Category Archives: commercial mortgages

…mortgages made simple…

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THE RAY C. MCMILLAN ADVANTAGE

The Ray McMillan Mortgage Team  is licensed through Northwood Mortgage Ltd. We deal with major banks, trust, life insurance, finance companies and private lenders. We are licensed to provide the most competitive mortgage rates and terms available for your real estate financing needs throughout Ontario.

OUR SERVICE INCLUDES:

 

  • First and second mortgages
  • Transfers
  • Condominium/Townhouse purchases
  • Home Improvement Loans
  • Construction Loans
  • Debt Consolidation
  • Refinancing
  • Power of Sale
  • Multi-residential
  • Vacant land
  • Cottages and recreational properties
  • Rural and farm properties

 

 

ARE THERE ANY COSTS INVOLVED?

When we arrange a prime residential first mortgage the lender pays us a finder’s fee.This does not affect the rate our terms of the mortgage in any way.

When we arrange any other type of mortgage that does not qualify as a prime residential mortgage then the lender does not pay us. We must then charge a brokerage fee*. The fee is based on the complexity involved to arrange the mortgage.

any-questions

You have mortgage questions, the Ray McMillan Mortgage Team has answers.

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Why a commercial mortgage app gets rejected

Traditional commercial banks often try to play things safe, and may be hesitant to support commercial projects considered too “unique.” Even commercial borrowers that have favourable tax returns and a sound business plan might find their applications for commercial mortgages denied. Worse, some banks will not even offer a good explanation as to why the applications were denied.

If you are looking to apply for a commercial mortgage, you might want to prepare yourself for the possible reasons banks reject applications.

Unfeasible business plans

Commercial loan officers will often ask applicants to show them their business plans. If your business plan does not seem like it can support the loan you are applying for, your application will likely be rejected. Make sure that your plan takes into consideration various payback options for the long-term loan you are applying for. Of course, you could always find a lender that is not too particular about your business plans.

Tax return issues

If the underwriter discovers something in your tax returns that violates the bank’s lending guidelines, he or she will decline your application in a heartbeat. Often, the problem might be related to low or insufficient net income, but other issues with your tax return may also raise some eyebrows. Ensure that your tax return has no problems before applying.

Lending limitations

There is often a cap to the amount of money a bank can lend. At times, a bank could limit the amount of cash it would provide you with, or even strictly detail what you can use the loan for and what you cannot. In exceptional cases, the bank might approve your loan but not lend you cash, which is as good as declining the loan altogether. If this happens to you, turn to another lender.

Insufficient or no collateral

Without collateral, the bank will outright refuse your application for a loan. Moreover, the collateral should be adequate enough to serve as a lien of your personal assets, much like with homeowners and their properties. If you have issues with this, choose lenders that do not require collaterals.

Source: Canadian Real Estate Wealth 27 Nov 2015

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Your HomeBuyingTeam – What Professionals Should You Call On?

Your HomeBuyingTeam - What Professionals Should You Call On?

Your HomeBuyingTeam

What Professionals Should You Call On?

Even if this isn’t your first homebuying experience, you’ll want to get help from a team of professionals. Having the help of professionals will give you experienced and knowledgeable people for reliable information and answers to your questions. These are the people who can help you:
•Realtor
•Lenders or mortgage broker
•Lawyer or notary
•Insurance broker
•Home inspector
•Appraiser
•Land surveyor
•Builder or contractor

You will be doing a lot of interviewing to establish your team. Use this handy CMHC worksheet to help you keep track of the people you interview and the ones you finally choose.

The next sections describe each professional role.

The Realtor

Your realtor’s job is to:
•Help you find the ideal home
•Write an Offer of Purchase
•Negotiate to help you get the best possible deal
•Give you important information about the community
•Help you arrange a home inspection

Finding a Realtor

When looking for a realtor, don’t be afraid to ask questions — especially about possible service charges. Normally, the seller pays a commission to the agent. But, some realtors charge buyers a fee for their services. Use the CMHC worksheet Checklist for Evaluating Realtors to help you.
If you would like to know more about a realtor’s ethical obligations, go to the Canadian Real Estate Association’s website at www.crea.ca, or call your local real estate association.

The Lender or Mortgage Broker

Many different institutions lend money for mortgages — banks, trust companies, credit unions, caisses populaires (in Quebec), pension funds, insurance companies, and finance companies. Different institutions offer different terms and options — shop around!

Mortgage brokers don’t work for any specific lending institution. Their role is to find the lender with the terms and rates that are best for the buyer.

Finding a Lender or Mortgage Broker
•Ask around. Your realtor, another professional, family members, or friends may give you helpful suggestions.
•Look in the Yellow Pages™ under “Banks,” “Credit Unions” or “Trust Companies” for a lender and under “Mortgage Brokers” for a broker.
•Contact the Canadian Association of Accredited Mortgage Professionals at 1-888-442-4625, or visit the Association’s website at www.caamp.org.

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The Lawyer/Notary

Having a lawyer/notary involved in the process will help ensure that things go as smoothly as possible. You need a lawyer (or a notary in Quebec) to perform these tasks:
•Protect your legal interests by making sure the property you want to buy does not have any building or statutory liens, charges, or work or clean-up orders
•Review all contracts before you sign them, especially the Offer (or Agreement) to Purchase.

Finding a Lawyer

Law associations can refer you to lawyers who specialize in real estate law. In Quebec, contact the Chambre des notaires du Québec for the names of notaries specializing in real estate law.

Remember that a lawyer/notary should:
•Be a licensed full-time lawyer/notary
•Live/work in the area
•Understand real estate laws, regulations and restrictions
•Have realistic and acceptable fees
•Be able and willing to explain things in language you can easily understand
•Be experienced with condominiums, if that’s what you are buying

Lawyer/notary fees depend on the complexity of the transaction and the lawyer’s expertise.

Shop around for rates when choosing your lawyer/notary. Use the CMHC worksheet Checklist for Selecting a Lawyer/Notary to guide you.

The Insurance Broker

An insurance broker can help you with your property insurance and mortgage life insurance.

Lenders insist on property insurance because your property is their security for your loan. Property insurance covers the replacement cost of your home, so the size of your premium depends on the value of the property.

Your lender may also suggest that you buy mortgage life insurance. Mortgage life insurance gives coverage for your family, if you die before your mortgage is paid off. Your lender may offer this type of insurance. In this case, the lender adds the premium to your regular mortgage payments. However, you may want to compare rates offered by an insurance broker and by your lender.

Don’t confuse property insurance, or mortgage life insurance, with mortgage loan insurance.

The Home Inspector

Whether you are buying a resale home, or a new home, consider having it inspected by a knowledgeable and professional home inspector.

The home inspector’s role is to inform you about the property’s condition observed at the time of the inspection. The home inspector will tell you if something is not working properly, needs to be changed, or is unsafe. He or she will also tell you if repairs are needed, and maybe even where there were problems in the past.

A home inspection is a visual inspection. It should include a visual assessment of at least the following:
•Foundation
•Doors and windows
•Roof and exterior walls (except winter)
•Attics
•Plumbing and electrical systems (where visible)
•Heating and air conditioning systems
•Ceilings, walls and floors
•Insulation (where visible)
•Ventilation
•The lot, including drainage away from buildings, slopes and natural vegetation
•Overall opinion of structural integrity of the buildings
•Common areas (in the case of a condominium/strata or co-operative)

Finding a Home Inspector

It’s important to hire a knowledgeable, experienced and competent home inspector. In most areas of Canada, there are no licensing or certification requirements for home inspectors. Anyone can say that they are a home inspector without having taken any courses, passed tests or even inspected houses. So look for a home inspector who belongs to a provincial or industry association holds an accreditation that demonstrates training and experience, provides inspection reports, carries insurance, provides references and has strong experience with the type of home to be inspected.

While CMHC does not recommend any individual home inspector or association, CMHC supports a common national occupational standard for home inspectors such as the home inspection industry’s voluntary and independent national certification program.

Home inspector fees range, depending on the size and condition of the home.

The Appraiser

Before you make an offer, an independent appraisal can tell you what the property is worth. This will help ensure that you are not paying too much. In order to complete a mortgage loan, your lender may ask for a recognized appraisal.

The appraisal should include:
•Unbiased assessment of the property’s physical and functional characteristics
•Analysis of recent comparable sales
•Assessment of current market conditions affecting the property

Finding an Appraiser

Ask your realtor to help you find an appraiser.

The Land Surveyor

If the seller does not have a Survey or Certificate of Location, you will probably need to get one for your mortgage application. If the Survey in the seller’s possession is older than five years, it needs to be updated.

Remember that you must have permission from the property owner before hiring a surveyor to go onto the property. Ask your realtor to help co-ordinate this with the owner.

Finding a Land Surveyor

Search the web or Yellow Pages™ or ask your realtor to help you find a land surveyor.

#mortgagesmadesimple

Bank of Canada slashes key rate as economy contracts, exports stall

The Bank of Canada is cutting its key interest rate for the second time this year, citing a larger-than-expected first half contraction and a “puzzling” stall in non-energy exports.

The central bank lowered its benchmark overnight rate by a quarter percentage-point Wednesday to 0.5 per cent, blaming faltering global growth, disinflation and low prices for oil and other commodities. The Canadian dollar fell more than a cent in the wake of the decision.

The bank stopped short of characterizing the economy’s first-half stall as a recession, even a mild one. But some economists say that is exactly what Canada is facing.

The latest rate cut marks a sudden about-face by Bank of Canada Governor Stephen Poloz, who has repeatedly insisted that the economic hit from the oil price collapse would be quickly offset by surging non-oil exports, such as car parts, lumber and machinery and equipment. He had characterized his earlier January rate cut as “insurance.”

But six months later the rebound remains elusive, in spite of a much cheaper Canadian dollar, now worth less than 80 cents (U.S.).

The bank acknowledged in its latest forecast, also released Wednesday, that the failure to get a lift from non-energy exports is “puzzling.”

Making matters worse a massive plunge in business investment – down 16 per cent in the first quarter – has become a dead-weight on the economy. The bank now says it expects investment in Canada’s oil patch to plummet close to 40 per cent this year, significantly worse than the 30 per cent it initially thought, as long-term investments in the oil sands are delayed or put on hold until the price of crude comes back.

A lower overnight rate typically prompts banks to cut rates on home mortgages and other loans – a situation that could exacerbate record household debt levels in Canada and add fuel to the hot housing market in cities such as Toronto and Vancouver.

But Mr. Poloz and his central bank colleagues say the risk of weak growth and disinflation outweighs the worry that Canadians may pile on more debt.

“While vulnerabilities associated with household imbalances remain elevated and could edge higher, Canada’s economy is undergoing a significant and complex adjustment,” the bank said in its statement. “Additional monetary stimulus is required at this time to help return the economy to full capacity and inflation sustainably to target.”

The bank’s new forecast calls for a contraction in the first half of this year, with the economy shrinking at an annual rate of 0.6 per cent in the first quarter and 0.5 per cent in the second quarter. The bank does not use the word “recession,” although a recession is typically marked by two consecutive quarters of shrinking GDP.

Nonetheless, the bank said it expects growth for the entire year to hit 1.1 per cent – a sharp downgrade from the 1.9 per cent growth it forecast just three months ago. It’s calling for growth of about 2.5 per cent in 2016 and 2017.

The central bank said the Canadian economy won’t return to full capacity until the first half of 2017, versus its previous target of late 2016.

Canada’s fundamental problem is that it now has a distinctly two-track economy – one faltering badly because it’s tied to oil and other commodities, and another growing due to “solid” household spending and the recovering U.S. economy.

“As the second track gains strength and Canadian producers benefit from the depreciation of the Canadian dollar, it should re-emerge as the dominant one,” the bank said in its statement.

The non-energy economy makes up more than 80 per cent of the Canada’s GDP, but that side of the economy has been swamped by the effects of the oil price shock.

For now, the weight of the economic decline in Canada’s resource-dependent provinces is dragging on the national economy. Since last November, unemployment is up 1.3 percentage-points in the energy-intensive regions of the country, while retail sales are down nearly 1 per cent, along with steep declines in car and home sales.

It’s a vastly different picture in the rest of the country, including Ontario and Quebec, which depend more heavily on manufacturing exports.

The central bank put the blame on the U.S. and China, where growth “faltered in early 2015.” This has depressed prices for oil and many other commodities that typically drive Canada’s export-led economy.

Also Wednesday, the central bank matched the cut in the overnight rate by lowering the bank rate to 0.75 per cent from 1 per cent and the discount rate from 0.5 per cent to 0.25 per cent.

Source: BARRIE MCKENNA OTTAWA — The Globe and Mail Published Wednesday, Jul. 15, 2015 10:01AM EDT

Shadow mortgage lending on the rise as house prices soar

Canadian house prices have risen 36 per cent since June 2009, according to the Teranet-National Bank.

Canada’s housing boom is increasingly driving homebuyers to seek mortgages from private lenders, who demand rates that can be more than five times higher than those charged by the nation’s banks.

Canadian house prices have risen 36 per cent since June 2009, according to the Teranet-National Bank house price index. At the same time, Canadian banks have become more conservative and regulators are making it harder to lend, giving rise to an alternative market, including Canadians who refinance their own homes at low rates and then use the money to become mortgage lenders themselves.

Some analysts say a housing investment is increasingly risky because the pace of price increases has vastly outstripped wage growth, all amid a time of historically low interest rates and record debt levels. If and when interest rates rise, the concern is that consumers would have little ability to increase their payments, because they have so much debt.

“The risk arises if the unintended consequence of regulation is to push out the risk profile of the less regulated sector, and to encourage it to grow quickly at the same time,” said Finn Poschmann, vice-president of policy analysis at the C.D. Howe Institute.

“In dollar terms it is not a huge part of the economy (but) my concern is that we pay attention, because small problems sometimes get unexpectedly large, and quickly so.”

Mortgage broker Lou Perrotta said that in terms of volume, 20 per cent to 30 per cent of the mortgages he puts together are now privately financed, typically because borrowers are declined for a bank loan for reasons like a low credit rating or unsteady income. That represents about $4 million to $5 million of the $20 million of mortgage business he does annually, he said.

“Business is brisk, without question. (It has) probably tripled in the past three years,” said Perrotta, president of Domus Financial Corp in Toronto, where house prices have increased by 55 per cent in the last six years.

‘It’s not for the faint of heart’

Perrotta acts as a matchmaker between individuals who have money to lend – and who are seeking higher rates of return than can be had in stocks or bonds – and borrowers who are willing to pay a higher mortgage rate to get into the market.

He also invests his own money, lending between $25,000 and $250,000 each to “five or six” borrowers a year who offer a good balance between risk and return.

“It’s not for the faint of heart, and you need to understand the dynamics of real estate,” Perrotta said.

One private lender, who asked not to be named because she is close to the real estate market and fears hurting her business, took out a C$400,000 mortgage on her paid-off home at 2.49 per cent and then gave that money to a broker that lent it to a borrower at a higher rate, for a fee.

“Who the hell is going to give me 9 per cent return?” said the lender, who said she has recourse to the borrower’s assets if he defaults.

Shadow lending ‘growing very fast’

CIBC senior economist Benjamin Tal said the shadow lending market represents about 4 to 5 per cent of Canada’s overall mortgage market.

“This is something that is growing very fast, because many borrowers are not having access to banks because the banks are highly regulated,” said Tal.

In Ontario, Canada’s most populous province, private lending accounts for about 4 per cent of new mortgage originations, or $1.1 billion, or 2 per cent, of total mortgage lending by dollar value, according to Teranet.

While that’s a fraction of the sub-prime lending that got the U.S. housing market into trouble seven years ago, analysts are concerned that the market is growing rapidly and may be concentrated in hot housing markets such as Toronto and Vancouver where a sudden downturn could take hold.

Legal practice

The practice is legal, and can be done through a person-to-person loan, in which the lender is named as a lienholder on the mortgage, or through a Mortgage Investment Corp, in which investors can pool their money to lend to those who either don’t qualify for a traditional loan.

While major Canadian lenders offer five-year fixed mortgage rates at about 2.5 per cent to qualified borrowers, rates in the private market range between 7 per cent and 15 per cent, one mortgage broker said.

Traditional lenders also send business to alternative lenders, feeding the pipeline.

Royal Bank of Canada, the country’s biggest bank, said when a client does not qualify for a mortgage, the bank will recommend an alternate lender, which may include a trust company, a mortgage broker or a private mortgage corporation, an RBC spokesman said in a statement.

Canada’s financial system regulator, the Office of the Superintendent of Financial Institutions, said it monitors the alternative mortgage market but would not comment on its size, whether it was growing or whether OSFI had any concerns.

Anthony Croll, vice president of Individual Investment Corporation, a Montreal-based private lender that has been in business since 1958, said he’s seen a rise in the number of small private lenders over the last few years competing with the 10 per cent to 12 per cent interest his company would charge.

He also thinks inexperienced lenders may be underestimating the risks associated with non-payment of a loan.

“Occasionally an accountant or someone else has said – after hearing about our rates, or what the deal is – ‘I can do that myself,'” Croll said. “But you know everything is easy and fine to do until you have a problem.”

Source: By Andrea Hopkins, Thomson Reuters Posted: Jul 09, 2015 2:36 AM ET

THE HOME MORTGAGE ADVANTAGE

THE HOME MORTGAGE ADVANTAGE

Home Mortgage Consultants is a mortgage broker agency. We deal with major banks, trust, life insurance, finance companies and private lenders. We are licensed to provide the most competitive mortgage rates and terms available for your real estate financing needs throughout Ontario.

OUR SERVICE INCLUDES:

  • First and second mortgages
  • Transfers
  • Condominium/Townhouse purchases
  • Home Improvement Loans
  • Construction Loans
  • Debt Consolidation
  • Refinancing
  • Power of Sale
  • Multi-residential
  • Vacant land
  • Cottages and recreational properties
  • Rural and farm properties

ARE THERE ANY COSTS INVOLVED?

When we arrange a prime residential first mortgage the lender pays us a finder’s fee.This does not affect the rate our terms of the mortgage in any way.

When we arrange any other type of mortgage that does not qualify as a prime residential mortgage then the lender does not pay us. We must then charge a brokerage fee*. The fee is based on the complexity involved to arrange the mortgage.

#mortgagesmadesimple

Road reps badmouth broker credit checks

It’s one of the clear advantages brokers offer clients hunting for a mortgage, but even that is being threatened by mortgage specialists arguing the hit attached to their credit checks are much lower than those undertaken by brokers.

“It’s totally false,” says Ron Butler of Butler Mortgage. “We hear this constantly – the bankers are trained to say it.”

Butler is referring to the claim by mortgage specialists that they are able to perform credit checks that result in just a two-point hit to a client’s credit score as opposed to the eight-point penalty they claim is attached to a broker query.

It’s a boast that Butler and others argue as just another way for banks to attract and keep mortgage clients.
But there is a remedy to that type of fear mongering that keeps clients locked into bank mortgages: education.

John Panagakos, a principal broker with Dominion Lending Centres, says he informs clients that multiple checks in a short period of time will have just a small impact on score.

“If a client is shopping around for a mortgage, the credit bureau has built in a model that (allows for) multiple hits and it won’t drastically affect your credit score,” he says.

Even still, that one-time hit is often negligible against the credit score. And, as Butler explains to his clients, there are bigger threats to credit score than pulling up a report.

“What the consumer really needs to understand is the things that affect their credit is maxing out lines of credit or credit cards, rather than a couple of credit pulls,” Butler says. “Leaving your line of credit maxed out, month in and month out, is massively more impactful than a couple of credit pulls.”

Patrick Smith, a mortgage broker with Dominion Lending Centres, contends that the two-point cost of a credit check at the bank – however false – certainly removes that particular advantage from brokers’ arsenals, but he believes the impact to his business would be minimal.

“When you throw away eight points versus two points, (brokers are still) saving the clients the leg work of looking around and being well-versed in what terms are favourable and the things that banks aren’t necessarily disclosing,” he says.

Source: MortgageBrokerNews.ca by Olivia D’Orazio | 15 Jun 2015