Why Private Mortgages Work

We’ve talked a lot here about how private mortgages work, but it’s time to start talking about WHY they work. Like always you’ll want to speak with one of our Canada mortgage brokers to make sure that this is the best route for you. While they are different, they’re virtually identical to every other sort of mortgage – you’re just dealing with a private lender instead of a bank or government organisation. Like mentioned earlier, everyone is different and you should do your research and talk to use first.

30 Year Mortgages are Out

With the last major changes made to the mortgage rules last year, 30 year mortgages are out. The max amortization rate for any kind of mortgage, including private mortgages, is now 25 years. While this will raise your payments a little you’ll be able to avoid a debt bubble. Any Canada mortgage broker can tell you that the longer your mortgage runs the more time you’ll have for something to go horribly wrong.

Private Mortgages Have Less Default Risk

Private mortgages year after year have been shown to have a much lower risk of default than other kinds of mortgages. Why is that though? Is there some dark magic at play or just better terms? Like all loans you’ll have to be careful about who you work with and what your mortgage terms are. When you work with us as your Toronto mortgage broker we’ll be able to work through your contract and understand if you’re getting a good deal or not. It’s only a lower default risk if you’re getting a deal that’s right for you.

Lower Interest Rates are the Norm

Most borrowers will see their interest rates drop a few percent when they pick a private lender, but some can see even larger jumps. It really depends on where you’re starting at – if you’re a higher credit risk or have a history of bad credit you could run into trouble. That’s exactly why you will want to work with us as your mortgage broker; no one should have to pay more than they have to and we’ll go over every aspect to help you make the most of your terms. Don’t get stuck with a bad deal when you can get the one that’s right for you.

Better Repayment Terms

Private mortgages feature better repayment terms. Most borrowers will see fewer punitive terms like early repayment penalties and late payment penalties with some interest forgiveness thrown into the mix. But everyone is different and each lender is going to offer you as a borrower a different kind of deal. That’s why it’s so important that you don’t do it on your own.

When looking for the right mortgage you need the right help. We’ll be able to help pair you with a lender that not only offers you a good deal now but a good deal later. We’ll make sure that you don’t just get a good teaser rate – you’ll get a mortgage you can live with. Visit our private mortgage page to learn more!

Your Mortgage Refinancing Checklist

So we’ve talked about mortgage refinancing, but here we’re going to go over a quick checklist you’ll need when you come speak with one of our Toronto mortgage brokers. If there are any special documents you need aside from these we’ll let you know – but this list will about cover it. While a few things won’t apply to you, it’s important to read over the whole list! Don’t skip it! Read it right now! Before it’s gone forever – well no not really, but you get the point.

  • Photo or Picture ID – You need a way of proving that you are you. It’s better that the bank is paranoid about proving that you’re you and not some identity thief intent on stealing all of your equity with you none of the wiser. Passports, driver’s licenses, ID cards, anything generally issued by the government will help you establish your identity to a prospective lender.
  • Proof of Income – What do you do for a living? Self employed? Using your business to prove that you’ve got some kind of income rolling in? Paystubs? All of these things will help show that you have an income to pay your mortgage.
  • Bank Statements (Private and Business) – You’ll need bank statements for the last 3 to 6 months (farther back the better) to show that you have money in your account.
  • Divorce or Marriage Documents – Are you receiving alimony, child support from a divorce? You’ll need to bring in your divorce decree. Have you married since your mortgage started and you need to show that you have another income in your household that you want considered as your own? Bring your marriage documents with you.
  • Mortgage Documents – The loan origination document is VERY handy to have. You’ll also want to bring in statements (the most recent is best) from the current mortgage lender to show that you’re current with your payments. Don’t leave home without these if you have them, especially the most recent statement.
  • Tax Forms for 2 Years Prior – Showing proof of your income with your taxes is the best way to go about it. If you want your business income to be considered also bring tax returns for your business too.
  • Utility Bill – Most lenders are going to want proof that THIS is your home. A utility bill usually suffices to prove that this isn’t another mortgage refinancing on a rental property.

There are other things you might need to bring – but you’ll find these out when you schedule an appointment with one of our Canada mortgage brokers. Remember that each lender will be different and their criteria can range widely! Some won’t care if you’re refinancing a rental property or that you don’t have a utility bill. Others won’t care if you bring in information to prove that you and your partner live together. It all ranges wildly from one lender to the next, but when you work with us you’ll find out what you need to know.

Learn more about our great rates for mortgage refinancing here!

Is Mortgage Refinancing Right for You?

Let’s face it, we all want to pay off our mortgage as soon as possible but sometimes you need a little help. Maybe you’ve gotten behind on your payments, maybe your interest rates are spiraling out of control – either way you need to know that you’re taking control of your mortgage, not the other way around. With interest rates now at the lowest they’ve been for years and soon to rise, now is the time to take advantage and get the deal that works out best for you.

The Good:

Sometimes mortgage refinancing comes with some great perks like:

Easy Access to Credit Means Cheap Money

When interest rates are this low, lenders are willing to work with just about anyone. Even if you have bad credit when you work with one of our Canada mortgage brokers you’ll get the help you need to find a mortgage that works for you. But while interest rates are low now, they aren’t going to stay this low forever!

Better Options than When You Started

When you first took out your mortgage you probably didn’t have the best credit – after years of timely payments you’re going to have a better track record that lenders will be interested in. All that hard work is finally going to pay off with better options for mortgage refinancing. Say bye bye to being a financial wallflower and hello to an option you can finally live with.

You Have More Leverage Now

You have something else you didn’t have when you started: equity. With equity in your home you’ll be able to secure a much better deal this time around. While you may have to give up a little equity to get a better interest rate, but for most it’s a great trade-off.

If you’re not sure what kind of equity situation you have, talk with one of our brokers.

The Bad:

Not everyone is going to benefit from mortgage refinancing.

Fees Can Cost You Big

Closing a refinance can be just as costly as getting a new mortgage – don’t do it just to save a point or two! You should be getting a seriously great deal on mortgage refinancing before you pay fees. Talk with one of our Canada mortgage brokers to find out if you’re getting the best rate for you.

Not Everyone Can Qualify

It’s important to understand that not everyone can qualify for a mortgage refinance their first time out – depending on your credit, how much equity you have and how much more time you’re willing to put into a mortgage will give you an idea if this is really the right way for you to go.

You’ll Extend the Life of Your Mortgage

If you’re trying to pay off your mortgage early, you might be hit with expensive pre-payment penalties and a few years of extra payments. Extending the life of your mortgage may not always be a great thing, especially if you want greater mobility (aka the ability to move out and move on).

Sometimes it’s a great fit, sometimes it’s not. Talk to one of our Canada mortgage brokers today or visit our mortgage refinancing page here to see if mortgage refinancing is really the right choice for you.

How Do Home Equity Loans Work?

Home equity loan or second mortgage allows you to treat the equity you have in your home for money. The sounds pretty straightforward, but it really is. You’ll be able to borrow up to 80% of their homes equity – but we don’t recommend doing that. Working with one of our Canada mortgage brokers we’ll help you understand your options, and here were going to explain both the benefits and disadvantages of this kind. From understanding the difference between fixed-rate mortgages and home equity lines of credit, you’ll learn the ins and outs of home equity loans work.

What is equity?

You’re going to first need to figure out how much equity you hold in your home. If you just got a first mortgage and only paid a 20% down payment, you only have 20% equity in your home (minus any interest from the first mortgage you took out).

You’re going to want to wait awhile before you start looking into a home equity loan if you’re in this boat. If you’d like to figure out how much equity you have, take the most recently appraised value of your home and subtract how much you owe your lenders or any liens on your house – et voila, you’ll know how much equity you have in your home.

What kinds of the home equity loans are there?

There are two main kinds of home equity loans that you can take out on your home. These fixed rate home equity loans, also known as second mortgages, and a home equity line of credit or HELOC. Each of these has its benefits and drawbacks, so you’ll want to be careful about which one you take out on your own home. One of our Canada mortgage brokers can help you find out which one is best for you.

What is a fixed-rate loan?

A fixed rate loan, or second mortgage, allows you to keep the same interest rate and terms over the life of your loan. These are the most desirable for borrowers because you don’t have to worry about your interest rate floating up and down with the prime – a big concern with HELOCs and variable rate mortgages. You’ll get this in one big lump sum that you use to pay off bills or complete a project.

What is a home equity line of credit?

A home equity line of credit is a kind of home equity loan that allows you to borrow against the interest on your home like a credit card; you can pay it off and borrow again as many times as you need over the life of your loan. This means you can open the line of credit and never use it until you need it – unlike a fixed rate loan or second mortgage.

Always borrow carefully

Before you borrow, speak to one of our Toronto mortgage brokers. We’ll be able to help you figure out if this is the right way for you to go.

Different Ways to Tap Into Your Home Equity

As a homeowner, you can put your home equity to much use. Converting this equity to cash is quite easy if you are aware of your options. Here’s a look at three common financing solutions that put your home equity to good use.

Home equity loan (HEL): Working pretty much like a traditional loan, a home equity loanprovides you a lump-sum payment at a fixed rate of interest. The borrowed amount plus interest must be paid over the loan term in the form of fixed periodic payments.

A home equity line of credit more is a credit line you can get against the equity built up in your home. There is a guaranteed amount of cash available to you; you can draw from this ‘money bank’ whenever there is such a requirement. The interest is paid on the actual borrowed amount, and the rate is variable over the loan term.

You can re-borrow the money that you just paid back, using checks or cards. A majority of home equity credit lines come with a variable rate, though you can also consider negotiating a fixed rate.

Cash out refinancing: Here, you take out a new mortgage of a higher value than the amount you owe on your current mortgage, and use the cash to pay off your existing mortgage. The difference is used as a home equity loan. The interest rate on such a financing solution is generally, but not always lower than that on a home equity loan.

Also, visit our home equity line of credit page today to learn more!

5 Reasons a Second Mortgage May be Right for You

Not sure where to get some much-needed funds or if you should go for a loan? If you’ve got home equity, then a second mortgage should not be a problem for you!

What is Second Mortgage?

Second mortgage is any other mortgage you make while you are still paying off your first mortgage. Usually, a second mortgage is backed up by a real estate property such as your home because it requires you to have something that has equity to borrow against. The equity can be from your home’s appreciation, your principal mortgage down, or from a large initial down payment you’ve made when buying property. By going for a second mortgage, you can refinance up to 85% of your property’s value!

So now that we know what a second mortgage is, let’s talk about the reasons why you’ll probably have to go for a second mortgage.

Buying Another Property

Buying a rental property is a wise investment because the rent from such can go into paying for the property itself, thereby earning you some profits once the property is fully paid off. The clincher is you often have to chalk up about 20% of the property’s value for your down payment – that’s where a second mortgage can come handy.

Investing

They say that it takes money to make money – so it goes without saying that to start a business or invest into something, you’ll need to first come up with a considerable amount of cash. You can use a second mortgage to start a business or beef up your portfolio. Just be sure to invest on something that will be worth your while.

Paying Off Debt

Debt that is left unattended can swell to unmanageable amounts because of high interest rates. Because second mortgages these days often have a low interest rate, it would be wise to use one to get rid of debts that have a high interest rate. You can also pay off several loans at once, leaving you with just a second mortgage to manage.

Renovating Property

Home renovations can get very expensive and getting loans for home renovations is often tricky. By going for a second mortgage, you can use your home equity to get what needs to be done, done!

Paying for School

Going for higher education can be very expensive. If you’ve got home equity, you can use that to get a second mortgage and go back to school or send your kid to school. Higher education also means better jobs and making more, so this is truly a wise way to use a second mortgage for!

Ready to get a second mortgage? Then be sure to contact a trusted mortgage broker! Our team of Toronto mortgage brokers can help you through all the steps to obtain a second mortgage fast and easy. Simply fill in your details via our online mortgage application form for fast approval and immediate assistance. Contact us and we’ll immediately get back to you answer your mortgage questions and to assist you with your needs.

Home Equity Loans for Small Businesses

Expanding or starting a small business means that you need to have the capital to do so, but not everyone have enough savings to cover the expenses and funds for that. If you own your home, then there is a chance that you can use a home equity loan to finance your business. Find out more about this below.

Why Use a Home Equity Loan

Home equity loans are ideal for funding small businesses because it offers the lowest interest rates, are very straightforward, and have flexible payment schemes. In fact, in Canada, investing, whether in the form of stocks or a small business is one of the main uses of home equity loans.

What are Home Equity Loans?

Home equity loans are just loans that are backed by residential equity. You can also look at it as a form of second mortgage either by your bank or by private lenders. Usually, a home equity loan is interest-only and short-lived, which means it only lasts 6 to 12 months because they are supposed to transition into a refinanced mortgage or something similar at the soonest possible time.

Home equity loans are available to applicants with poor credit history and can be as little as $25,000 to as high as $2 million. The loan’s value can be as much as 80% of your home’s value and interest rates are quite manageable, starting at 5.95%

Home Equity Loans for Your Small Business

A home equity loan is great for a small business primarily because of the short-term nature of the loan, ranging from just 6 months to a full year. It also allows you to adjust your payments according to your situation and needs because it is interest only. It also offers lower interest rates compared to unsecured debt.

A home equity loan is different from a typical mortgage because it does not require income qualification. If you are a small business owner, procuring a mortgage might prove to be difficult because it is common practice for owners of small businesses to write off as much of their income to lower their tax. Although that saves you (or any other small business owner) some money, it can affect your ability to obtain a mortgage even with good income and credit. Needless to say, a home equity loan would be great for small business owners and those who are self-employed as the loan is based on your existing equity and not what income is reflected on your tax return.

Getting a Home Equity Loan

Home equity loans are designed for homeowners with the main criteria by banks and private lender being your Loan-to-Value ratio or LTV. The home equity loan you want to avail of plus the value of your existing mortgage cannot exceed 80% of your home’s value (this is for security).

Applying for a home equity loan is actually quite easy and quick. In fact, you can do it right in the comfort of your own home! Contact us at Mortgage Central Canada and experience what it is like to have the best Toronto mortgage brokers at your side!

 

2 Smart Reasons to Get a HELOC this Year

Most of you reading this knows what home equity is but just a refresher, your home equity is the positive value that you get when you subtract what you currently owe on your mortgage from the current market value of your home. If the number is a negative one, then you’re underwater and do not have equity.

The reason why it is important to understand what home equity is because while there are millions of homeowners who are enjoying an appreciating asset, there are also millions who are trapped underwater and this post isn’t really for them. Now, if you’ve got equity with your home, then you can consider tapping it with a home equity line of credit (HELOC). Basically, a HELOC is a revolving loan that’s funded by your home’s equity. It works as a second mortgage that is often connected to a credit card or a chequebook.

Below are 2 reasons you should consider to determine if a HELOC is right for you:

Smart Reason #1: Your Home Needs Major Repairs

When important and expensive systems fail, then getting a HELOC is great to fund your required repairs. It can also be handy for avoiding minor catastrophes by funding expensive preventive maintenance. Examples of this are bolstering a worn deck, replacing old plumbing, and repairing a cracked foundation. Things like these are not covered by home insurance so having a way to get these taken cared of is always welcome.

Smart Reason #2: Your Home Needs an Upgrade

Paying for home renovations and remodeling projects are smart ways of putting your HELOC to good use. Anything that can add value to your home by using its equity for funding improvements makes a lot of financial sense in the long run, more so if you know how to choose wise home upgrades. Calculated home upgrades can add a lot of value to your home, but you have to be truly cost-efficient in your upgrades to have a fair return of investment.

As for home upgrades, repainting a kitchen gets you more ROI than a complete kitchen overhaul. Probably the easiest and most rewarding home upgrade you can do is to replace your front door. It is such a small thing but can mean a few thousand dollars added to your home’s perceived value.

Need help getting a HELOC? Contact our team of Toronto mortgage brokers today! We’ll answer your questions and help you with the whole process. Remember, managing your HELOC starts with choosing one with a good interest rate and other payment terms. Make sure you are tapping into your home equity for the right reasons to avoid falling further into the debt trap.

6 Unbelievable Facts About Toronto’s Real Estate Market

If you’ve been following real estate news for the past few months, then you already know about the gravity-defying powers of the Toronto real estate market. Let us continue to wow you with 6 unbelievable facts about Toronto’s Real Estate Market below!

Skyrocketing Home Prices

Okay, this may not be new for you but do you know that the average price for a detached home in Toronto is now well above the $1.2 million mark? At an actual average price of $1.285 million, Toronto homes are now priced at 15.2% more than what they cost just a year ago.

As for the average home price (not just detached ones), it is now at $782,051 – a figure that is still likely to increase over the next few years because of high real estate demand, low supply, increasing interest from foreign buyers, and low bank interest rates.

Migration Boom

An estimate of about 2,800,000 new residents will call GTA their home in the next 25 years according to the Ontario Government. This means that by 2041, the region will be home to about 9.5 individuals, a 43% increase from the current population.

This Toronto migration boom is not just because of the influx of foreigners but is also because of the increasing number of Canadians who are now eyeing Toronto as their future home.

Real Estate Profitability

When it comes to gauging real estate profitability, cap rates are one of the major factors. It is the number that measures the return on investment if a landlord decides to rent out property. It is the annual return after all operating expenses such as maintenance and property taxes have been paid but before profit taxes are deducted. Isn’t it surprising that there isn’t much left over once the investor pays their profit taxes and mortgage interest?

20 Years to Pay

Numbeo says that a renter of an average property in Toronto’s downtown will take about 20.36 years to be able to pay the rented property’s market value. Considering that prices can get even higher outside the centre of the city, this is surprising indeed!

Numbeo is a website that measures prices of homes in various cities all over the world.

$25 Billion in Loans

Canada’s largest subprime mortgage lender, Home Capital Group Inc. has $25,222,523 worth of outstanding loans. About 90% of these loans are by people living around or in Toronto.

11 Homes per 1,000 Individuals

A recent report from the Royal Bank shared that for every 1,000 Toronto citizens, 11 housing units are being currently constructed. The report also shared that more than 4.5 per 1,000 people is considered high-risk zone.

At current time, the Toronto Real Estate Market is still hotter than ever, with prices still going up and showing no signs of slowing down in the near future.

Not sure whether you want to plunge into Toronto’s Marketplace? Stay tuned for more Toronto Real Estate news and updates! Better yet, contact us for any questions and don’t forget to register for Canada’s first ever International Property Investment Show!

Toronto Continues to Be One of the Growth Leaders in Canada This Year

What was merely predicted back in spring is coming to life for Toronto this summer. A few months ago, Canada’s Metropolitan Outlook’s Conference Board said that they are expecting that Toronto’s economy is going to expand by about 2.8% this year, making it Canada’s third fastest growing metropolitan economy. The same outlook shared that Hamilton will continue to outpace the national average as it did last year, maintaining a steady and solid economy.

The Conference Board of Canada’s Centre of Municipal Studies Associate Director Alan Arcand shared that Toronto’s overall economy growth in 2017 will be driven by healthy overall growth along with gains across the services-producing industries plus the continuing strong activity in non-residential construction and manufacturing. He added that the same can be said for Hamilton’s economy this year, although it is expected that Toronto will still surpass Hamilton. Hamilton’s growth is projected to be at 2.2% whilst Toronto’s is projected at 2.8%.

A Period of Growth for Toronto

Although the real GDP in Toronto is only expected to expand by 2.8% for 2017 (it grew 3.1% in 2016), the region continues to grow. Immigrants are still eyeing Toronto as a premium location, thereby fueling both domestic demand and population growth. This in turn drives activity in personal services, retail and wholesale trade, plus construction.

This year, construction in Toronto is expected to rise up 3.1%, mainly because of non-residential projects. Meanwhile, the services sector has a forecasted expansion of 2.8%. Positive outlooks are also forecasted for export-oriented industries such as tourism and manufacturing, largely because of a healthy U.S. economy and the lower Canadian dollar. As for the manufacturing industry in Toronto, the forecasted growth is also at 2.8%.

Job growth is expected to slow down this year despite of the healthy economic outlook. An estimated 31,000 new jobs for Toronto has been forecasted for 2017.

How About Neighbouring Hamilton?

Hamilton experienced a 2.1% growth in 2016 and that is not expected to grow much this year. The expected growth is at 2.2% despite both the non-residential construction and manufacturing sector boom expected this year. The manufacturing sector’s output is expected to rise up 2.4% for 2017 despite some companies deciding to move their operations to the U.S.A.

The non-residential construction projects such as the second phase of the James Street GO Station, the new multi-purpose building for McMaster University, and the Gerald Hatch Centre for Engineering Experiential Learning are expected to keep the construction sector working for most of the year. As for the services sector, the growth rate is still projected at 2.1% for the third year in a row.

Hamilton’s job creation is expected to slow down, from 3,600 in 2015 to about 2,800 new jobs in 2017.