2nd Mortgage Private Lending Canada

Grow-Ops Properties - Is it Lendable?

2009-07-26T03:04:00.000-07:00

Some lenders try to get away from 'grow-op' properties. Some lenders will consider lending on such property providing the property is strong and has been fully remedied. In addition to the district or city re-issuing an occupancy permit, the credit union requires an inspection report prepared by Pacific Environmental confirming that the house is fit for human habitation prior to approval. Details about costs associated with obtaining the report can be found here at http://www.pacificenvironmentalbc.com

95% Loan to Value Second Mortgage

2009-07-26T02:35:00.000-07:00

As of today, 2nd mortgage up to 95% LTV is available through selective lenders as long as the first position lender is a CMHC approved lender. If you are planning to do some equity take out on your principle residence, this will work well. For a business for self (stated income), this program is also available up to 90% LTV through very selective lender.

A few restrictions:
1-3 fixed rate selection
Owner occpuied properties only
First mortgage must be an approved CMHC elnder
Maximum 75% LTV conventional
Maximum 95% LTV high ratio insured mortgage
Stated income - must have 680> beacon score

Cash Back Mortgage? How about "Flex Down" ?

2009-07-23T00:27:00.000-07:00

Have you seen 'cash back' mortgages with zero down payment funded on closing? Yes it is available at posted rate (not fully discounted rate). How about considering 'flex down' mortgage and get the best rate possible!? It saves you money while keeping our down payement 'zero' out of pocket - reason being - flex down mortgage still gives you the best rate possible vs. cash back mortgage adds the cost of money on the 'rate' itself. Make sure you compare the two options.

Here is how it works. With the 'flex down' program, the down payment can come from other sources such as personal line of credit, which only has 'interest only' payment. Also, with 95% LTV at 2.75% premium, we are only paying a bit higher at 2.90% in order to do 'flex down' mortgage program.

For more information on 'flex down mortgage', click here.

Critieria for Mortgage Registered in Company Name

2009-07-13T21:04:00.001-07:00

CMHC GUIDELINES

-CMHC will allow a full rental property to be registered in a company name for fully qualified deals only.
-CMHC BFS simplified program is not eligible.
-When submitting a rental application with a Corporate borrower, the corporation’s full legal name is entered in the guarantor field and the individuals providing their personal loan guarantees in the borrower and co-borrowerfields.
-The mortgagor on title may be listed in the “Borrower”, “Co-borrower” or “Guarantor” fields in the Emili system for CMHC.

GENWORTH GUIDELINES

-Genworth will only allow a full rental property to be registered in a company name for fully qualified deals only.
-Genworth BFS Alt A program is not eligible.
-When submitting a rental application with a Corporate borrower, the corporation’s full legal name is entered in the guarantorfield and the individuals providing their personal loan guarantees in the borrower and co-borrower fields.

LENDER GUIDELINE EXAMPLE

-Maximum of 2 guarantors only (both AA and AAA deals).
-The guarantor(s) must have signing authority with the company.
-The guarantor(s) must pledge a personal guarantee.
-Confirmation that the corporation is financially sound, with no liens against it.
-Personal guarantee(s) for 100% of the mortgage loan is required when the borrower is a corporate entity.
-All parties on the application will be responsible for 100% of the loan, irrespective of which party is on title as mortgagor.

Home Buying - All Closing Costs and Associated Fees

2009-06-01T00:40:00.000-07:00

What It Will Really Cost to Own a Home?

A quick rule of thumb, any home buyer can expect to pay from 1.5% - 4.0% of the purchase price of their home in closing costs.

Here are a list of expenses and some of them are optional:

Cost of Home
Purchase Price
GST (on new/significantly refurbished homes)

Upfront Costs
Appraisal fee $250 - $400
Down Payment and Deposit
Estoppel certificate fee (for condominium/strata unit)
Home Inspection $300 - $450
Land Transfer Tax
Legal fees and disbursements ($700 - $1200)
Mortgage broker's fees
Mortgage loan insurance premium (can be included in your mortgage)
Prepaid property taxes/utility bills
Property insurance
Survey or certificate of location cost
Title Insurance (do NOT neglect this one!)

CMHC Self Employed Policy Change

2009-04-07T13:00:00.001-07:00

CMHC will no longer accept applicants under their Self Employed program who own and incorporate a company. CMHC will still however do “sole proprietor” under that program. If applicant is incorporated they will now have to fully qualify.

Other high ratio mortgage insures in Canada also include Genworth and AIG. However, the lenders must adopt the insurer's program for you to obtain the insurance.

New Immigrant - No Job, No Credit, 30% down

2009-03-17T17:10:00.000-07:00

If you are a new immigrant and thinking to purchase a home or rental home in Canada, here is a good program:

* 30% down payment, can be owner occupied or rental.
* Maximum Loan $1M on rental, max $1.5M on principle residence.

Qualification: must have permanent resident card confirming landed immigrant status

Income: no income in Canada is okay. Need to provide information on offshore income and business; investment incomes, the more information, the better (if you own business, provide what does the company do, how many employees, your clients, gross and net income)

Credit History: no credit is okay, as long as having down payment (30%) + 12 months mortgage, interest and tax of “liquid assets” (if you have credit history, no need to show cash equal to 12 mth payment).

All down payment must be in Canada 15 days before funding.

Free consultation.
Chinese (Mandarin, Cantonese), Japanese, Fillipino, Korean.
Christine Chien, Personal line: 604-603-6189

Prime Rate Announcement: 2.50% (March 3 2009)

2009-03-04T11:35:00.000-08:00

(Ottawa March 3, 2009) - As expected, the Bank of Canada aggressively reduced another 0.50% on the overnight lending rate. The bank's current prime rate is reduced from 3.00% to 2.50%. We expect the lenders to follow the rate cut.

The Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve its 2 per cent inflation target over the medium term.

The next scheduled date for announcing the overnight rate target is 21 April 2009.

Current variable rate: Prime + 0.80%
Current best 5 year fixed: 3.99% (close within 45 days)

Clients must qualify for the loan to obtain the best rate.

Renewing or Refinance Citi Bank Mortgage?

2009-01-27T20:11:00.000-08:00

Do you have a Citi bank mortgage up for renewal? Contact us.
With the financial crisis in the States, Citi Financial has officially pulled out from subprime lending and cut their broker channel last year 2008 November.

If you currently have a Citi Financial mortgage up for renewal, even it is at high ratio 90% - 100% LTV. We will be able to help you out. Contact us at cchien@mortgagegrp.com

Free consultation p. 604-603-6189, ask for Christine Chien.

Bank of Canada Rate Cut by 0.50%

2009-01-21T00:11:00.000-08:00

Jan 20th, 2009, Bank of Canada announced yet another rate cut by 0.50% from 3.25% to 2.75%. The previous rate cut was last year December 9th.

Major banks and lending institutions in the previous rate cut followed only 0.25%. Interestingly, TD Bank and a few institutions have formally announced to follow today's prime rate change from previous 3.50% to 3.00%. As of today, the best variable rate is at prime + 0.80 (3.00% + 0.8% = 3.8%). The next scheduled Bank of Canada rate announcement is March 3rd, 2009.

Genworth - Self-Employed Insurance Guideline Changes

2008-12-15T20:11:00.000-08:00

Effective December 8, 2008, the following changes have been implemented to the Genworth BFS Program.

Borrowers with commission income are no longer eligible
The income reported by the borrower must be reasonable based on the industry, length of operation and type of business.
Beacon Scores have increased for 95% LTV deals - Primary Applicant must have a 700 beacon (up from 680) and the Secondary Borrow must have a beacon of 680 (up from 650)
Strong credit and credit score with minimum 2 trade lines with at least two (2) years history
Maximum LTV for Refinances has been reduced to 85% (down from 95%

Other Business-For-Self Guidlines, please click here.

Bank of Canada - Another 0.75% Cut (Prime Now at 3.25%)

2008-12-09T10:22:00.000-08:00

Prime rate has been cut by 0.75% by Bank of Canada.
Current Prime Rate: 3.25%

The outlook for the world economy has deteriorated significantly and the global recession will be broader and deeper than previously anticipated. Global financial markets remain severely strained. Measures taken by major governments are beginning to encourage credit flows, although it will take some time before conditions in financial markets normalize. In addition, a series of recently announced monetary and fiscal policy actions will also support global economic growth.

While Canada's economy evolved largely as expected during the summer and early autumn, it is now entering a recession as a result of the weakness in global economic activity. The recent declines in terms of trade, real income growth, and confidence are prompting more cautious behaviour by households and businesses.

All of these factors imply a lower profile for core inflation than had been projected at the time of the last Monetary Policy Report in October.

Several factors are helping to counterbalance the negative drag from the global economic and financial developments. The depreciation of the Canadian dollar will continue to provide an important offset to the effects of weaker global demand and lower commodity prices. As well, money markets and overall credit conditions in Canada are responding to significant and ongoing efforts to provide liquidity to the Canadian financial system.

How Can Debt Consolidation Benefit Me?

2008-12-02T14:15:00.000-08:00

What is debt consolidation?

If you have numerous credit card debts at high rates, plus auto loans, retail loans, and etc..., it maybe better off to consolidate all debt into one account - if you own your primary residence.

How does it benefit me?

There are numerous benefits. Most important being savings on the interests. If your current debt is $80,000 at avg of 15% (most credit cards charges higher,the total interest will be $12,000 a year. If the debt is consolidated at 9%, it is an interest saving of $4800 a year for you.

The other benefit is easiness to manage. By having more than one credit cards and loans with different due dates and amount, one is easy to miss the payment. By consolidating all loans into one account, it is easier for one to manage.

One benefit that most people miss is the credit history. If one has credit cards and loans that are constantly at high balance, it has negative effects the credit score. This means, if the maximum limit is $9000, and one usually use all limit up $9000, or sometimes higher, it may dramatically decrease your credit score. By consolidating the debts into one mortgage using equity of the home, it may well save your credit score in a big number.

Next Step? Call us at 604-603-6189 or Email us: cchien@mortgagegrp.com

Flex Down payment VS Traditional Down Payment

2008-11-15T18:21:00.000-08:00

Flex Down" actually has been around for some time. Flex down (CMHC program) is available for an "employed individual" who receives salary, or for "self employed" only if he/she claims sufficient income to debt service.

Flex down payment could include the following:

personal line of credit (LOC)
credit card transfer
borrowed funds.

Whereas, a traditional down payment can be from the following:

cash
gift from relatives
RRSP withdrawal
funds borrowed against proven assets
rent-to-own payments
goverment home owner grants
procceds from sale of other property

Flex down mortgage program, while allowing flexibility on source of down payment, it does have higher insurance premium for the same amount of loan and loan to value compared to traditional down payment program.

No more 100% Refinance (Citi Financial pulled out 100% Refi)

2008-11-10T10:33:00.000-08:00

Beginning on Monday, November 10th, CitiFinancial Canada will no longer make loans above 95% loan-to-value. 95% loan-to-value uninsured refinances will still be available through CitiFinancial branches, but no longer through brokers.

Therefore, as of November 10th, 100% refinance will no longer exist. Citi Financial has been the only one that will do 100% refinance.

News: Canada Agrees to Buy C$25 Billion in Mortgages

2008-11-10T10:26:00.000-08:00

Canada Mortgage and Housing Corp (CMHC), a government-run agency, will buy as much as C$25 billion ($21.6 billion) in mortgages from the banks, Finance Minister Jim Flaherty said today in Ottawa. The lenders will get cash, giving them more money to lend to consumers and businesses.

Borrowing costs for Royal Bank of Canada and other lenders have soared as the global credit crisis spreads. Canadian banks have become less willing to lend to each other, let alone to customers. The difference in yield between Canada's three-month treasury bill and the three-month dollar London Interbank Offered Rate rose to the highest since at least 1990 this week.

Canadian banks are "reluctant to lend to any other bank,'' said Ian Nakamoto, director of research at MacDougall & MacTier Inc. in Toronto, which owns bank shares. ``Canada is obviously not an island unto itself. We rely on the funding costs that any other bank in the world would rely on.''

Shares Mixed

The Canadian Bankers Association, speaking for the nation's banks, said today's move is ``a safe, efficient and economic way of facilitating credit markets.''

"It's been difficult for our institutions to raise long- term funding,'' Nancy Hughes Anthony, chief executive officer at the association, said in a telephone interview. ``I don't think there's any silver bullet, but this is one helpful initiative along with many others.''

The mortgage buybacks may allow commercial banks to lower their prime lending rate by about a quarter percentage point, Flaherty said. Canadian Imperial Bank of Commerce and Toronto- Dominion, the No. 2 lender, cut their rates 15 basis points, to 4.35 percent. Bank of Nova Scotia, Royal Bank of Canada and Bank of Montreal cut 25 basis points to 4.25 percent.

Take Action

``Our mortgage system is sound,'' Flaherty said. "Canadian households have smaller mortgages relative both to the value of their homes and to their disposable incomes, than is the case in the United States.''

Subprime Mortgages

Canada's stock of residential mortgages is about C$773 billion, according to the finance department. Subprime mortgages represent less than 5 percent of all outstanding mortgages in the country, compared with about 20 percent in the U.S., the finance department said.

Tip 4 - Commercial Properties at 100% Financing

2008-10-28T00:43:00.000-07:00

Thru specific local lenders, we have access to get you a 100% financing for an owner-occuipied commercial properties.

Thus, if you run a business and currently lease the place. You should look deeper to this opportunity. The lender would require to see that you have been successfully paying a similar amount of rent to your landlord in the past and your business operation is financially healthy. For a good 3 year history of such proof, your business will be eliglbe to purchase a commercial owner-occupied property at no money down!

Mortgage Tips for the Self-Employed

2008-10-27T18:57:00.000-07:00

Keep your taxes up to date
In order to qualify for a mortgage, home buyers must submit a credit history and declare all outstanding debts. They must also provide documentation of their income.

With salaried individuals, banks generally ask to see a letter of employment and a pay stub. With self-employed people, banks typically require two years of personal and business tax statements, depending on whether the individual is incorporated or a proprietor.

While banks look at the gross income of a salaried person, both gross and net incomes are key determinant in transactions with self-employed individuals. Because small-business owners must collect their own taxes, some put off paying them for several years, report loss on business, or simply expensed all items possible to reduce the taxable income.

Make the income case justifiable

The aforementioned circumstances don't take into account people who've been self-employed for less than two years. There are a variety of financial products in place for people in that boat.

"The bank may look at it and say, 'Well, Mr. Smith was an engineer for three years at Shell Canada. For the last two years, he's been contract. Let's look at the last two years' tax returns. He's a professional. He made $60,000 as an employee and he made $60,000 as self-employed. Let's proceed."

Some banks offer a product called a "no-income qualifier." The lender will overlook your recent income (or lack thereof) if you can show that you have assets -- such as investments, perhaps -- and that you have sufficient funds to make a down payment.

Tip 3 - 100% Financing Buy Undervalued Property and Refinance

2008-10-24T20:52:00.000-07:00

This tip would generally apply on real estate investors. If the appraised value is at $500,000 and you are purchasing it for $400,000. There is a $100,000 built-in equity.

What you can do is to use a short-term money source as down payment to purchase the house at $400,000. And you follow one of these second steps:

1. Refinance the property with a new appraisal and get your money back. This method is mostly adopted but is not the cheapest way because you incur new legal fee.

Here is the trick.

2. Do a "global" registration mortgage. This mortgage is registered differently from other mortgages. Long story short, you are able to raise the loanable amount by showing the appraisal WITHOUT incurring legal fee. The extra money also has the flexibility of a line of credit if you choose so.

Ask us about this program!

Tip 2 - 100% Financing 95% mortgage with 5% Cash Back

2008-10-24T20:31:00.001-07:00

With specific lenders through broker channel, you may do a 95% financing with 5% cash back option for closing cost or renovation. This product is still around.

The key thing here is that this 5% cash back cannot be used as down payment. Thus, you will need to come up 5% cash as down payment. The strategy here is that this 5% can be gifted money from your straight relatives. The lender will not request to verify where the 5% cash back is spent.

Another strategy is if you are someone who has high debt service ratio and is just close to being qualified, this 5% money can be used to pay off your existing debt and make the debt service ratio in line.

News: Banks Cuts Prime rate to 4.00%

2008-10-23T17:27:00.000-07:00

Oct. 21 (Bloomberg) -- The Bank of Canada reduced its main interest rate by a quarter of a point, less than economists predicted, saying it will probably need to act again to fend off the effects of a credit crisis and global recession.

Governor Mark Carney and his five deputies trimmed the target rate for overnight loans between commercial banks to 2.25 percent, the lowest since October 2004. Seven of 24 economists surveyed by Bloomberg predicted the move, with 13 calling for a cut twice as deep and four expecting no change.

The credit squeeze spurred by the subprime mortgage meltdown is sapping demand for Canadian shipments of automobiles and lumber to the U.S., Canada's main export market. The global financial crisis also may crimp the domestic spending that's propped up Canada's economy, policy makers said. Today marked the first scheduled decision by a central bank within the Group of Seven major economies since a coordinated rate cut on Oct. 8.

The central bank may have been reluctant to ease by half a point after already doing so this month, Lascelles said.

``These actions provide timely and significant support to the Canadian economy,'' policy makers said in a statement from Ottawa, referring to their own rate cuts and the joint move. ``Some further monetary stimulus will likely be required.''

HERE ARE MORE RELATED NEWS (FOR YOUR INFO)

Currency Fell

The Canadian dollar weakened 1.6 percent to C$1.2105 per U.S. dollar at 11:06 a.m. in Toronto from C$1.1909 yesterday. The currency's drop from a record 90.58 Canadian cents per U.S. dollar set last Nov. 7 will help exporters, the bank said.

Policy makers cut their forecast for economic growth this year to 0.6 percent from a July prediction of 1 percent. Next year's gross domestic product will also grow 0.6 percent, compared with a July forecast of 2.3 percent.

Canadian exporters will be hobbled by a U.S. recession, a world economy that ``appears to be heading into a mild recession,'' and lower prices for the country's exported commodities, the Bank of Canada said. Domestic spending will also be curbed by tougher lending conditions, the bank said.

Policy makers didn't say Canada's economy is headed for a recession, unlike assessments by BMO Capital Markets, Bank of Nova Scotia, Credit Suisse Holdings Inc. and UBS AG.

`Not Done'

``They firmly signaled they are not done,'' said Derek Holt, an economist at Scotia Capital in Toronto, adding the rate will be lowered to 1.75 percent at the next meeting. ``You could have taken that statement today and easily changed the headline to have a 50- or 75-basis point cut.''

Canada's key rate hasn't been below 2 percent since 1960, and its record low was 1.12 percent in 1958, a time when it was based on treasury yields rather than actions by policy makers.

Canadian banks, rated the soundest in the world this month by the World Economic Forum, are still reluctant to lend after the worst financial malaise since the Great Depression toppled institutions such as Lehman Brothers Holdings Inc. in the U.S. and Fortis in Europe.

The biggest commercial banks in Canada failed to quickly match the central bank's Oct. 8 move, the first time that's happened since 1997. Some matched the full 50-basis point cut only after the government created a program to purchase up to C$25 billion of their mortgages.

`Longer Downturn'

Prime Minister Stephen Harper, who won re-election on Oct. 14 by arguing he was a better economic manager than his rivals, has said he'll meet with provincial leaders in the coming months to discuss the economy. Harper last week also backed French President Nicolas Sarkozy's call for international meetings on restoring confidence in financial markets.

``We're looking at a much longer downturn in the American economy than anyone was thinking a year ago,'' British Columbia Premier Gordon Campbell said after a meeting of provincial leaders in Montreal yesterday to discuss the economy. British Columbia is Canada's top lumber-exporting province.

Canfor Paper Corp., Canada's second-largest lumber producer by market value, said Oct. 8 it will close a plywood plant in Fort Nelson, British Columbia. The 290-worker factory was shut because of ``unprecedented and challenging market conditions,'' Chief Executive Officer Jim Shepard said in a statement.

Commodity Prices

Carney, 43, has room to cut rates further because the economic slowdown is pushing commodity prices down from record highs set earlier this year. Those higher prices drove inflation above the central bank's 2 percent target and boosted business profits and consumer incomes in provinces such as British Columbia and Alberta, which is home to the world's second-largest crude oil deposits.

Inflation peaked in the third quarter of this year and will fall below 1 percent in the middle of next year, the central bank said today. In July, policy makers said prices would accelerate to 4.1 percent between October and December.

The bank will provide a new detailed economic forecast paper in two days, and its next scheduled decision is Dec. 9, 2008

NEWS - Banks Unprofitable Holding Discount on Variable Rate Mortgage Oct 15th 2008

2008-10-15T17:18:00.000-07:00

Mortgage Borrowers Pushed To Lock In Variable Rates - 15 Oct 2008
National Post-Garry Marr

Canadian banks are trying to convince consumers to lock in their mortgage rates because more than 20% of the home loans they have negotiated have become unprofitable, according to industry sources.

The push has come after the banks cut the discount they offered to consumers with variable-rate products tied to the prime lending rate. Two weeks ago a consumer could get a variable rate product at 0.60 percentage points below prime; today it is one percentage point above prime.

Anybody with a mortgage negotiated in the past two years would be out of their mind to lock in to, say, a five year term, he said. "If you've got a mortgage rate negotiated below prime, you have a dinosaur. It doesn't exist anywhere. You should hold onto it until the end of the term.

Last week, the Bank of Canada lowered interest rates by 50 basis points only to see the major banks cut their prime lending rate by half that amount. "At the prime minus rates we were basically earning zero or negative, said Ms. Dal Bianco, vice-president of real estate-secured lending with Toronto-Dominion Bank.

With a cost of funds generally above 4% because of the lack of liquidity in the market. For those now entering the housing market, the rate is 5.25% for a variable rate product, but Ms. Dal Bianco said that might not be high enough. "We are not making much money on those, if anything." she said.

NEWS - World Coordination Rate Reduction Oct 9th

2008-10-12T10:28:00.000-07:00

Bernanke’s Push for Global Cut Began With Trichet, King Talks - By Scott Lanman (Bloomberg)

Oct. 9 - Federal Reserve Chairman Ben S. Bernanke’s push for the broadest coordinated interest-rate cut in history started with a weekend of telephone conversations with Jean-Claude Trichet and Mervyn King.

Calling from his Washington office on Oct. 4 and Oct. 5, Bernanke broached the idea with Trichet, the European Central Bank president, and King, the Bank of England governor. The talks culminated Oct. 7 in a conference call where they privately hammered out details of the unprecedented move. Also on the line were central bank chiefs in Canada and Japan.

Twenty-four hours later, the plan came to fruition when policy makers announced half-point reductions aimed at easing the financial crisis. Bernanke’s work behind the scenes over those four days illustrates that the ties he’s forged with counterparts abroad are helping decisions keep pace with changing economic fortunes.

Ninety minutes earlier, the Dow Jones Industrial Average had ended down 5.1 percent for the day, the fifth straight day of losses. Yesterday’s move represents closer coordination among central banks than the rate cut in the aftermath of the 2001 terrorist attacks, when a half-point reduction by the Fed was later followed by the ECB, Canada, Switzerland and Sweden.

Yesterday, it was the Fed, the ECB, the Bank of England, Bank of Canada and Sweden’s Riksbank reducing their benchmark rates by half a percentage point. The Bank of Japan supported the action, Switzerland also took part and China’s central bank separately cut its key rate 0.27 percentage point.

Not all central bankers have been keen to cut rates in recent months. Until last week the ECB had been focused on returning inflation below its 2 percent limit with Trichet arguing as recently as mid-September that his economy was in a temporary “trough."

2nd Mortgage Refinance up to 100% LTV

2008-09-14T11:10:00.000-07:00

As of Oct 15th, 2008, if you have been following the mortgage news, there will be no more "zero" down payment insured by CMHC, AIG, or Genworth. Although not many people know that they can purchase property with 0%, it is still a big change.

If, however, you are refinancing your owner occupied property, we still do up to 100% Loan-to-Value (LTV) refinancing. We will work with any first mortgage you have (whether it is bank mortgage, or a private first mortgage).

If you are in foreclosure, as long as you are allowed to bring your first mortgage up to date, meaning you can keep the first mortgage as long as you pay the arrears within a time frame, we will be able to help you.

Best of all, this program requires no insurance premium.

Commercial 100% Financing Available

2008-09-12T14:01:00.000-07:00

Yes. We do commercial purchase for up to 100% financing.

If you are the business owner that run the business in the property and have been paying rents to your landlord, you can purchase your own at zero down payment!

Given your business has been paying a similar rent than monthly mortgage payment and your business can provide a healthy financial cash flow statement in past 3 years, you will be eligible for the program.

Program available in all major cities in Canada. Inquire within.

Preferred property types:
- warehouse
- retail shops
- no special purpose property (some down payment required)
- no restricted use property (some down payment required)

Land or Property Transfer Tax Refunds

2008-08-25T11:50:00.000-07:00

If you purchase land or an interest in land, you may be entitled to a refund of a Provincial Land Transfer tax.

In Ontario, qualified first time home buyers may be entitled to a refund of a provincial Land Transfer Tax up to a maximum of $2,000 or a home priced up to $227,500. There is also a first time buyers refund for homes purchased in the City of Toronto.

In British Columbia, qualified first-time buyers may receive a refund of Property Transfer Tax on homes valued up to $425,000.

For registrations on, or after, February 20 2008, the fair market value threshold for eligible residential property is $425,000. A proportional exemption is provided for eligible residences with a fair market value of up to $25,000 above the threshold (i.e. up to $450,000).

First Time Home Buyer - RRSP Home Buyer's Plan

2008-08-25T11:43:00.002-07:00

RRSP Homebuyers Plan

As a first time homebuyer, you are allowed to withdraw up to $20,000 from your RRSP without penalty. This amount can be doubled with your partner to a total of $40,000. RRSP Homebuyers plan must be repaid over a period of 15 years. Participants of the Homebuyers plan must begin repayment to their RRSP within two years of withdrawing the funds and amounts must be repaid within 15 years.

For more information, talk to your mortgage professional or visit:

Canada Revenue Agency http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html

Service Canada http://www1.servicecanada.gc.ca/en/goc/home_buyers_plan.shtml

Foreclosure Proceeding in BC

2008-08-13T12:40:00.000-07:00

The typical redemption period is 6 months maximum in BC. During the redemption period, the property owner can seek alternative financing (if there is equity still in the property), or to sell the property during the period before the redemption ends (before the court -order sale). Please click the chart below to understand the details of foreclosure proceeding in BC.

Courtesy of http://www.foreclosures.ca/

Main Reasons for Mortgage Default

2008-08-12T16:28:00.000-07:00

A few major reasons for mortgage defaults are:

- Marriage breakdown
- Loss of employment / failure of business
- Over extended credit / people living beyong their means
- Revenue Canada judgement / other large judgement
- Health problem / addiction / substance abuse

When you are in arrears for mortgages, it is the best to first contact the lender about your reasons for the interruption in income. Seek for help from friends and relatives.

Generally, after 3 payment arrears, the lender will send out a demand letter. Another 3months after, the lender will send out foreclosure letter and a court order for foreclosure. If the property owner is granted for 6 months redemption, it is the best to seek for advice from a professional mortgage broker for different options available.

Examples of Funds for $10M - $5 Billion Projects

2008-08-12T16:10:00.000-07:00

Private fund not only includes private money from investors, it could also be money from instituational mutual funds, international funds and other sources.

Some examples that we will find you funds for include:

-Commercial, Industrial & Residential Mortgaging
-Land & Development Lending
-Specialized Apartment Building Lending
-Bridge & Short Term Lending
-Conventional & Non-Conventional Financing
-Equity & Participating Mortgage Loans
-Joint-Venture Financing for Builders & Developers
-Mezzanine & Subordinated Debt for long term acquisitions
-Special Situation Loans & Convertible Debt
-Distress & Performing Mortgage Loan
-Equity Capital for Acquisitions & Restructurings

International projects we will look at includes the following:

- Ontario: 118 residential units subdivision, construction financing
- Mississippi : $18M Casino contruction
- Florida: First Phase Project
- BC: Development and Purchase $600M
- Washington DC - Acquisition of a $70 million office building
- Mexico: Development of $150 million project
- Refinancing: Income producing buildings

Non-Real Estate Related Projects:
- Panama Water Bottling Plant $5 Billion
- Other projects: Waste Converter, Hotel, Condo, Commercial, Industrial

Update - Lender's no longer offering 40 year amortization or 100% LTV

2008-07-22T15:47:00.001-07:00

Effective immediately:
ING BankFirstline Trust
TD Canada Trust
G & F Financial (BC only)

Effective July 23/08
Laurentian BankEffective July 24/08
National Bank of Canada

Please note, this applies for new deals only.

Mortgage Insursers Push to Keep Zero Down Loans

2008-07-16T12:45:00.000-07:00

MORTGAGE INSURERS PUSH TO KEEP ZERO-DOWN LOANS - Financial Post, July 16/08

Private mortgage insurers are pushing for ways to keep no-money-down mortgages alive and are set to meet with Department of Finance officials in the next two weeks to discuss possible options, sources indicate.

The move comes after Ottawa cracked down on mortgage practices that allowed consumers to enter the housing market with no money down and amortize their loans over 40 years. New rules that come into effect on Oct. 15 would demand a 5% repayment and shorten the length of amortization from 40 years to 35 years.

Sources indicate the country's major private insurers, which control about 30% of the market, have told mortgage brokers they are working on a solution which would keep the zero-down option alive and even the 40-year amortization.

One insurer, PMI Canada, which has been in the market for about a year, indicated it hopes to come up with some alternatives.

"PMI Canada is still in the process of reviewing and analyzing the new mortgage insurance measures for industry and market impact. PMI Canada looks forward to meeting with the Department of Finance at the end of the month to better understand the new measures, after which we will be better able to make an informed strategic business decision as to whether or not we are able to continue to offer the 40-year mortgage insurance option," said Janet Martin, chief executive of PMI Canada, in an email to the Financial Post.

An industry source said the private mortgage insurers are looking into creating a product in which the first 95% of a mortgage is backed by the government with the last 5% securitized independently by the private mortgage insurers.

The new rules from Finance appear aimed as much at Canada Mortgage and Housing Corp., a Crown corporation that controls 70% of the mortgage-insurance market.

In the hotly competitive mortgage-insurance market, CMHC has often been the aggressor in the marketplace. For years, the entire market was CMHC and Genworth Financial Canada, which has controlled the other 30% of the multi-billion mortgage industry. In the past two years, AIG United Guaranty, a subsidiary of and PMI have been trying to crack the market.

CMHC and Genworth both responded to the intrusion by insuring products with longer amortizations. CMHC's decision to insure mortgages with zero money down ended up incurring the wrath of David Dodge, the former governor of the Bank of Canada, two years ago.

Mr. Dodge feared interest only mortgages were fuelling the housing market and demanded a meeting with CMHC. Some industry observers say new rules put in place last week are the long-awaited response to Mr. Dodge's concerns, coming after months of consultation.

Now, the private sector is suggesting it wants to be excluded from the new rules. The Private firms are looking at trying to do the 100% insurance themselves. Brokers have been told to wait a week for nore news before they can find out how to proceed.

Bank of Canada holds line again on key interest rate

2008-07-15T10:00:00.000-07:00

Bank of Canada holds line again on key interest rate
Last Updated: Tuesday, July 15, 2008 9:49 AM ET

The Bank of Canada has cut its economic growth outlook for the country this year, and left a key interest rate unchanged on Tuesday. The bank left its overnight rate - what big banks charge each other for overnight loans - steady at three per cent.

In conjunction with the interest rate decision, the bank said it expects economic growth in Canada this year of only one per cent. Growth is expected to rise to 2.3 per cent in 2009 and 3.3 per cent in 2010.

That is down from the lowered outlook the central bank offered in April, when it said it expected 1.4 per cent growth for this year. In January, the bank said it was looking for 2008 growth of 1.8 per cent.

The bank also sounded a warning over its outlook for inflation, saying that commodity prices continue to outstrip expectations.

"Assuming energy prices follow current futures prices over the projection period, total [Consumer Price Index] inflation is projected to rise temporarily above four per cent, peaking in the first quarter of 2009," the bank said.

The bank sees energy prices subsequently stabilizing and inflation is projected to return to its two per cent target in the second half of 2009.

The bank will offer more details on its outlook for the economy and inflation on Thursday, when it releases its update to the monetary policy report.

The central bank surprised many observers last month when it held the line on interest rates. Many economists had been projecting a rate cut of one-quarter of a percentage point.

What is Tax Deductible Mortgage?

2008-06-18T17:12:00.000-07:00

Tax deductible mortgage has been very popular recently. This product, however, has actually been around a while. Here is a brief explanation of how you can make your mortgage tax deductible - while doing the same thing and paying the same mortgage amount each month.

If you are up for renewal and you are currently paying "some" tax to Revenue of Canada, this product maybe suitable for you. As you may understand, your monthly mortgage payment consists of principle and interest. The interest pays the lender, the principle pays down the mortgage over the 25 years (or up to 40 years).

The difference is, with a special arrangement called "combination mortgage", the interest still pays to the lender; however, your principle payment will be automatically available in a separate Line of Credit (LOC) account. When the money in the LOC is designated for "investment purpose" only, the interest on the LOC is tax deductible.

Therefore, you will have extra "expenses" to file during that tax year, and therefore, you will have extra tax return (or have reduced taxable income).

If you use the investment earning to pay extra payment into your regular mortgage, you will generate a new portion of money in the LOC. And therefore, you will accumulate even more money available for investment and incur more interest that is tax deductible.

Contact us if you are interested in learning more. The product is not for everybody, but when it is used wisely, you can live mortgage free twice as fast.

Steps to Claim the Exemption

2008-06-09T13:12:00.000-07:00

Administrative Steps to Claim the Exemption

Ensure all the required steps are taken when a purchaser claims the first timehome buyers exemption to avoid confusion and processing delays. The following information highlights areas where purchasers claiming the exemption commonly make errors:

First Time Home Buyers' Property Transfer Tax Return
Any purchaser claiming this exemption must complete the tax return specificallydesigned for the exemption. If a computer generated tax return form is used, it must be stapled to the back of the original blue return form.

The First Time Home Buyers' Property Transfer Tax Return requires the purchaser toprovide information verifying that he or she meets all the requirements for theexemption. Anyone seeking assistance when completing the FTHB tax return maycontact the Property Transfer Tax office at 250 387‐0604.

The purchaser must certify, by signing the return, that he or she meets all therequirements for the exemption. Read this section carefully before signing.

Specific Sections of the Tax Return Form
Many of the sections in the FTHB tax return are the same as those in the general and special tax returns that are also in use. However, several sections are unique to the FTHB tax return and attention should be paid to ensure they are completed correctly. The following document (download) helps a purchaser complete sections A, B, E,F and H of the return. Click to download the Complete Instruction for "Completion of First Time Home Buyer Tax Return, Application, or Application for Refund",

Property Transfer Tax Service
Telephone (Vancouver): 604 660‐2421
Telephone (Victoria): 250 387‐0604
Toll free in Canada: 1 800 663‐7867 (request a transfer to 250 387‐0604)
E‐mail: PTTENQ@gov.bc.ca

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First Time Home Buyer - Mortgage Requirement

2008-06-09T12:52:00.000-07:00

The following mortgage requirement does NOT apply to property purchases register prior to February 20, 2008.

Mortgage Paydown Requirements
The mortgage paydown requirements described in this section are NOT applicable to property purchases registered on, or after, February 20, 2008. Also, the mortgage paydown requirements described in this section are not applicable to property purchases registered before February 20, 2008, and paid down on, or after,February 20, 2008.

For property purchases registered prior to February 20, 2008, and paid down before February 20, 2008, the requirements with respect to how much the financing maybe reduced during the first year the purchaser owns the property are outlined in the following sections.

These restrictions apply to all types of financing, including re‐advanceable mortgages and lines of credit. All payments made against the principal amount of the mortgage (both regular and lump‐sum payments) are used to determine how much the mortgage has been reduced. Sometimes the type of financing used, such as a re‐advanceable mortgage or a line of credit, enables the purchaser to borrow money in addition to the money borrowed to finance the home.

When calculating how much the mortgage has been reduced, only the amounts borrowed to finance the home are considered.At the end of the first year after the exemption is claimed, the ministry sends the home owner a letter as part of a routine follow‐up procedure. The home owner must return the completed letter to the Property Transfer Tax office in order to maintain their eligibility for the exemption.

If the property purchase was registered before February 20, 2008, the homeowner may also be asked to provide a complete history of their mortgage account up to February 20, 2008.

Exception
If a mortgage is reduced before February 20, 2008 beyond the allowable paydown limit as a result of the proceeds from a life or critical illness insurance policy, the mortgage paydown restriction is not imposed and the exemption continues to apply.

However, the insurer must pay the proceeds directly to the lender as a term and condition of the policy. First Time Home Buyers' Program Page 7 of 16A pro‐rated exemption is available where a purchaser reduces the eligible indebtedness below the allowable limit before February 20, 2008.

The pro‐rated exemption is based on the date the mortgage was paid down below the required level of financing. Where a pro‐rated exemption is available, the pro‐ration is applied to the obligation that is broken first (either the one‐year occupancy requirement or the one‐year mortgage paydown restriction).

Mortgage Paydown Limits
A mortgage cannot be reduced before February 20, 2008 by more than the greater of: $13,000,
and the amount that would reduce the mortgage to 70% of the fair market value of the property (calculated on the date the application is made to register the transfer at the Land Title office).

For example, if the value of the property registered was $375,000, 70% mortgage is $262,500, the maximum amount by which the mortgage maybe reduced is $13,000.
For example, if the value of the property registered was $375,000, 80% mortgage is $300,000, the maximum amount by which the mortgage maybe reduced is $37,500 (80% to 70% => $300,000 - $262,500 = $37,500)

Restrictions During First Year the Property is Owned

2008-06-09T11:47:00.000-07:00

Occupancy Requirement
The purchaser must occupy the residence as his or her principal residence within92 days of the transfer being registered at the Land Title office.
The purchaser must then continue to use the residence as his or her principal residence for at least one year after the date the transfer was registered.
At the end of the first year the ministry will send a letter to the purchaser asking for information to confirm that the property is still his or her principal residence.
A purchaser who ceases to maintain the residence as his or her principal residence prior to the first anniversary of the registration date may be eligible for a rated exemption based on the date the purchaser moved off the property.

Exceptions
If the purchaser dies prior to the first anniversary of the registration date, the occupancy requirement is no longer imposed and the exemption continues to apply.
The exemption also continues to apply if the property is transferred in accordance with a court order or separation agreement under theFamily Relations Act.Construction Requirement.
If the property purchased is vacant land, and the purchaser wants to claim the first time home buyers' exemption, a principal residence must be built on that land within one year after the transfer is registered, and the purchaser must then reside on the property for the remainder of that year to receive the full exemption.

To be eligible for the full exemption, the fair market value of the land plus the cost to build the home cannot exceed the threshold amount of $425,000.A partial exemption is available where the total value of the land plus the cost of the improvement exceeds the maximum allowable fair market value by up to$25,000.

Partial Exemption Calculation

2008-06-09T11:39:00.000-07:00

For example, for a property with a fair market value of $445,000,

the partial exemption is calculated as follows:

Fair market value of property............................... $445,000
Tax at 1% of the first $200,000
and 2% on the remainder .....................................$ 6,900

Partial exemption calculation:
6,900 x (425,000 + 25,000 – 445,000) ..................- $ 1,380
25,000

Tax Payable................................................ $ 5,520

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What Property Qualifies for the Exemption?

2008-06-09T11:31:00.000-07:00

What Property Qualifies for the Exemption?

The First Time Home Buyer (FTHB) program provides a full exemption from property transfer tax only on properties where:

1. The improvements on the property become the principal residence (whetheror not they are formally classified as residential),
2. The land is 0.5 hectares (1.24 acres) or smaller,
3. The value of the land plus improvements falls below the set threshold amount of $425,000.

The current threshold amount applies to purchases registered on, or after, February 20, 2008.

Partial exemptions from property transfer tax are available in certain circumstances:

1. Where part of the improvements on the land are used for purposes other than the purchaser's primary residence, such as where part of the improvement is used for commercial purposes or where there is a separate dwelling or residential improvement on the land, only the portion that is the purchaser's primary residence is eligible for the exemption.
2. Where the land is larger than 0.5 hectares, only the residential improvement and0.5 hectares of the land are eligible for the exemption. For example, a one hectare vacant parcel of land is purchased. Only 0.5 hectares is eligible for the exemption. The fair market value of entire parcel is $100,000.
3. Where a property has a fair market value of up to $25,000 more than the threshold amount, the property is eligible for a partial exemption.

First Time Home Buyer - Download Complete Guide

2008-06-09T11:20:00.000-07:00

Topics Covered

Overview
Who qualifies for the exemption?
What property qualifies for the exemption?
Financing Requirements
When may the exemption or refund to be claimed?
Requirements that must be met during the first year the property is owned.
Penalty for false declaration

Click Here to Download

Indicators of Capacity and Inflation Pressures for Canada

2008-06-09T10:36:00.000-07:00

Indicators of Capacity and Inflation Pressures for Canada

CPI inflation
A measure of price movements, produced by Statistics Canada and obtained by comparing the retail prices of a representative "shopping basket" of goods and services at two different points in time. Learn more

Core inflation
Year-over-year growth in a variant of the CPI that excludes the eight most volatile components —which account for 19 per cent of the CPI basket—(fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, intercity transportation, and tobacco products) as well as the effect of changes in indirect taxes on the remaining components. Learn more

CPI excluding food, energy, and the effect of changes in indirect taxes (CPIEXFT)
CPI excluding food, energy, and the effect of changes in indirect taxes. For more details on this measure, please see: Core Inflation by Seamus Hogan, Marianne Johnson and Thérèse Laflèche. Learn more

CPIW
CPIW is adjusted to exclude the effect of changes in indirect taxes. The indirect tax effect for CPIW is assumed to be the same as for CPIX. For more details on this measure, please see: Core Inflation by Seamus Hogan, Marianne Johnson and Thérèse Laflèche. Learn more

Weighted median
This measure of trend inflation corresponds to the percentage change in the CPI component at the midpoint of the cross-sectional distribution of weighted price variations. This median price varies from month to month. For more details on this measure, please see: Core Inflation by Seamus Hogan, Marianne Johnson and Thérèse Laflèche. Learn more

Chain price index for GDP
Price index for GDP, equivalent to the ratio of the value to the volume of GDP, with the volume estimated using a chain Fisher formula. Learn more

Chain price index for consumption
Price index for consumption, equivalent to the ratio of the value to the volume of consumption, with the volume estimated using a chain Fisher formula. Learn more

Chain price index for consumption excluding food and energy
Calculated as the ratio of the value to the volume in chain 1997 dollars of consumption (v1992115) excluding the following items:
Food and non-alcoholic beverages (v1992070)
Alcoholic beverages bought in stores (v1992071)
Electricity(v1992081)
Natural gas (v1992082)
Other fuels (v1992083)
Motor fuels and lubricants (v1992099)

http://www.bankofcanada.ca/en/press/background.pdf

New Immigrant - Non-Landed Immigrant

2008-06-05T13:52:00.000-07:00

Most lenders and banks do not lend to "not landed new immigrants". Non-landed immigrants have Social Insurance Card (SIN) starts with "9 xx xxx xxx". Although it is harder to finance in this category, there are still programs available for you.

If your SIN starts with 9 xx xxxx xxx, and you come to Canada for work transfer or you already have a job, you can get financing. You may able to finance the purchase up to 90%, providing bank reference letter (stating you are a client of them in good standing), 3 months full time employment record (by a form of employment letter stating you have been working full time with them, not on probation, show income, start date), show down payment is from applicant's resource (not a borrowed fund). Sometimes work visa maybe required; it is case by case.

For high ratio New Immigrant products, the rate is not the best discounted rate. But it is not too off from it either. Just to note that you will see a tiny bit higher rate.

How to Have 100% Financing - Part 1

2008-05-30T00:17:00.000-07:00

Yes. 100% Financing exists. Here is 1 of the 5 ways:

Method 1: 100% Financing with Insured Mortgage

The obvious and the most straight forward one. If your can debt service the mortgage payment (see qualifying article), you can get a high ratio mortgage up to 100%, and pay insurance premium 3.10%, so it will be $3100 on a $100,000 mortgage. (note the $3100 can be paid upfront or amortized into the monthly mortgage payment)

Pros: It's straight forward. As long as your income can qualify for the payment (TDS/GDS), the value of the property makes sense, your credit score is >680 with Equifax. The interest rate is fully discounted, which is the lowest possible interest rate you can obtain.

Cons: You pay big insurance premium. If you are only holding the property for 1 year, your cost of $100,000 loan is $3100 for one year. If you, however, hold the property for 10 year, the cost thus is relatively low. Know what your needs are.

Note 9/12/08

As of Oct 15th 2008, 100% financing is no longer offered by CMHC, Genworth, or AIG due to the US credit problem. Goverment of Canada has halted 40 year amortization and 0 down payment. For other strategies, consult with Christine Chien or stay tune with our future postings and strategies.

Self-Employed (BFS) Mortgage Info Sheet

2008-05-26T21:47:00.000-07:00

Here is a sample mortgage product sheet available for all Canadian (all province). It clearly states the credit score needed for specific loan to value (LTV). It also states the TDS and GDS requirements.

Click selfemployeinfosheet to download.

What is Cash Back Mortgage?

2008-05-26T11:06:00.000-07:00

A cash back mortgage provides 3%-5% of your purchase price, 'cashed back' to you on closing day. It is ideal for clients who need money for legal fees, furnishing and decorating, or other moving expenses. It can also be used as a down payment like flex down program (borrowed down payment).

For purchasing of $100K condo, client can literally pay nothing down, with the use of 5% cash back mortgage. The mortgage loan will be the entire $100K. Note, though, the interest rate on cash back is generally higher (not a fully discounted rate).

Can I Borrow My Down Payment?

2008-05-26T09:54:00.000-07:00

Yes. They can be gift, borrowed funds, 100% sweat equity, or lender cash back incentives. Keep in mind the following conditions: You must have good credit score (>680 on equifax).
There will be s slight insurance premium (2.90% on the loan amount), which can be amortized into your payments. Lastly, You will need to have sufficient income to qualify for the mortgage on T4 or if you are self-employed, your reported income must be sufficient to debt service.

The advantage of this option is to allow borrowed down payment at the best discounted mortgage rate. Whereas, cash back mortgages. are at higher rate, designed to offset the money the lender gives you on closing day.

Can I borrow my down payment if I need to "state" my income?
Generally the answer is no. However, there are a couple of other options if you need to both borrow your down payments, and also 'state' how much you earn. Contact us.

Self Employed Purchase Insurance Premium

2008-05-24T17:06:00.000-07:00

The following guidelines are written assuming you are a business owner and do not have sufficient reported income on T1 (read here for BFS general guidelines)

Even if you do not have enough income to qualify for your dream house, you are still eligible for the purchase up to 95% loan to value (LTV), depending on your credit score. It is called a "BFS Stated Income Program", and is eligible for primary residence purchase or refinance.

To borrow up to 95%, you will need pay a slight insurance premium on the loan amount to offset the fact of not having sufficient reported income. In Canada, the insurance is generated from one of CHMC, Genworth, or AIG. They are highly competitive and offer the same rate for the "BFS Stated Income Program".

Table 1. CMHC Genworth AIG Self-Employed Insurance Premium

Self Employed Mortgage General Guidelines (BFS)

2008-05-24T16:18:00.000-07:00

Self-Employed individuals include realtors, contractors, business owners, financial planners, network marketers, stock brokers, and 100% commissioned jobs...etc. These individuals do not have T4 on Notice of Assessment (NOA). Instead, they have T1 General (with statement of business activities) on the tax return.

There are different qualifying scenarios when Business For Self (BFS) apply for a mortgage: You do, or you do not, have sufficient income reported to CRA shown on Notice of Assessment (NOA) on line 150 to service the mortgage. Generally, they fall on the second scenario, and even occasionally, they report business loss to CRA.

The general guidelines for self-employed (BFS) to qualify for mortgage:
1. You reported business income minimum 2 years (same industry)
2. You can provide 1 of the following items: business license, GST/HST return summary, incorporation certificate, audited financial statements prepared and signed by CA
3. Your down payment must be from your own resources, shown on 3 months record of bank statements, investment portfolio, RRSP, and other liquid assets.
4. Your credit score is vital for qualification, the higher your score, the more you can borrow

Good new is, if you meet all above, your reported income is not a factor anymore.

Read "Qualifying 3. Source(s) of Income"
Contact us if you do not meet all of above criteria. You will be able to qualify under other mortgage programs only available through broker channel with us.

Finance with a Leaky Condo?

2008-05-14T16:20:00.000-07:00

Leaky Condos – Specific to BC

You can only get financing from banks providing the following documents:

1. An Engineers Report has been completed. (This advises the Strata-Council how much it will cost to repair the unit of the building). The Engineer usually recommends a full fix and a less expensive fix.
2. A "Special Assessment" *1 is the amount charged to each of the strata-unit owners to fix as recommended by the Engineer.
3. A meeting with Strata Council would be called so the above assessment can be voted on and approved. This approval must show in the Minutes of the Meeting, which will have to be sent to the lender for confirmation.
4. Some Lenders my require the 'full fix' to be completed prior to lending in which case a "Certificate of Completion" will be issued.
5. A few Lenders will allow financing if the assessment has been levied and the Strata Council had voted and passed the resolution. Both TD Canada Trust and First National Financial will lend based on this criteria.

Should you require financing prior to any of the above occurring, you will have to contact a Private Lender.

*1. If the cost to fix is $750,000 and currently the Strata Council has $100,000 in their contingency fund, they would deduct $100,000 from $750,000 = $650,000. If there are 50 units in the condo complex, each owner would be given a “Special Assessment” of $13,000.00 to fix the issues. $650,000 divided by 50 = $13,000.00 per unit.

Required Documents for Self Builder

2008-05-13T19:15:00.000-07:00

Construction Loan - Required Documents for Self Builder

a) Copy of Land Contract if land is being Purchased of copy of Title of land already owned
b) Resume confirming good knowledge of the home building process
c) One Complete set of house plans and working drawing (blueprint)
d) Site Plan showing legal description, dimensions of property in detail
e) Copy of all Sub-Contracts which confirm Home Construction Costs
f) An Appraisal indicating final value once the home is constructed.

Applicants qualify under normal underwriting guidelines. The value used for financing is the value determined by the Appraisal. (eg if land purchase is $125,000 and based on the plans, the value of the home is worth $300,000, the total value used for lending purposes would be $425,000). Click Qualified Builder for more information.

Required Documents for Qualified Builder

2008-05-13T19:10:00.000-07:00

Construction Financing also known as Draw Mortgages

Mortgage financing is available to purchase serviced land and then to build a home. Depending on the type of Builder, the following will be required:

1) Qualified Builder - having your home built by a qualified Home Builder at a fixed price.
2) Self Builder - you are your own general contractor where you sign contracts with sub-trades.

Documents Required for Qualified Builder

a) Signed and accepted copy of building contract
b) One complete set of house plans and working drawings (blue prints)
c) Site Plan showing legal description, dimensions of property in detail
d) Confirmation Builder is a “New Home Warranty” builder
e) An Appraisal indicating final value once the home is constructed

Applicants must qualify under normal underwriting guidelines. The value used for financing is the value determined by the Appraisal. (if land purchase is $125,000 and based on the plans, the value of the home is worth $300,000, the total value used for lending purposes would be $425,000). If the applicant has 15% down payment, the lender will advance construction monies up to a total value of $361,250.00, which is 85% of the total appraised value.

**There are a few important things to remember when doing construction financing**
1) You will not be paid until the home is complete.
2) Client must use their own money to do the build, they will then be reimbursed by lender once the house has been completed to certain stages. This requires additional funds over the down payment. Line of Credit (LOC) must be in place to draw upon for the construction costs.

Consumer Proposal VS Bankruptcy

2008-05-12T10:43:00.000-07:00

Here is another tip for individuals in current financial trouble and has had late payments on mortgages for 2-3 months arears. It is always the best that you contact the lender/bank first. Seek for settlement and prevent them from taking legal action. Propose to pay extra to get a settlement, instead of the banks foreclose on you.

This way, you can avoid having to claim bankruptcy and have a "bankruptcy" record on your credit bureau. A bankruptcy record stays on your credit history for 7 years, versus a consumer proposal will only show the creditor trustee's name and only stay on record for 3 years.

Reasons for Low Credit Score

2008-05-12T10:15:00.000-07:00

Too many inquiries in a short period (shows you are credit seeker)
Bad payment history (R2: 60 days late, 10-15 points off)
High balance on credit limit (using up all available limit on each card)
Accepting too many credit cards in the mail (each application is a hard hit 4-6 points off)
Accounts closed at the bank request
Judgement, bankruptcy, liens, consumer proposal history

Other tips on maintaining credit score and free credit report

Who Qualifies for First Time Home Buyer Exemptions

2008-05-07T23:31:00.000-07:00

First Time Home Buyer's Program - 2008 Feb Updated

If you are purchasing your first home, you may qualify for an exemption from property transfer tax. Certain requirements apply:

Purchaser Qualifications
-You are a Canadian citizen, or a permanent resident
-You have lived in BC for 12 consecutive months before the date you register the property, or you have filed 2 income tax returns as a BC resident during the 6 years before the date you register the property
-You have never owned an interest in a principal residence anywhere in the world at anytime and you have never received a first time home buyer's exemption or refund

Property Qualifications
The purchase price is less than $425,000
The land is 1.24 acre or smaller
The property will only be used as your principal residence

Note: You may still qualify for a partial exemption if the property does not meet all these criteria

How to Apply
Apply for the exemption when you register the property at Land Title Office. Generally a lawyer registers the property and applies for the exemption on your behalf. If you did not register but you are eligible, you may still apply for the exemption within 18 months of the date you register the property.

For more information, visit https://www.sbr.gov.bc.ca/individual.html
Toll-free in Canada: 1800-663-7867 (request a transfer to 250 387-0604)

What is High Ratio Mortgage?

2008-05-07T11:20:00.000-07:00

A "High Ratio Mortgage" is a mortgage with higher than 80% Loan to Value (LTV). There is always an insurance premium on top of the loan amount. The higher the LTV, the higher the premium rate. Contact us for the complete insurance premium rate for fully salaried and self-employed programs.

What is Conventioanl Mortgage?

2008-05-07T11:15:00.000-07:00

A "Conventional Mortgage" is a mortgage with equal or lower than 80% Loan to Value (LTV). A conventional mortgage usually has the standard term, 25 year amortization, and usually has no insurance premium on top. See "Righ Ratio Mortgage" for comparison.

Alternative Lending Sources

2008-05-01T18:16:00.000-07:00

There are numerous alternative lenders. If you are turned down by a bank, chances are there are alternative lenders for you. Keep in mind, the interest rate sometimes will be slightly higher. but it also helps you purchase the house you want now.

Here are a few scenarios and the alternatives matching products:

1. Low credit score

Banks usually become hesitant if your credit is lower than 620 or 600. They will likely ask you to pay a bigger down payment, or simply turn you down. The alternative way is to contact your mortgage specialist for special programs only available through broker channel.

The solution is to borrow for short-term (6 months to 2 year max). Meanwhile, seek help to repair your credit score (see our section for credit score). Consult with your mortgage professional for further advice, or contact us anytime for specific questions and strategies.

2. No income proof

No income scenario may apply to both self-employed or for salaried individuals. The idea is to get around the income proof requirement required by the banks. The solution we recommend is to apply for equity lending. There are only a few lenders out there that do equity lending. Your credit score play a critical role on how much you can borrow. Equity lending does provide good rates, usually at prime rate, and sometimes even matches what bank offers. Note this though, equity lending is not available for purchase/refinance on apartments and condos.

3. Self-Employed with Gifted Down Payments

If you are self-employed and you are unable to proof that the down payment is from your own source (or not able to proof 90 days in your bank account), chances are you will be turned down, especially if you are borrowing at high ratio. The solution to you is to go for an alternative programs offered by either GE, Cove, or Excaliper. These lenders are only available through broker channel so let us know if this situation applies to you.

Credit Score Tips 2

2008-05-01T17:45:00.001-07:00

Here are other mortgage tips for you:

1. Learn how the credit score is calculated and composed of
2. Reduce retail credit cards (Futureshop, theBay, etc)
3. Stay with the cards you have had for a long time (if you have theBay for 10 years, yes, keep it)
4. Ask to increase your credit limit once in 3-4 months (by calling the 1800 number at the back of your card; call and ask to have an increase without them having to "submit" your application; a submit is a soft hit on your credit score, you may lose 1-5 points per hit)

Lastly, if you already have a mortgage, call you lender/bank to switch to a "bi-weekly accelerated mortgage". You can save tremendous amount of money over the life time of the mortgage by doing so.

Difference Between Guarantor and Co-Signer

2008-04-08T12:33:00.000-07:00

Fundamentally, both guarantor and co-signer are used to help qualify the mortgage for debt servicing or for for credit score purpose. A frequently asked question is which one can be on the title. Here is the answer:

A guarantor can choose not to be on the title.

A co-signer will be on the title. He/she is essential a formal co-applicant for the mortgage.

Mortgage Approval Process

2008-04-07T17:57:00.000-07:00

Mortgage approval process is more or less the same for all residential mortgages.

1) Purchase Contract - Offer Accepted
The majority of mortgages are applied when your "offer of purchase contract" is being accepted by the seller. There is usually a "subject removal date"; before this specific date, your mortgage approval should be lined up and confirmed by your mortgage broker or lender. You, as the buyer, will remove your "subject to financing" clause before or on the subject removal date, or on the flip side, cancel your purchase without losing your deposit if your financing cannot be approved.

2) Determine Down Payment
Before purchasing, most buyers have set their down payment budget. In Canada, if you are employed, you can go as low as "zero down"; whereas if you are a self-employed (business owner), you can go as low as 5% down payment. Note that the lower the down payment, the higher your monthly mortgage payment is; thus, the higher your income has to be to qualify for the mortgage.

3) Determine Mortgage Type
Mortgage is not just about the rate. There are different kinds of mortgages to consider for your situation. For example, for a conservative individual who cannot tolerate any fluctuation on the mortgage payments, it is the best to go with a fixed-rate mortgage. Whereas, a variable-rate mortgage will have a fluctuating payments, adjusted to Bank of Canada prime rate. There are also adjustable mortgage products and interest only mortgages. Ask your mortgage expert about the various options.

4) Submit Mortgage Application
The mortgage application contains three major category. All three are essential to determine your eligibility. First is your income type and income amount. Second is your assets (what you own), and the third is your liability (what you owe). With formal consent, your mortgage broker will check your credit score, which is another essential information for your mortgage application.

5) Initial Evaluation
An experience mortgage broker will be able to evaluate your mortgage eligibility based on the above information before submitting to the lenders. This is a step where you will hear from your broker about the products/options that are available to you. It usually take about a day for the broker to present your options.

6) Submit to Lender(s)
Your application will be submitted to the qualified and best rate lenders based on your situation and eligibility. A good broker has in-depth resources, which means that he/she has more access to different lenders to help your mortgage application. After the submittion, it usually take about 1 - 5 business days for the lender to evaluate your application.

7) Receiving Decline or Mortgage Commitment
After the 1-5 business days, depending on the lender, some are fast response, some are slow, you should hear from your mortgage broker about the lenders response. You will either know the reason of the decline and will re-submit to alternative lenders at that moment, or you will receive a commitment paper from the lender. The commitment paper describes the criteria (conditions) the lender will approve your mortgage if you can provide/proof their described criteria.

8) Preparing Documents to Meet Lender's Conditions
Lenders will always want to see your recent 2 years Notice of Assessment (NOA) to prove your reported income is what you had on the application. It is very common that the lender will want to see your proof of down payment in the form of 3 months bank statement history. Another common condition is to also show that you have sufficient fund to "close" the transaction (1.5% of purchasing price in cash/liquid fund to pay for realtor fee, property transfer tax, lawyer fee, etc). Lastly, for self-employed individuals, you will need to provide business proof in forms of one of the following: GST/business number; articles of incorporation; T1 General; or some lenders accept certified accountant's letter.

9) Obtaining Formal Mortgage Approval
Assuming all conditions are met by our supporting documents, the lender will issue a formal mortgage approval. It takes at least 1 business day for the approval to be issued after all conditions are met.

10) Subject Removal
The buyer, you, can remove your subject clause on your purchasing. At this moment, your deposit will not be refundable after subject removal. Speak to your real estate agent for the specifics on the deposit and the contract terms.

11) Funding/Transaction Completion
After obtaining a formal approval from the lender. It usually takes at least 5 business days to 10 business days for the lender to prepare your mortgage fund. Congratulations! You just purchased your dream house and have a mortgage selected for your specific situation and preferences!

New Immigrant Mortgage Programs

2008-04-01T11:14:00.001-07:00

New immigrants usually do not have credit history nor proof income to support a mortgage. We have access to mortgage programs that can help you.

If you are a new immigrant, and come to Canada with 2 year work commitment, you can get up to 90% loan to value (LTV) without credit history.

If you are a new immigrant and can proof $250,000 net worth, you can get up to 75% LTV.

Call us at 604-603-6189 or email cchien@mortgagegrp.com

Chinese, English, Japanese, Filipino Service
Free Consultation

How is Property Transfer Tax Calculated?

2008-04-01T11:09:00.000-07:00

In British Columbia, a transfer of ownership of the property triggers property transfer tax. It is calculated as follows:

1% on first $200,0o00
2% on the remaining

For example, the property purchase price is $535,000

Your property transfer tax is 1% x $200,000 + 2% x ($353,000) = $9060

First first time home buyers, in 2008, up to purchasing price $425,000, a first time home buyer is excempt from paying the tax but will need to show having sufficient fund to close (1.5% of purchasing price).

How Does Prime Rate Change?

2008-04-01T10:31:00.000-07:00

The mortgage prime rate fluctuates with Bank of Canada prime rate.

Bank of Canada has scheduled 8 rate announcements each year. Please check Bank of Canada website for the specific dates.

For variable mortgages, as soon as the prime rate changes, some lenders adjust your mortgage payment the next day, some lenders wait until the first day of the next month to avoid admin hassles. Whereas for fixed mortgages, the rate goes with the Bond yield.

Criteria for Private Lending

2008-04-01T10:25:00.000-07:00

Loan-To-Value (LTV)

Up to 90% LTV for a house with income potential (condo not applicable)
Up to 85% LTV for equity take out (ETO)

Credit Profile

Beacon score: 420-700 (avg 560)
Current Mortgage arrears
Revenue Canada arrers
Foreclosures

Income

Soft Income: no proof
Hard Income: GDS/TDS not applicable

Lenders however wants to ensure you have enough money to live on

Appraisal

Special appraisal is ordered for private lendign purpose
Loanable value is determined upon appraised value

Rates for Private Mortgages

2008-04-01T10:16:00.000-07:00

Rates

1st Mortgage: 7.25% - 12%
2nd Mortgage: 9.50% -14%
Equity Take Out (ETO) - 10.50% - 16.0%

Although the rates are high, it does not appear to affect your overall rate as much.
See Example:

$100,000 Total Loan Needed

$75,000 first mortgage at 7% => 4.9%
$25,000 second mortgage at 14% => 3.4%
Your combined rate on $100,000 => 8.4%

Note: All private mortgages involves lending fee of 1% - 3%.

Qualifying 3. Source(s) of Income

2008-03-16T22:07:00.002-07:00

There are generally two major income types - 1. Salaried 2. Self-employed

Generally, it is much better to have salaried income when applying for mortgage. It provides lender a sense of stability, and the Notice of Assessment (NOA) clearly shows your annual income under T4.

Individuals who are considered self-employed are generally commissioned or paid per contract. To use the income generated by self-employment, the business must establish for +2 years and can provide proof of existance by one of the documents: articles of incorporation, business number, or income on T1 General on NOA for last 2 years.

For individuals who do business with all cash and report very small income, if able to proof existance of business + 2 years, or proof being in the same industry for + 2 years (even business started just last month) if having credit score > 680, he/she can be qualified.

How much of my total income is used toward calcuation?

It is very simple Check your personal Notice of Assessment mailed back from the goverment each year after filing tax. If you are salaried individual, check the amount on T4 and see total employment income. If you are self-employed, check T1, line 150. It shows how much you reported the income from the business.

Those amount on NOA is the amount used for your income. The income then is used to calculate the debt service ratio.

Qualifying 2. Debt Service Ratio (TDS and GDS)

2008-03-16T21:50:00.000-07:00

The second important criteria when qualifying for a loan is "debt service" ratio. There are two ratios being considered: gross debt service (GDS) and total debt service (TDS).

Total Debt Service (TDS): Mortgage Payment + Other debt payments + Heat + (1/2 condo fee + leasehold monthly costs if applicable)

The first affordability rule is that your total monthly debt cannot exceed 40% of your monthly income. This includes housing costs and other debts, such as car loans and credit card payments. Lenders add up these debts to determine what percentage they are of your gross household monthly income. This figure is your Total Debt Service (TDS) ratio.

For credit score lower than 680, it must be 40% or less; for score >680, it must be 44% or less.

Gross Debt Service (GDS): Mortgage Payment + Heat + (1/2 condo fee + leasehold costs if applicable)

The second affordability rule is that your monthly housing costs shouldn't be more than 32% of your gross household monthly income. Housing costs include monthly mortgage principal and interest, taxes and heating expenses — known as P.I.T.H. for short. Lenders add up these housing costs to determine your Gross Debt Service (GDS) ratio.

For credit score lower than 680, it must be 32% or less.

Qualifying 1. Credit Score

2008-03-16T21:23:00.000-07:00

One of the three main criteria is Credit Score.

First, you need to have a credit history to be able to establish credit score (more info). Most Canadian lender uses Equifax for your credit history. All Canadians can obtain their own credit score for free if requesting it by mail (more info).

Here are some general guidelines.

> 700 => Anything above 700 is considered good credit. Score of 750 and 700 is generally treated the same under lender's guidelines. For self-employed individuals, 700 is the key criteria if borrowing to 95% loan to value (LTV).

> 680 => This is a minimum credit score for various fully discounted rate mortgages. This is also a minimum score for high ration lending at 100% for salaried individual, and 95% for self-employed individual. In other words, score less than 680 will not qualify you for zero down purchasing (salaried), or 5% down purchasing (self-employed).

> 650-660 => Some lenders have less stringent guildline for credit score, and 650-660 is where their minimum requirement sits. It is an essential level for high ratio lending. Score less than 650 will not qualify for 10% down payment under CHMC high ratio guideline. For conventional mortgages, 650-660 is a key for fully discounted rate with 25% down payment.

> 600 => Some banks, credit unions and institutional lenders accept score at 600s. This is the minimum score for a discounted interest rate. Anything lower than 600 will consider A- or B lending case. For self-employed individuals, this is not an ideal score range. Many mortgage products are limited with score less than 650.

See tips for maintaining credit score.

How Lenders Qualify You?

2008-03-16T21:11:00.000-07:00

This question is often asked.
The answer is actually very straight forward.

First, lenders want to see a good track record of paying bills on time. They also want to make sure that applicant is able to pay off the mortgage while maintaining life basis. Lastly, they want know the source(s) of income, either salaried, commissioned, or self-employed.

Lenders qualify you mainly based on the following simple rules:

1. Credit Score
2. Debt Servicing Ratio
3. Source of income

They also want to make sure that the property, used as loan collateral, has enough remaining servicing life.
Additionally, they will also consider the following supplemental items:

3. The Subject Property
4. Personal Networth

High Ratio 90% Already Owning the Land

2008-03-16T18:19:00.000-07:00

Example 2: 90% Financed to do construction (already owned the land)

Land Value: $ 100,000
Construction: $300,000
Total: $400,000

90% Loan to Value
Total Loan = $300K x 90% = $270K
Stages 40%, 70%, 100%

Draw $1 - 40% completion
$300K x 40% = $120K
$300K x 40% x 10% lien holdback = $12K
Advanced Fund # 2 = $270K - $120K - 12K = $105,000

Draw #2 - 70% completion
$300K x 40% = $90K
$300K x 70% x 10% lien holdback = $21K
Advanced Fund # 3 = $270K - $90K - 21K - (105K advanced fund)= $54,000

Draw # 3 - 100% completion
$300K x 0% = $0K
$300K x 100% x 10% lien holdback = $30K
Advanced Fund # 4 = $270K - $0K - 30K - (105K + 54k) = $81,000

Total Fund Advanced for Construction = $240,000
Total Lien Holdbacks = $30,000

Total Loan Amount = $270,000

NOTE: All applicants, like all mortgages, must meet Total Debt Service (TDS) and Gross Debt Service Ratio (GDS) and Credit Score requirement

Convention 80% With Purchase of Land

2008-03-16T18:06:00.000-07:00

The following example is for "self-built" construction loan without purchase of land.

Example 1: 80% Financed to purhcase land and do construction

Land Value: $ 200,000
Construction: $300,000
Total: $500,000
80% Loan to Value
Total Loan = $500K x 80% = $400K
Stages 40%, 70%, 100%

Draw #1 - Purchase the land
65% x $200,000 = $130,000 provided by lender to purchase lend
35% x $200,000 = $ 70,000 prepared by borrower
Advanced Fund # 1 = $130,000

Draw $2 - 40% completion
Total Construction Loan = $400K - $130K = $270,000
$300K x 40% = $120K
$300K x 40% x 10% lien holdback = $12K
Advanced Fund # 2 = $270K - $120K - 12K = $105,000

Draw #3 - 70% completion
$300K x 40% = $90K
$300K x 70% x 10% lien holdback = $21K
Advanced Fund # 3 = $270K - $90K - 21K - (105K advanced fund)= $54,000

Draw # 4 - 100% completion

$300K x 0% = $0K
$300K x 100% x 10% lien holdback = $30K
Advanced Fund # 4 = $270K - $0K - 30K - (105K + 54k) = $81,000

Total Fund Advanced for Land Purchase = $130,000
Total Fund Advanced for Construction = $240,000
Total Lien Holdbacks = $30,000

Total Loan Amout = $400,000

Types of Construction Loan

2008-03-16T16:39:00.000-07:00

Here are 3 scenarios applicants:

1. Residential Home Buidler: documents required to apply for loan include, offer to purchase contract; schedule of construction and price; approved plans.

2. General Contractor: documents required to apply for loan include, approved plans and contracts between general contractor and borrower.

3. Self-Build: documents required to apply for loan include, offer to purchase contract; approved plans; land/title in borrower's name(s); copy of building permits; construction costs breakdown; contracts with all subcontractors; borrower's resume

First step: Apply and create necessary documents

Second step: Consult with your mortgage broker for your available mortgages

Christine Chien 604-603-6189 (mon-sat 10 am - 9pm)
cchien@mortgagegrp.com

Third step: Understand the stages & percentages of "money draws" during construction.

Construction Loan (Mortgage)

2008-03-16T16:22:00.000-07:00

Construction Loans are available for Canadians.

Here are general information of a construction loan:

1. Lender advances fund to builder at specific times
2. Borrower must always put their own funds into project first
3. Some lendrs allow advances to purchase land*1
4. Some lenders require land is clear title
5. Provincial lien holdbaks are done on all advances 10%*2
6. All advances require an inspection (appraisal) to confirm % complete*3
7. Some lenders require additional for cost overuns
8. Can loan up to 95% of the "total value of property" (land value + cost of construction) *4

* 1 Can loan up to 65% of the "land value" to purchase the land
*2 10% of the money will be held back by the lender for 45days after completion of project
*3 Inspection and appraisal will be sent by the lender, approx cost $500 each visit
*4 For example, if land value is $200K, construction cost is $300K, the total property value when completed is $500K. Borrower can borrow 95% of the value = $475K

There are additional applicable costs with Construction Loans

- Admin fee per draw charged by lender (waived by some lenders)
- Cost of inspection (appraisal) per each draw
- Interest Rate during construction period (prime + 1% - 2%)
- Set up fee (waived in some cases)

Tips - Establish and Maintain Credit Score

2008-03-14T18:37:00.000-07:00

Maintaining a high credit score is vital when you need to borrow money.

Always have it ready when you don't need to borrow.

Not sure what your score is?

Here are some key things you must know:

- Start using your credit card! Have at least 2 credit cards and use them regularly.

- It is better to have major bank credit cards than retail credit cards (Bay, Future Shop, etc).

- It is the best to stick with the card and use them at least one a month (could be just for 3 bucks purchasing).

- Pay off credit card every month. I mean, pay it off!

- Never use over 70% of the available credit. Best, never use 50% when you can. It is not good to have a high revolving balance all the time even you pay off each month.

- Monitor your credit score twice or once a year. Stats show that 1 out of 8 people will notice an error on their credit report.

- Don't shop around for interest rate when doing a house mortgage. It hurts your credit score for each inquiry. If you know mortgage broker, let them do one check and shop rates for you.

FREE credit report from Equifax.

http://www.equifax.com/EFX_Canada/consumer_information_centre/docs/request_report_form_e.pdf

Free Canadian Credit Report from Equifax

2008-03-13T02:08:00.000-07:00

All Canadians can obtain a free credit report 'by mail' through request to Equifax.

It is not easy for consumers to find these fine prints on the website. Here is a convenient link to you. http://www.equifax.com/EFX_Canada/consumer_information_centre/docs/request_report_form_e.pdf

If you found any error on your credit report, you can request correction. https://www.econsumer.equifax.ca/ca/view/common/dispute_process.jsp

Credit Dispute

2008-03-08T18:10:00.000-08:00

We can dispute and fix the incorrect items on our credit report. It usually take about 30 days for an error to be recorded and fixed.

Credit Dispute Form

Equifax https://www.econsumer.equifax.ca/ca/view/investigation/investigation.jsp TransUnion https://www.tuscores.ca/content/page.jsp?id=/tucanada/common/data/en_CA/ps/disputeonline.xml&locale=en_CA

Better Business Bureau Founded in 1912, the Better Business Bureau provides information related to Business Reliability Reports, Dispute Resolutions, Consumer and Business Education and much more to the consumer. For more information, please visit http://www.canadiancouncilbbb.ca/

Raw Land and Acreage Mortgage Criteria

2008-03-08T17:55:00.000-08:00

We have access to lenders that will lend up to 80% on the equity of the property.

Here are the criteria:

1. Only the bare land, principle residence and garage will be considered determining the value
2. Maximum of 5 acres will be considered when determining the the value the property
3. Location must be within 50km of urban population of 25,000 or more

This can combined with "equity mortgage", where no income verfication is required.

Conventional mortgages is available for raw land acreages properties. Conventional mortgage requires 25% down payment with 25 amortization.

Here are the criteria:

1. Only the bare land, principle residence and garage will be considered determining the value
2. Maximum of 80 acres will be considered when determining the value

Lastly, depending on the applicant's qualifications and credit score, high ratio mortgage is also available for zero - 5% down payment. Insurance will be applied by CHMC, Genworth, or AIG.

What is Equity Mortgage?

2008-03-08T11:11:00.000-08:00

Equity is the percentage of the appraised value of your property that has not been used as collateral. Therefore, if you own $100,000 house and has 60% mortgaged, your equity is 40%, which is $40,000.

Equity mortgage is not a "home equity line of credit" nor a "traditional mortgage". Equity mortgage allows borrower to borrow the equity in the house after years of mortgage payments, and also offers the following advantages a traditional mortgages don't have.

1. No income verification - salaried and self-employed (need to provide "being in the same industry for 2 years)

2. Single family, duplex, townhouse, rural/acreage properties are eligible

3. Up to 80% with 650 beacon score (65% with 600-649 beacon score)

4. Up to 35 year amortization

5. Weekly, Bi-weekly, Monthly payment options

The borrow only looks at the appraisal and determines the value of the equity. In this case, the income of the borrow is not a criteria. For salaried individual, only job letter (employment letter) is required, an for BFS (business for self), only need to proof being in the same industry for 2 years.

Borrowed down payment is not allowed.

How Is Credit Score Calculated?

2008-03-02T01:20:00.000-08:00

The percentage listed below with each section outline the weight they are given when determining your overall score.

Past Payment Performance - 35%

It will include credit card payment, line-of-credit payment, even your utility bills (if you have set up a credit account with them). Not all bills are counted toward this payment performance.

Credit Utilization - 30%

Low balances on a few cards are better than high balances on just one credit card. It is advised to not exceed 80% utilization of credit balance. In other words, if you have $10,000 balance available, it is wise to not to use up more than $8000 at all time. Even better, do not exceed $5000 at all time if possible.

Credit History - 15%

The longer you have established the credit the better. A credit history that has > 3 year history is good. Always keep the credit cards that you already have for a while. Keep using them, even just for a $5 purchase. It will be good for your overall score.

Types of Credit in Use - 10%

Credit history with traditional banking is better than finance company. You obtain more score on credit cards with banks than with retail stores such as The Bay or Future Shop credit cards. Do not have too many retail cards because it maybe interpreted as potential for future risk.

Inquiries - 10%

Shopping for credit frequently is interpretd as "credit seeker". Each credit inquiry will reduce your credit score by 5 points minimum. It is advised to always ask the company if they are doing a credit check (which is a "hard hit") when you apply for a credit account.

That is why it is adised to let your mortgage broker do the work when shopping for a mortgage. If you shop your deal from bank to bank, each bank will pull a credit report on you, thus lowering your credit score. Brokers pull one credit history and use it for all the financial institutions.

For more information on credit score, visit Equifax at www.equifax.ca

Private Lending - Private Lender - Last Resource

2008-02-08T01:41:00.001-08:00

A private lender should be used as your last resource. It is usually not accessible to the general public so if you are interested in learning more, email us at 1dayapproval@gmail.com

There are three key factors

Credit: applicant's credit should range 420-700
Income: usually applicant cannot prove their 'hard income' (your goverment taxable income shown you T1)
Property: residential, small commercial, light industrial, factual interest (Party A divorcing Party B, joint tenancy (undivided interest) thus becomes factural interest as 'tenants in common'

FACTS ABOUT PRIVATE LENDING MONEY

The rate from private lenders would range from 9% - 14%, and whereas most lending/financing does not cost a fee, a private lender would charge a standard 2% rate on the borrowed sum.

The maximum loan is 90% of the purchase price. For equity take out (refinancing), the loan-to-value ranges between 80-85%.

If the private money is used for 1st mortgage, the interest rate ranges from 7.25-12%

If the private money is used for 2nd mortage, the interest rate ranges from 9.5% - 14%, and the equity take out will range from 10.5% - 16%. The additional fees will be higher as well for a 2nd mortgage refinancing or purchasing.

Again, private lending should always be used as the last resource for borrowing because of its interest rate. However, mathematically, it does not raise your 'average interest' drastically as you would think, and it makes your deal work! For instance, an investor can afford 15% of the down payment and needs another 10% from private lender to make the purchase work, the overal "average interest" on mortgage(s) will not as high as it seems.

A friendly suggestion to all home buyers and real estate investor, unless you can pay down 35%, it is wise to obtain a 'mortgage pre-approval' to understand your price range. It is free and you can lock the lower rate for 120 days.

Credit Score and Credit Report

2008-01-31T12:27:00.001-08:00

Federal and provincial privacy and credit reporting regulations grant consumers important rights regarding credit files and related matters, although these regulations vary by province. As well, information provided by credit reporting agencies also vary by agency.

Generally speaking, by law you have the right to:

Know what your credit file contains
Have information deleted that cannot be verified
Receive a free copy of your credit file by mail, if you request in writing and include acceptable photocopied identification
Have derogatory, credit-related information deleted after seven years (may vary by province and credit reporting agency)
Review your credit file in person
Know who has received your credit file in the past year
Take someone (lawyer, friend, relative, etc.) with you to review your file
Include a brief written statement as a part of your credit file
Have disputed information investigated at your request
Know the name and address of the credit reporting agency responsible for preparing a credit file used to make a decision regarding your credit, insurance or employment

Equifax Canada Inc.
Consumer Relations Department
Box 190 Jean Talon Station Montreal, Quebec H1S 2Z2
Phone: 1-800-465-7166
e-mail: consumer.relations@equifax.com
http://www.equifax.ca/ (business site)
http://www.econsumer.equifax.ca/ (consumer site)

Zero Down - "Purchase or Refinance with Improvement"

2008-01-25T00:01:00.001-08:00

All Canadians have access to the Zero Down Payment program. Here is one that you can fully utilize "Purchase Plus Improvement" mortgage.

The program is offered by CHMC, Genworth, and AIG.
http://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/hopr/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=125831

You can be qualified with or without income proof.

If you are self-employed, you will be eligible with 680 beacon score.

You will need a proof of 1.5% of purchase price in your savings account.

It is an excellent program if you are doing improvement on the house and at the same time, utilizing the zero down to make the purchase and improvements.

EXAMPLE 1.

Purchase Price : $225,000
Improvements to do: $30,000 (kitchen) + $20,000 (bathrooms)

E-mail 1dayapproval@gmail.com

APPLICATION PROCESS

We will arrange your application with suitable lender and assist you in advancing $225,000 to purchase the home.

Your improvement plan will be reviewed by appraiser, sent by the selected lender, to evaluate the value of your property "after improvement".

You first do kitchen, hire a qualified contractor, keep the bill, and upon completion of the project, the lender will send out the appraiser to examine the improvement and notify the lender and lawyer to advance your contruction cost of $30,000 for kitchen.

You then do the bathrooms. Upon completion, appraiser will be sent again and examine the work being done. Assuming everything is aligned, you will get the money $20,000 that has already incurred for doing your bathrooms.

To learn more about this or to apply for Purchase or Refinance with Improvements program. Simply email us at 1dayapproval@gmail.com