Mortgage Rate Hike Possibly Coming Soon

It looks like recent job losses are not going to prevent an upcoming mortgage rate hike. The Bank of Canada is still poised to raise interest rates in October 2018 despite the losses in the part-time work market in August.

Survey Results Fuel Disappointment?

The August 2018 survey of the Statistic Canada’s Labour Force was released after an earlier report came out stating that the rates will remain the same for the time being. Many were disappointed with the reported figures although investors expressed that they still think that an interest rate hike will be announced on October 24. This prediction has a certainty rate of about 60%.

Andrew Kelvin, TD Securities Senior Rates Strategist thinks that the survey results will still lead to an October interest rate hike. Note that the survey data shows that 51,600 jobs were lost in August 2018 further increasing the jobless rate from 5.8% in July to 6% in August. This is not the whole picture though, employment rate grew by 0.9% YoY or about 172,000 jobs. Aside from this, hourly wages for August rose by 2.6% compared to a similar time period in 2017; however, this figure is the lowest in the past year since October 2017.

What The Numbers May Mean

Meanwhile, Reuters reported that a similar event might happen in Canada, referring to the expected increase in interest rates in the US by the Federal Reserve following a strong showing of the US job market.

BMO Capital Markets Senior Economist Sal Guatieri says that although the part-time job figures this month was disappointing for showing a retraction compared to the previous month’s gains, full-time jobs are still up and that is good news, stating that full-time positions increased by 40,400 positions despite part-time employment decreasing by 92,000 jobs.

Canada’s most populous province Ontario had 2 months of increases but lost 80,100 jobs in August while employment grew in other places such as Manitoba and Alberta.

More Interest Rate Hikes in Canada Foreseen

Interest rates are also likely to further increase in the coming year, although it may be too early to predict right now just by how much the looming interest rate hike will increase. Some speculate that the interest rates will face a few more hikes before it settles to a more stable rate by 2020. It might be best to get one’s finances in order this year before further increases take effect to avoid paying higher interest rates.

With mortgage interest rates poised to increase in the near future, now would be the perfect time to apply for a mortgage or other loans if you’re planning to buy a home, invest in property, or consolidate debts. If you want to find alternative lenders in Canada or interested to find out how much you can borrow for your needs, contact us and we will find the best financial solution for you. We will assess your current situation and propose possible solutions that will work for you and possibly save you lots of money as well. Talk to us today!

For more mortgage related news or to apply for a home equity loan, second mortgage, home equity line of credit and more, please visit us at:

Bank Mortgage Declined? Get a Private Mortgage Instead!

Qualifying for a mortgage these days is seriously a lot of hard work. Banks are stricter than ever, government regulations are tightening up, and interest rates are rising too; meaning, it will even be more challenging to qualify for a mortgage from a bank more so for people who don’t have an impeccable credit history.

People who are self-employed, living in non-hot real estate areas, and those with other loans are often declined by banks and told that they don’t qualify for a home loan. Because of this, more Canadians are finding ways to fulfill their home financing needs with the help of a private mortgage lender. Far from what most people think that private mortgage lenders are last resort options, the way they operate these days can make them a wiser choice than borrowing from banks.

Why Consider Borrowing from a Private Mortgage Lender?

You can borrow from a private mortgage lender with less fuss than borrowing from huge financial institutions like banks. This is because private mortgage lenders are often small companies or individuals who offer loans for a small profit. They are not as bureaucratic as banks and tend to consider each borrower as a person rather than just a number. They also set their own criteria for lending because their funding is from a group of investors or can just be an individual investor. Because of this, they are more flexible with their process and can entertain people with unconventional circumstances.

Who Are Recommended for a Private Mortgage?

Generally speaking, people who are likely to be declined by banks have a better chance of borrowing from a private mortgage lender. Examples are those who:

  • Have bad credit
  • Are self-employed
  • Want to purchase raw land or unique property
  • Wanting a short-term loan
  • Need funds for home improvement projects but do not qualify yet for certain loans
  • Need access to their home equity but can’t refinance an existing mortgage for various reasons
  • Need funds for debt consolidation

How  a Private Mortgage Can Help You

The best person to ask about the ins and outs of how a private mortgage works is a mortgage professional who has a keen knowledge of alternative lending services. A private mortgage may work differently depending on several factors so all details must be considered. This is why mortgage professionals ask for your information so that they can determine how you can qualify for a private mortgage. Once it has been determined that you are eligible for a loan, the next assessment will be about your ability to pay. After the mortgage professional has these details, several mortgage solutions that meet your needs and means will be proposed to you. After this is done, a deal will be put in place together with an exit strategy so you’d know exactly until when you are supposed to pay and by how much.

Mortgage professionals do this service for a fee and what you get is a great deal that can help you smooth out your finances. Have you been declined by a bank? Contact us to get a private mortgage loan instead!

Second Mortgage Loans in Canada

In Canada, second mortgage loans are an additional loan that a homeowner can take on a property on top of a primary mortgage. Because a second mortgage is an additional loan, the risks for the lender are quite high, prompting them to charge higher interest rates for second mortgages as compared to a primary mortgage to mitigate their possible loses should the homeowner fail to make payments.

Defining a Second Mortgage

Second mortgages technically come in 2 forms, the lump sum home equity loan, and the revolving credit HELOC which stands for a home equity line of credit. These 2 loans sound similar but they are not the same in terms of format, interest rates, and payment terms. Usually, the term ‘second mortgage’ applies to home equity loan to avoid confusion with a HELOC.

A good credit score is most certainly needed when trying to get a second mortgage from a bank or similar huge financial institutions. This is because the risks of nonpayment are higher for second mortgages due to the fact that paying for them is on top of an existing mortgage. For individuals who do not qualify for a second mortgage with banks, going the private lender route with the help of professional mortgage brokers is possible.

Who Needs a Second Mortgage?

People with a lot of credit card debts from various providers are ideal candidates for a second mortgage as the most popular use for it is to consolidate debt. With a second mortgage, you can access a part of your home equity as a lump sum and pay off your high-interest debts so that you end up with just one bill to pay instead of a few. By using a second mortgage to consolidate debt, you’ll save up on interest fees and more of your payment will go towards paying your actual loan than just struggling to cover interest fees. Other people who may need a second mortgage are people who need to fund a huge project (such as a much-needed home renovation). Consolidating debt and financing home improvement are great ways to use a second mortgage to improve your credit score too.

How to Qualify for a Second Mortgage?

Qualifying for a second mortgage means passing the lender’s requirements on 4 key areas, your credit score, your ability to pay, your property location and status, and your existing home equity.

Lenders are looking for people who have a great property with a substantial enough equity and have the means to pay. Credit score is negligible depending on the lender’s specific requirements.

The best way to find lenders with whom you might qualify for is to reach out to a professional mortgage broker. Good mortgage brokers have years of industry experience and have a huge network of lenders that they can match with specific borrowers based on the factors mentioned above. At Mortgage Central, we’d be happy to discuss your options with you as well as help you get approved for a second mortgage. Contact us soon!


What You Have to Know About the Rates of Second Mortgage in Canada

Mortgage rates are not the same throughout Canada. This applies to all types of mortgages including second mortgages. The reasons why mortgage rates fluctuate depend on many factors but location is a major determinant.

Who Sets Second Mortgage Rates?

The second mortgage rates are set by individual lenders within reasonable limits (for instance, they can’t charge above a certain rate without attracting the attention of authorities). These lenders can be banks or private individuals known as private lenders.

Who Lends Second Mortgage in Canada?

The lenders of second mortgages in Canada tend to be private lenders because larger institutions such as banks typically don’t want to bother with high-risk loans. A second mortgage is considered a high-risk loan because the primary mortgage will be the priority for compensation in the event of the borrower defaulting.

Unlike banks, private lenders are willing to take higher risks because they can draw up their own rules (within reason). However, because of the higher risk that they take, private lenders tend to be very location-sensitive and their rates can vary by region.

Rates Vary by Area

Expect that rural rates won’t be the same as city rates because of the risks involved. Basically speaking, higher rates apply to loan that carry a higher risk, such as in the case of rural loans because going after them will also cost more for the lender in the event of a default. Loans for properties in the city are charged a lower rate because they’re easier to manage for the lender.

Second Mortgage Fees

There are a number of fees that you can expect to pay when applying for a second mortgage. Some lenders will ask for 3-5% of the value of the mortgage depending on whether it is a closed term second mortgage or if it is an open term second mortgage.

Generally speaking, you should be ready to pay the following fees if you’re looking to get a second mortgage:

  • Appraisal fees
  • Insurance Fees
  • Legal Fees
  • Notary Fees

Note that lenders won’t lend the full appraised amount and not even the estimated equity because of risks involved. The fees will also be heavily influenced by other factors such as time, location, and real estate market volatility as well as the assessed ability of the borrower to pay. It is best to talk to mortgage professionals in your area to have an idea of the rates to expect as well as which private lenders can possibly offer the most favourable terms. Shopping for a private lender is really the way to go before applying for a second mortgage.

Second mortgage rates in Canada can vary because of several factors. This is why it is important to shop for a lender that can give you the best rates and terms with the help of professional mortgage brokers who have your best interest at heart. Your mortgage can be turned into an asset with the proper help. Talk to us today.

How a Mortgage Broker Can Make Your Life Easier

Mortgage brokers either have a negative or a positive image depending on one’s background and personal experience but the truth is, mortgage brokers only act as an agent or a middleman between a borrower and a lender, although some may be more conscientious about their job than others.

What Does a Mortgage Broker Do?

A mortgage broker acts as the go-between for both the mortgage lender and the homeowner. Mortgage brokers work with borrowers to help them qualify for a loan or a mortgage while also working with lenders to connect them with homeowners who are in need of cash.

The communication between homeowner, mortgage lender, and mortgage broker isn’t like a three-way system. The mortgage broker talks to the borrower and the lender separately and negotiates agreements between parties. When the mortgage broker finds parties that are amenable to each other’s terms, the mortgage broker will then draw up the paperwork for the loan.

The above is possible because the mortgage broker already knows what both parties want. This is why mortgage brokers ask you a series of questions and go into personal financial details with you as part of the initial consultation.

Some financial information that your mortgage broker may ask from you include:

  • Details regarding your assets such as savings and properties
  • Your income (your pay stubs, tax returns, employment or business history)
  • Your financial standing (including your credit score)

The above information are required to determine your capacity to pay and therefore, determine your ability to get a loan. In some cases such as when you’re after a mortgage refinance, your equity and current home value will be assessed to determine your qualifications and what loan type would be best for your needs.

More Than Just A Go-Between

Good mortgage brokers do more than simply connect lenders and borrowers. They take time to consider what the borrower needs and match them with mortgage lenders with terms that are within the borrower’s means. It is also not uncommon for a good mortgage broker to suggest another financial solution that may be of a better fit for the homeowner.

The mortgage broker will compare various banks and private lenders to determine the right fit in terms of fees, rates, type of loan, and risks involved. The final decision is made by the mortgage lender and homeowner, but a good mortgage broker will save both parties plenty of time and plenty of money in fees. In exchange, the mortgage broker earns by commission. This commission is just about nearly the same amount of money wasted on fees should a homeowner decide to do everything on their own instead of having a mortgage broker.

Getting a mortgage (or any type of loan) can be very tricky. It pays to have a seasoned professional, such as a mortgage broker, do the heavy lifting for you. Not only can we help you to understand what you are getting into, but we’ll also help you save time and money while making sure that we connect you with the right lenders. Contact us at Mortgage Central Canada today!

Managing a HELOC – Dealing With Interest and Payments

Although a lot of Canadians are interested in getting a HELOC or a home equity line of credit, the majority are concerned about being unable to manage making payments on time more so as interest rates seem to be seeing an upward trend these days. News saying that HELOC payments will increase also abound, causing fear and worry for those who are already struggling financially.

The Current Situation

More than 2 million Canadians Have an existing HELOC or are on the process of getting one. They’re due to see an increase in their payments in the coming months, news that are not welcome for many.

A HELOC is a revolving loan that is secured by a home’ equity. This means that failure to make payments can place one in the danger of becoming homeless. This, of course, sounds dramatic; however, this won’t be an issue for a properly managed HELOC.

Advantages of a HELOC

A home equity line of credit allows a homeowner to tap home equity whether or not they have mortgage. In getting a HELOC in Canada, what matters is that the homeowner has built up some equity on the home and that the homeowner qualifies for the criteria set by the lender.

HELOCs are a lot more flexible than a second mortgage and works almost like a credit card but with markedly lower interest rates. With a HELOC, a homeowner can access a part of or the full amount of a predetermined loan ceiling when needed. Interest is only paid on the exact borrowed amount (for most HELOCs) and there is no penalty if the homeowner decided not to use the HELOC at all. Payments are not expected until the agreed upon payment period, giving homeowners ample time to prepare themselves financially  to afford making payments.

About Interest Rates

Now, HELOC interest rates are lower than that of a credit card; however, they are variable just like the interest for a credit card and the rate is set by the lender. This means that when interest rates go up, HELOC payments would also go up.

The prime rate jumped up 0.75% a few weeks ago. What was formerly 0.50% is now 1.25%. This may seem like a huge increase and yes, it is, but considering that credit cards charge upwards of 20%, the increase in HELOC rates is certainly a lot more manageable although still considerable. More increases are due by the end of 2018 and until 2019.

Coping with Changes

Because of the forecasted rate increases, it may be wiser to choose to convert your HELOC into a fixed rate mortgage This will incur charges so this option is best for those who still have a lot to pay on their HELOCs. For those who have a little left to pay, it would be smart to make sure that payments are made on time to minimize the possibility of getting a huge rate increase from your lender as lenders typically assign a higher rate for those who also have an increased risk of non-payment.

Getting a HELOC is huge and important decision that is best made when you’ve had enough time and consideration to not make blindly. Questions about getting a HELOC or how to leverage your home equity should be answered before you sign any papers. If you have any questions do not hesitate to contact us at Mortgage Central. We’d be glad to assist you with managing a HELOC and getting it.


Ontario Investors Lost $1B in Syndicated Mortgages According to Toronto Lawyer

David Franklin, a real estate lawyer from Toronto believes that Ontario investors have lost more than $1B of their investment money in syndicated mortgages. A CBC news report recently shared that 120 Chinese investors in the GTA stand to lose about $9M in investments like these and David Franklin adds that this news is just a small fraction of what’s going on.

Bold Opinions

Franklin was recorded to have stated that the $9M loss is the smallest one he’d seen after he reviewed the contracts with Black Bear Homes.

Franklin further stated that in his opinion, the said investments deals are fraudulent. He also shared that based on the court documents that he’s been able to take a look at, the investors will lose an amount that’s more than a billion dollars in Ontario.

Investors who provided funding for the syndicated mortgages with Black Bear Homes were tricked to provide mortgages in values that far exceed the real worth of the investment properties. On top of this, interest payments from their own capital were given to them until the funds were used up.

As a backgrounder on syndicated mortgages, they can be legal or legitimate investments where a borrower forgoes going to the bank and instead, just finds more than one private lender to invest money in a property.

Franklin adds that more syndicated mortgages like those for Black Bear projects are being sold by several companies. With further digging, CBC News found out that the Financial Services Commissionof Ontario has shut down at least one of those companies.

The Investigation Deepens

Back in October 2016, a cease and desist compliance order was issued by FSCO for Tier 1 Mortgage Corporation. Since that day, the interests of syndicated mortgage investors have been protected by an appointed trustee in 16 Tier 1 real estate development projects.

It is to be noted that one registered mortgage broker named Dominic Ha solicited investors for investors Black Bear projects and did the same thing for Tier 1. A CBC News investigation has found that some of the syndicated mortgages investors for Black Bear projects are also investors for Tier 1 projects.

Investor Guan Bai Long shared that has $180,000 worth of investments in Tier 1 and Black Bear projects through Dominic Ha. He also shared that the agent even went to his home to have him sign documents and convince him to invest another $150,000 from his retirement funds. These investments were supposed to be paid back to him more than 2 years ago. Guan shared that as a result of the unfortunate turn of events, he had to take out loans to fund his children’s tuition.

Mortgage agent Ha began soliciting syndicated mortgages investors in 2011. He also had an appearance in Chinese TV promoting the investments just 2 years ago in 2015. Ha insists that all pertinent information has been provided to investors, his lawyer shared.

Open Fraud

Certified fraud examiner Bill Vasiliou shared that after taking a closer look at the investors’ stories, ledgers, and syndicated mortgage contracts of Black Bear projects, he believes that there is an ongoing fraud. He was also quick to add that there are similar cases and that the Black Bear cases are mere peanuts compared to others he had seen.

Worried that you may be falling for an investment scam? We can help you make better decisions with your investments by arming you with the information you need. Contact us at Haywood Hunt Private Investigators.

Why Borrow Against Your Home Equity?

Borrowing against their home equity gets some people feeling iffy, viewing the transaction with suspicion and thinking that it is a ploy for lenders to rob someone off of their home. The truth is far from this. Borrowing against one’s home equity can prove to be a smart financial decision as long as it is done right and for the right reasons.

Using Your Home Equity

Your home equity is the value your home that you actually own. It is defined as the difference between what the homeowner still owes in the current mortgage and the home’s current market value. Considering this definition, there are 2 ways to increase your home equity. One is when you make payments towards your mortgage, and another is when the value of your home increases such as when real estate value increases or when you make certain home improvements that add value to your home.

Borrowing Against Your Home Equity

You can tap your home equity by getting a loan against it. There are different types of home loans that are taken against your home equity. We will talk about the 3 most popular options today – getting a HELOC or a home equity line of credit,  getting a  mortgage refinance, or getting a second mortgage or a lump sum home equity loan. It can get confusing regarding whether you should go for a HELOC, a second mortgage, or a home refinance to access your home equity so read on to get an idea about each one.

Mortgage Refinance

A mortgage refinance is a great way to tighten things up when there has been a significant change in your home’s value such as in the case of skyrocketing home prices in areas that have undergone some recent development. Depending on the terms of the refinance, you may find yourself saving a lot of money on interest fees, finding that it is easier to pay your loans, or even both.

Second Mortgage

Also called home equity loan, a second mortgage allows you to tap your equity and get a lump sum of cash that you can use to consolidate debt or pay for any huge expense. Debt consolidation is a popular reason for applying for a second mortgage because it lets the homeowner save so much on interest fees for high-interest loans. The downside is that paying back a second mortgage usually comes with a short time frame.

Home Equity Line of Credit

A HELOC is the most flexible compared to the previous 2 ways to tap your home equity. The payment for a HELOC can also prove to be the easiest to manage; however, you won’t benefit much from a HELOC unless you need access to a revolving credit source cash for quite some time. Remember that payment will be scheduled at a certain time so you can’t just go to the lender and pay back your HELOC even when you have the means to do so.

Are you still unsure whether is it time to leverage your home equity? Talk to us and let us know what your concerns are so we can help you choose a loan product that will best suit your needs. Contact us at Mortgage Central Canada today!