercial property financing, I suggest that you give me a call so we can go through your requirements in detail and then discuss different approaches you can take to secure commercial bridge financing.
CIBC Cash Back Mortgages
“CIBC Cash Back Mortgages Are A Great Refinancing Option”
CIBC cash back mortgages, available through our Mortgage Centre Brokerage, have a number of interesting features for those looking to refinance an existing mortgage.
Coming in both fixed and variable offerings, these products are designed to provide competitive mortgage terms as well as giving you cash in hand to either pay down the mortgage right away or to use the funds for other purposes.
For instance, with the variable mortgage option, the mortgage rate is priced at prime minus 0.50 and will provide 2% of the mortgage balance at closing in cash back to you for mortgage amounts under $400,000 and 3% for mortgage amounts over $400,000.
In this variable rate example, if you were to apply the cash back portion from a $400,000 plus mortgage against the outstanding balance immediately after closing, the effective rate of the mortgage would drop below prime minus 1.1%, making it one of the lowest cost products on the market.
And if you are looking for a debt consolidation through mortgage refinancing, or want to pull some equity out of your house for some other reason, the cash back option may also be very attractive to you.
With a mortgage refinancing, you can now only secure a mortgage up to 85% of the value of the property, down from 90% earlier this year.
So if you’re pushing against the 85% limit and still can’t get enough funds to meet your requirements, a cash back mortgage can provide additional capital to you and still keep you within the qualifying requirements. For instance, a 3% cash back bonus at closing of a $450,000 mortgage refinancing will provide you with $13,500 cash in hand to use as you see fit. This would be the same as an 88% loan to value mortgage in terms of the funds advanced to you.
On the fixed interest rate side, the cash back program will reduce the posted fixed mortgage rate by up to 140 basis points and also provide cash back on closing of 0.25%.
There are different terms and conditions that can apply to a particular scenario, so you’ll have to work through the numbers to see how this can work for your requirements.
This is a very interesting mortgage program that provides some interesting options to customers in terms of great rates and additional cash.
If you’d like to know more about the CIBC cash back mortgage programs available through The Mortgage Centre, I suggest that you give me a call and we’ll go through your particular requirements together.
Sub Prime Refinancing Options
“Potentially Lower Cost Refinancing Options Available For Citifinancial, Citi-Corp, Household Finance, Avco Finance, And Accredited Mortgages”
Here in Canada, companies like Citifinancial, Citi Corp, Household Finance, Accredited, and Avco Finance provided modest amounts of financing rather quickly to borrowers with few other options.
In some cases, overtime, these could have become consolidated into these companies sub prime mortgage products similar to other debt refinancing in the market.
And during the recent recession, this type of funding remained available when other forms of financing on distressed credit situation either pulled back on issuing loans or left town all together.
But the sub prime market is starting to rebuilt itself with more lenders and offerings getting back into the game to provide sub prime offers to different slices of the residential mortgage market.
The result is that for certain borrowers that currently have a Citifinancial mortgage, Citi-Corp mortgage, Household Finance mortgage, Accredited mortgage, or Avco Finance mortgage, you may now have different and perhaps better mortgage financing options available to them in the market.
Specifically if you are in a situation where your mortgage will not be renewed or is in demand for repayment from your current sub prime lender, provided you have some equity in your property, there is a good chance that options are available either from an institutional lender or a private lender.
Or if you are paying a mortgage rate of 9% or higher, there is also a good chance, depending on the equity in the property and your borrowing profile, that a better sub prime option can be available to you as well at the present time.
If you’re considering refinancing an existing mortgage, you’re going to have to consider prepayment penalties. But for certain types of sub prime mortgages where the borrowings are integrated among credit cards, term loans, and home mortgage advances, the stated mortgage balance may be considered open for prepayment and could be moved to another lender without much cost.
Once again, the above mentioned secondary market lending sources can provide a valuable service for short term financing and have filled this role very well, especially since 2007.
For some people paying these mortgages, there may now be better options available in the market as things start to return to more normal sub prime lending.
If you have a mortgage in Canada with Citifinancial, Citi-Corp, Household Finance, or Avco Finance, or Accredited, and either need to refinance or would like to better understand your options, please give me a call and we’ll go over your situation and options together.
Click Here To Speak Directly With Toronto Mortgage Broker Joe Walsh
Commercial Mortgage Strategy
“Here’s A Commercial Mortgage Financing Strategy To Consider With
New Property Acquisitions And
Mortgage Refinancing Scenarios”
A commercial mortgage financing strategy for acquiring a property or refinancing an existing commercial mortgage can involve both a private mortgage and a bank or institutional mortgage.
Let me explain.
If you or your business have a strong enough lending and credit profile to qualify for a bank or institutional commercial mortgage, then the only thing that might be working against you in terms of getting financing arranged and in place is time.
Bank and institutional lenders that provide commercial mortgages follow a very deliberate and methodical process to go through a request for financing, validate key sources of information, issue a commitment to fund, and fund the deal. All of this takes time which can range from 60 days on the short end to 90+ days on the long side of things.
If you’re in need of financing to close a purchase or refinance an existing mortgage, you may not have enough time to get an institutional property loan in place.
Instead of risking losing out on a good buying opportunity or incurring additional costs when a refinancing is not completed in time, another solution would be to first acquire a private mortgage against the commercial property in question.
Private lenders, on average, can make financing decisions much faster than a bank or institutional lender.
By trying to get a private mortgage in place first, you increase the probability of meeting your deadlines.
Then, once the new private mortgage is in place, you can spend as much time as is going to be required to locate and secure a bank or institutional mortgage for the long term needs of the business.
The private money serves as a bridge loan to allow you to meet the immediate needs while buying time for you to locate the best available commercial mortgage deal on the market.
Yes, a private mortgage is likely going to be a bit more expensive than a commercial mortgage from a bank. But in many cases, the difference between bank and private on commercial properties can be less than you might think.
In addition, the private mortgage is likely going to be interest only payments versus a fully amortized payment, so you will also get a cash flow advantage during the time the private money is in place.
And getting the right commercial mortgage deal when you’re not forced to take whatever you can get due to time pressure can save you a considerable amount of money over time making whatever the incremental cost of a private mortgage small by comparison.
If you’re in need of commercial mortgage financing and don’t have a lot of time, I suggest that you give me a call so we can quickly go over your requirements and review private mortgage options that may be available to you in the market.
Value Of Home Renovation
“If You’re Looking For Home Renovation Project Financing, You Might Want To First Consider The Economic Value Any Given Project Contributes”
If you’re like most people considering home renovation, there are likely a number of projects you’d like to take on, but will limit what you actually invest in doing today based on the amount of capital you have to complete the work.
And what you include in the scope of work is going to have both an aesthetic value to you and an economic value to the market place.
Sometimes the personal value and economic value are very similar and sometimes they’re not.
One way to get a better idea of how much certain types of home renovation activities or projects can add to the value of your home is to utilize a valuation tool like the one provided by the Appraisal Institute of Canada. Here’s a link … http://bit.ly/G6S5a
This handy little tool allows you to put in cost estimates for different types of home renovation works and provides an estimated range of value or return on investment you can expect to earn over time from the completed work.
Keeping in mind that this tool provides you with some pretty broad ranges of potential value, the real benefit of using it is to get a comparative assessment between different renovation projects as to which ones add more value to your home than others.
Depending on your mindset and motivation for doing certain renovation work, this may not have any bearing whatsoever on what you choose to spend your money on.
But if economic value is important, this can at least give you something to think about as you plan out the complete scope of work and the related budget.
Another thing to keep in mind is that for renovation projects where construction mortgage financing will need to be procured, an assessed value of your home post renovation may be important in terms of the amount of money you can borrower.
Or put another way, the higher the value added renovation work being undertaken, the greater the increase in value in your home, and the more potential funding that can be raised against the future value of your home.
If you’re looking for a home renovation loan, I suggest that you give me a call so I can quickly assess your needs and provide relevant options for your consideration.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh
Fixed Versus Variable Rate Debate Continues
“61% Of Canadians Believe Interest Rates Are Going Up”
According to a recent survey by CIBC, over 60% of respondents said they thought interest rates were going to increase in the next year.
But of those surveyed, only 39% said they would choose a fixed rate at this time.
Here’s a link to the full article from the Financial Post … http://www.nationalpost.com/Prospect+higher+rates+hasn+people+flocking+lock/4880972/story.html
This underlies the ongoing debate over fixed versus variable rates that we have with clients every day.
From a “what should I do” point of view, there is really no right answer. There are good arguments for both, even in a rising rate environment.
The statistics do show that a high percentage of Canadians have been conditioned now to variable rates as staying variable has netted some considerable savings over the last number of years.
And many people have stayed variable during times of rate increases or projected rate increases, only to see interest rates settle down or even fall, further benefiting from their variable rate position.
But there is no guarantee that such good fortune will continue sticking with variable rates.
With all that’s going on in the global financial markets, its not beyond imagination that rates increase and then stabilize at a higher level which would make fixed interest rates very attractive right now.
It’s all about who’s crystal ball is more accurate over time.
And it would appear from some of the statistics out there, such as the CIBC report mentioned above, that there is a good portion of the population that’s going to stay variable until it doesn’t make any sense for them, or they can’t afford the financial risk of rates going any higher.
Added to everyone’s personal assessment of fixed versus variable is the fact that fixed rates have recently been coming down why variable rates have remained unchanged, creating an even greater rationale to go variable at the present time.
Once again, a big part of anyone’s final decision on rate structure is going to relate to their own situation, personal assessment and tolerance for risk, and long term financial plan.
To get more information on mortgage interest rates and what might make the most sense for you and your family, give us a call so we can assess your situation and get all your questions answered.
Positive Fixed Mortgage Rate Trend
“5 Year Government Of Canada Bond Yield On The Decline Pointing To Lower Fixed Mortgage Rates”
With the continuing drop in the 5 year bond yield, it appears only a matter of time that fixed term mortgage rates are going to do the same.
Fixed mortgage rates are closely linked to the bond market and with the bond yield now at a 5 month low, the correlation with fixed mortgage rates should spark some positive downward movement.
For a look at the most recent yield chart, click on this link …http://www.bloomberg.com/apps/quote?ticker=GCAN5YR:IND
This makes it a positive week overall for the mortgage market with the week starting off with no movement in the Bank of Canada’s overnight lending rate which tends to have a direct impact on variable mortgage rates.
The spread right now between the bond rate and equivalent term mortgage rates are significant enough that competition is likely going to bring rates down in order to grab or maintain market share.
All of this is potentially good news for mortgage holder and mortgage shoppers in Canada.
What type of rate change is likely to take place is hard to predict and it will also vary from region to region in the country, based on competitive forces in each area.
All the financial uncertainty in the world has made it more attractive to hold AAA Canadian Government issued bonds. Bonds have an inverse relationship with interest rates, so as the price of bonds gets bid up higher due to increased demand, the interest rate yield on the bonds drops.
The end result is that mortgage lenders have a cheaper source of money to draw on which should translate sooner than later into lower fixed term mortgage rates.
If you’d like to know more about how these potential rate changes may impact your mortgage situation or requirements, please consult with an experienced mortgage broker to help you stay on top of the expected rate moves.
Variable Rate Mortgage Sigh Of Relief
“Variable Rate Mortgage Holders Can Breathe Easier With Bank Of Canada Maintaining The Status Quo”
Yesterday the Bank of Canada announced that its maintaining its overnight lending rate at 1%.
This is good news for variable rate mortgage holders as most variable rate mortgages move directly with any changes in the over night rate.
The last number of months have produced considerable speculation about if and when rates are going up, and while most economist believe that interest rates are going to be going up, its not likely to happen right away.
A return to a more traditional overnight rate of 2% to 3% is now being pushed back to 2013 by some pundits.
It was only a month or so ago that a rate hike at the end of May seemed like a forgone conclusion. But then again, it shows just how much can change in a short period of time and how unpredictable interest rate movements really are.
For more information about the B of C’s announcement, here is the link to their site … http://www.bankofcanada.ca/2011/05/press-releases/fad-press-release-2011-05-31/
The next scheduled interest rate decision date is not until July 19, and the current consensus from those supposedly in the know is that there isn’t likely to be any further rate increases until at least September.
But, of course any predictions with respect to interest rates are subject to change.
So in the mean time, those holding variable mortgages, or considering one can continue to enjoy the near record run we’ve had in Canada at the low end of the rate spectrum.
Hopefully the trend will continue well into the future.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh
Online Mortgage Rate Considerations
“Things To Consider Before Shopping For Online Mortgage Rates”
With the continual advancement of the internet, online services for providing mortgage rates and potentially in the future, signing up for the mortgage online are going to become more visible to those that prefer to do more and more of their business online.
The key to any type of online business is simplicity of service where you can basically point and click on what you want. The closer something is to a commodity, the more likely online competition and offerings will appear.
So if you have great credit and are looking for a very straightforward mortgage offering, shopping around for the best rate on line will likely become an easier process in terms of both convenience in finding what you’re looking for and the speed of completion of the mortgage process.
For anything that’s not completely straightforward, these online line rate quoting services may end up leaving you wanting more.
As I’ve written before, a mortgage decision is one of the biggest financial decisions most people will make in their life time.
So taking the time to understand where you fit into the market, the terms and conditions of different offerings, and settling on rates and terms that make sense for your cash flow and future plans is pretty important.
As I write this article and post it in online media, I truly see the value of using the internet as a tool to assist with the mortgage financing process.
But my objective is to help you locate a suitable adviser who can assist you with the process.
All the posted rate information can be very misleading and many times comes with certain conditions that may or may not make sense to your particular situation.
As a mortgage broker, my goal is to give you broader access to the market and help guide or fit you into a lender’s program that will be the most beneficial to you at any given point in time.
This is an important distinction in the process of locating and securing a mortgage as lender programs and rates are a moving target, so whatever is advertised online today can be different tomorrow and if the information is not constantly brought up to date and refreshed, can end up being misleading.
The other aspect of online rate shopping is that is basically ends up having you select one lender to apply to, based mostly on posted rates.
If you make an application to a unique lender and don’t end up taking their offering, you’re not only right back at the starting point, but you’re also going to have more credit inquiries from a “one at a time” application process.
The point here is that posted online mortgage rates can be very misleading and many times are designed to get you to apply without you being able to tell if you will even be able to qualify for the offer.
Once again, for high credit score, high income, high net worth applicants, low rate shopping on line can be very beneficial.
For everyone else, at least at this point in time, it can be a bit misleading.
If you have any questions about mortgage financing for a residential or commercial requirements, please give me a call and I will make sure all your questions get answered right away.
Private Mortgage Pros And Cons
“Here Are Some Of The Key Considerations Surrounding Private Mortgage Financing”
As a mortgage broker, probably the thing I like the best about private mortgages is the flexibility to utilize this form of mortgage financing in so many different situations.
Private lenders are typically individuals that make their own assessment and lending decision and if they are comfortable with the case for financing, as well as the risk related to the deal, they will issue a commitment to fund the deal.
When we’re working to place funds through a bank or institutional lender, the requirements of the lender are more cut and dried and basically inflexible. Working with large transactional volumes requires a consistent application of lending criteria in order to efficiently process and approve deals. That makes a good deal of sense from a business point of view, but it can be frustrating for a borrower if they don’t quite fit into the lender’s box.
This where private mortgage lenders can provide tremendous value in the market place due to the fact that they control the ability to customize their approach to any given deal and potentially fund good deals that are not quite bankable or fall between the institutional lender cracks so to speak.
A major con of private lending that most borrowers don’t understand is that private lenders want to assess and fund deals quickly as they have funds available to put out in the market. Idle money doesn’t earn them a return, so they are interested in finding suitable deals and funding them.
Where the con comes in is that most borrowers don’t realize or appreciate that once they receive an offer to finance from a particular private lender, they need to act quickly on it or it may not remain available to them.
Unlike a bank that really has no limit to available funds, a private works with a finite money pool and if someone is waiting too long to accept an offer for financing, the private lender may very well place the funds into another deal.
Many times borrowers will shop the market and gather different quotations, circling back to different quotes over a period of time. While this approach may work with a bank or institutional lender, its certainly not guaranteed to work with a private money lender.
The key here is to start the financing process with a private lender knowing that if he or she give you 5 business days to accept an offer and you don’t accept it, there is a very good chance that it may not be available to you weeks or months later.
And while that may not seem like a particularly big deal, many times there is a sense of urgency around private mortgage financing requests and if you take too long and miss out on an offer, there is no guarantee you will find a suitable replacement in the time you have to work with.
Commercial Mortgages Potentially On The Rise
“Commercial Mortgage Lending In Canada Could Be On The Rise In A Number Of Ways”
Commercial mortgage lending is very much driven by a balanced lender portfolio that takes into account such things as the type of property, industry, and geographic location.
The more diverse the lending portfolio and the higher the quality of the commercial mortgage borrower, the more apt a commercial mortgage lender is going to be to extend more credit.
Right now, there is a trend in Canada whereby more U.S. retail is entering the country to take advantage of the higher dollar and the high per capital spending that exists in Canada which is starting to rival what these retailers are experiencing in the U.S.
Here’s a recent article that provides some further insight from a recently completed report by Colliers Canada …http://www.canequity.com/blog/2011-05-influx-of-american-retailers-leading-to-more-commercial-mortgages/
If the trend mentioned in the report continues and more and more high profile, financially strong retail companies enter the Canadian market and require commercial loans, this will not only increase the commercial lending for the related type of commercial property, but it will likely also help lenders broaden out their portfolios and achieve a larger, stronger portfolio in the process.
This is potentially good news for anyone looking to acquire, renew, or expand their commercial mortgage financing in the future.
Commercial lending as a whole has remained tight since 2007 and has been slow to loosen up as lender remain cautious as to further losses they may have to endure from their existing portfolio.
But nothing loosens up the purse strings more than solid economic growth numbers month after month and credit worthy borrowers looking to acquire capital on properties in major metropolitan areas.
As a commercial lending portfolio grows through lower risk loans, it has the capacity to either cover off existing credit risk in the portfolio or branch out into more commercial markets and take on slightly higher risk opportunities.
It remains to be seen if the U.S. retail expansion in Canada will create a positive commercial property financing domino effect, but it is a strong indication of the market continuing to come around and get back to lending money on a more regular and predictable basis.
From a supply side, the commercial mortgage market has also become stronger from more private lenders entering the market and being interested in commercial properties.
At least in the near term (as nothing is very predictable these days), the commercial mortgage market in Canada appears to be strengthening for deals large and small.
If you require commercial mortgage financing for a property you own or are looking to acquire, I recommend that you give me a call so we can go through your requirements together and discuss different financing options potentially available to your in the market.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh
Cottages As Investment Property
“A Cottage Or Vacation Home Can Also Be A Profitable Long Term Real Estate Investment”
According to a resent survey conducted by Royal Lepage, a percentage of those surveyed believe that owning a cottage or vacation home is a good long term investment.
Here’s the rest of the article as well … http://www.canequity.com/blog/2011-05-majority-of-canadians-confident-in-vacation-homes-as-long-term-investments/
The survey focused on individual that had either recently purchased a vacation property or planned to purchase on in the next 24 months.
Especially in the upper end cottage communities, the real estate market can very closely reflect what you would typically see in urban areas in terms of growth rate and resale-ability.
As more individuals get prepared to take this step towards cottage type investments, the key element to making their property profitable over time is going to be the structure and rates provided by their cottage mortgage facility.
While cottage mortgages are not that difficult to secure, there can be considerable differences in rates and terms from one type of cottage to another and there can also be differences from one area to another to reflect a market that is stronger and maintains higher resale activity and interest.
And when you already own a primary residence, you can still qualify for a cottage or vacation home mortgage at very slow interest rates and low leverage, but you’re going to have to make sure you can meet the lender’s lending criteria in order to do so.
Outside of just buying a good property mortgage financing is going to be the next important element in terms of the amount of money you need to put down to acquire the property, the interest rate you’re going to have to pay over time, and the monthly debt serving that is going to impact your case flow.
In order to properly navigate through all the different twists and turns that can come into play when trying to place a cottage mortgage, your best bet would be to work with an experienced mortgage broker who can help you plan ahead of purchase the best way to approach mortgage financing so that when you locate a property you’re interested in, you’ll already know if its going to fit into your financing requirements.
Housing And Mortgage Market Bewilderment
“Interesting Times In The Canadian Mortgage And Housing Markets”
Its a strange and interesting time in the world of real estate and mortgage financing here in Canada.
With all the recent changes in mortgage regulations that have made mortgage qualifying more difficult, especially for first time home buyers, housing sales have been on the down tick.
So you would think that there would be a lot of listings than buyers on the market, right?
Recently here in Ontario, I’ve noticed that good properties are still hard to land. Clients are putting in offers on listing and finding themselves in the middle of a bidding war with other potential buyers.
There seems to be a scarcity of good properties on the market at a time when you would think the opposite would be true.
Because of the changes is mortgage qualifications, mortgage applicants are moving down market into the newly renewed Canadian sub prime space for uninsured mortgages.
This part of the market was almost wiped out a few years ago, but now makes up to around 20% of the whole mortgage pie.
Private lenders are also seeing an upswing in business due to the recent changes in regulations.
The rental market is also in a state of change now that mortgages on rental properties are basically capped at 80%, requiring a not more equity to be in the rental game.
And then there is the totally unclear view as to where interest rates are heading.
Being that we are so closely tied to the U.S. market, and there being no sign of an interest rate happening any time soon south of the border, its hard to imagine much of an interest rate increase here, but then again anything is possible.
With all the focus on the global financials in the news, there are several reports now saying that the average consumer is moving to reduce their debt to help guard against whatever is going to happen next with interest rates and financial programs.
As we continue to move into the summer period and peak real estate season, it’s going to be interesting to see what trends or patterns may emerge.
Right now its more of a head scratch as to why the markets are behaving as they are.
No New Mortgage Rule Changes
“Canadian Home Owners Should Not See Any Further Mortgage Rule Changes
Any Time Soon”
According to finance minister Jim Flaherty, there are no further mortgage rule changes being proposed and that the three sets of changes made over the last couple of years have the market going in the right direction.
For more specifics on what the minister had to say, here is a link to a financial post article on the subject… http://business.financialpost.com/2011/05/10/no-new-mortgage-rule-changes-flaherty/
What this means for home owners is that its time to settle into the new way of things with respect to managing their mortgage debt now and in the future.
The recent rule changes have made it more difficult to qualify for a mortgage, requiring that individuals with lower equity down payments be able to cover off a rise in interest rates with their available income level.
Reductions in the maximum amortization period, amount of debt that can be refinanced as a percentage of property value, maximum lending for rental properties, and the removal of mortgage insurance on home equity lines of credit have had a significant impact on the residential mortgage landscape.
But like with any change, there is going to be an adjustment period during which time home owners and prospective home owners are going to have to learn how to meet the new requirements in order to achieve their financial goals in both the short and long term.
The whole point of making the changes was to avoid the housing market becoming too overheated by cheaper debt that is not likely to stay at the current levels for too much longer, or at least that is what all the signs and pundits seem to be pointing to.
And to this point in time at least, housing prices have held or increased in most Canadian locales while the residential housing market to the south continues to be in near total disarray.
So regardless of whether you’re a new home owner, a first time home buyer, or a long time mortgage holder, its likely time to brush up on the new world of mortgage financing so that you can be in the best position to make good decisions on a timely basis going forward.
Because most mortgage holders have not had any type of mortgage event or mortgage decision required of them in the last couple of years, it does make sense to acclimate yourself to the mortgage regulations as they exist today as they appear to here to stay for the near future.
If you would like to better understand any of the recent changes and how they may impact your current mortgage or future financial planning, I suggest that you give me a call and set up a time where we have a discussion and get all your questions answered.
Click Here To Speak With Toronto Mortgage Broker Joe Walsh
Closing Cost Trap
“Make Sure You Have Properly Calculated And Budgeted For Closing Costs During The Real Estate Purchase Process”
One of the most overlooked aspects of arranging financing for the purchase of a home is the closing costs.
These are items such as legal fees, property taxes, land transfer taxes, insurance, etc. that are not part of the property purchase, but must be paid before the purchase transaction can be complete.
And in some cases, the amount can be fairly substantial.
I had a call the other day from a couple that were 4 days away from closing, had all their financing arranged, but did not have $12,000 to pay the closing costs.
In many cases, when the closing costs are overlooked, most people are able to scramble around to come up with the money and complete the transaction. But even in these situations, they may end up using all their available short term credit which can lead to ongoing cash flow and cash management problems in the future as well as increased cost as now more debt has to be serviced.
In other cases, the inability to close the deal can be quite costly as well in the form of you losing your deposit which can kill the whole plan of home ownership altogether.
One of the reasons that the closing cost problem happens fairly regularly is that none of the professionals involved in the transaction take the time to point it out, even though they all know that there will be closing costs that need to be paid. This can include the real estate agent, lender, mortgage broker, and lawyer.
The other problem with not estimating for these costs ahead of time is that too much of your available money may get committed to your down payment and potentially your deposit, which can influence your mortgage approval. If closing costs were properly allowed for from the outset, then funds could be put aside to cover them off and the remaining cash or equity pledged towards the purchase.
This is why its advisable, especially for first time home buyers, to work with an experienced mortgage broker that is going to walk you through the whole home mortgage financing process and outline all the steps involved, including budgeting and funding closing costs.
Then when your mortgage application gets approved, the path to closing the deal will not be derailed by something that should have been considered earlier on in the process.
Click Here To Speak Directly To Toronto Mortgage Broker Joe Walsh