Mortgages for Rental Properties

Several years ago, it was fairly easy to obtain a mortgage to purchase a rental property.

If the rent carried the mortgage, taxes and condo fee's if applicable your would probably get approved for up to 80% financing.

That's changed is recent years. Now lenders are looking for Debt Servicing.  example.
A client needs to be able to carry their own home and the rental property against there own income and 50% of the rental property income.  The Total debt cant exceed 42% of the total income.
This is difficult for many investors and pretty much impossible if you own 2 rental properties.

One solution is to use a non bank lender that has different risk models and uses different underwriting calculations. I have access to these lenders.  You might pay a slightly higher rate but don't forget its all tax deductible if the property is for investment.

Getting preapproved for rental purchases is often overlooked and yet this type of mortgage financing has been tightened up almost as much as self employed deals.
Get preapproved and try to avoid properties with heavy taxes and condo fee's

If you own a Rental property or plan to purchase one or two give me a call to see what you can borrow.

Exclusive Mortgage Offers

I just finished a conference call with our Head Office.

We discussed our Exclusive offer not available from other Banks or Mortgage Brokers.

Mortgage Centre Canada is now offering a 5 Year Term at 3.49% .

This rate is .20 below other Banks and Lenders.

This offer is for clean deals, owner occupied, good credit.

Bank Mortgage Approval Turnaround Time

I spoke with a former co-worker today who sells mortgage at a major bank.

He was quite upset that his approval centre is running about 4 days right now.
he is losing deals to other bankers and the Broker industry because of this service.

At the same bank, I get a maximum 2 day turnaround and most times even faster. Also I have 4 dedicated
underwriters to work with which gives me a familiarity and my old friend has no idea who his deal will go with at any time.

In the broker world we are treated like a preferred customer so that the Lender can win our business every time.

Another reason to work with an experienced Mortgage Broker

5 Year Mortgage Best Rate

Our company has been given access to a special 5 Year Fixed Mortgage Rate.

3.49%

This rate is well below the best rate offered by several major lenders.

5 year Variable is also available at 2.50%

Best Rates Best Service Best Advice

Self Employed Clients

Some Brokers and Bank reps say its more difficult to finance Self Employed  clients.

I would agree that there is more work involved but fundamentally nothing has changed.

Being prepared and understanding the Lenders Polices and paperwork will still get you up to 75% financing. You need your NOAs and T1 Generals right up front.  A 2 year average income will be used.

We also have the B Lenders who will do these deals for a higher rate to compensate for the perceived risk of no income proof.  You can get up to 80% financing here.

As always use an experienced Broker to get the best results

5 Year Rate Starts to Drop

As I predicted, the first of many Lenders has announced a small but promising reduction in its Fixed 5 year mortgage rate.

Merix has reduced its 5 year Genworth Insured mortgage to 3.64% from 3.69%

I predict because of the 5 year bond rate dropping to August levels rates may drop more in the near future.

In the meantime, the Variable at 2.60% and 2 year and 3 year mortgages at 2.99% and 3.19% are still attractive

Use an experienced Mortgage Broker and get the best advice, service and rates.

Mortgage Rates Soar

The 5 year term has gone up again this week reaching as high as 3.79%. This is an 90 point jump since July. The average mortgage payment in Burlington is up about $225.00 a month.
 What are the Alternatives?
Shop around, I still have some Lenders at 3.59%.

Another good Alternative is the Variable mortgage which has become popular again. Prime minus . 40 gives you a rate of 2.60%.
The risks are an increase in the Bank of Canada rate and you need to qualify at the Canadian qualifying rate of 5.49%.  I think its a good choice for qualifying clients.

Lastly choose a shorter term like a 2 Year at 2.99%

Overall, I think the rates will fall again as the Bond settles down and greed for market share amongst the lenders forces more competition.

5 Year Term not the only Choice

With the rapid increase in 5 Year fixed mortgage rates, other choices have become interesting to the consumer.
Since this weeks hike, 5 year terms run between 3.49% and 3.79% depending on the Lender.

The Variable mortgage seems to have come back into favour.  Bank Prime of 3.00% less a discount of .40 give the client a rate of 2.60% and no Bank of Canada hike in sight and the client can lock in at anytime.

7 Year terms at 3.89% and 4 year terms at 3.24% are interesting alternatives as well.

As always, I spend time with my clients explaining the different terms and the Pro and cons for each.

Mortgage Rates Rising Again

If you are a Realtor, get your clients pre approved as soon as possible. Rate are rising again this week.
Several of our non bank Lenders have advised us they are going up by 10 or 20 bps tonight at midnight. No word from the major banks.
Getting pre approved can save your clients a rate for up to 120 days.

Mortgage Rates Slowly Trickle Down

8 weeks ago we had 5 year fixed mortgages at 2.89% and 10 year fixed at 3.69%.
Because of volatility in the Bond Market 5 year rates shot up to 3.59% in a 2 week period. 10 year fixed sits at 3.99%

In the last week I have seen two of the large banks I deal with reduce the 5 year term to 3.39%. No change yet in the 10 year fixed and it remains at 3.99%
I think competition and a softening bond market will allow these fixed rates to ease back, perhaps another 10-20 bps in the next month.
In the meantime the Variable has popped its head up and  could be an attractive alternative at 2.6%

Remember as  Mortgage Broker, my job is to give good advice and provide value when a client asks for the lowest rate. A great product, robust features and a great rate is what I deliver to my clients.

Hiring Experienced Mortgage Agents

Our Brokerage has openings for Experienced Mortgage Agents who have least 2-3 years in the business. Similar Bank experience as a Mortgage rep would be suitable.

We offer access to Canada's top lenders. Status with the major A Lenders resulting in top tier commissions and dedicated Underwriters.
Top commission splits available to strong volume producers.
Work with a experienced Principal Broker who sells actively and understands the market
Mortgage Centre Canada is an Iconic brand in the Canadian Mortgage space.
Access to a Free CRM program
Access to Benefits
Access to Commercial lending
Access to Equipment Leasing products
Access to a White Label product
Mentoring and Coaching available

Contact Bob at beach.b@mortgagecentre.com

Toronto Flooding Shuts down some Lenders

Yesterday was a tough day in the Mortgage Business.  Several Lenders were forced to shut down there approval centers because of flooding and power outage issues.
They are getting back to normal today but some still have no power in their buildings.

An unrelated issue also hampered service when Filogix, the software delivery system most banks and brokers use went down for several hours yesterday.
I managed to get 3 new deals approved despite these issues.

Hopefully we will be back to normal later today.

Poor Credit and Difficult to prove Income Mortgages still get good rates

We call these non conforming or B deals.
Example, the bank wont approve you because you have a low Beaon score on your credit and some late payments. Or, you are self employed and don't show enough income.
My B Lenders offer rates for deals like this between 3.70% and 5.00% The average  rate for a 2 year term is about 4.50%. The higher rate offsets the risk the Lender feels they take on with income or credit challenges.

 Not bad when you consider anything under 5% would be thought of as a good rate in the last 10 years.

I usually place clients with these challenges in a 2 year mortgage. The hope is that during this 2 year term, the client will be able to repair their credit or get their 2 years NOAs from their business.
At that point we can move the deal back into an A deal at prime rates.

Bob

5 Year Fixed Mortgage 3.39%

While most banks have raised their 5 year fixed mortgage to 3.59 % or 3.69%,  I have a great lender who is still offering 3.39% and a Line of Credit available for Prime plus .50%

I also have 5 year Variable mortgages at Prime minus .40%  (  2.60%)

In most cases my services and 30 plus years of experience are free to my clients.

Bob

Mortgage Rates are up but Good Deals are still Available

In recent weeks the 5 year fixed mortgage rate has jumped from 2.89% to 3.59%.  This 70 Bps jump will increase the average Burlington mortgage payment by $175.
If this kind of increase continues many believe the healthy market we are seeing will dry up.

I see many clients considering the 4 year term which is still available under 3%. The challenge with choosing this term is most buyers will need to qualify for the mortgage under the Canada Qualifying rate of 5.14%.

Another choice that is regaining popularity is the 5 year Variable mortgage. At Prime minus 40 or 2.60% its looking like a bargain. Like the 4 year term, clients need to qualify at 5.14% .

I think the 5 year rate will fall back as the bond market settles and competition for market share kicks in with the Lenders and the pie shrinks.

Until then, consider these other 2 options and call me for my advice!

MORTGAGE RATES CONTINUE TO CLIMB

How high will they go? It depends on the Bond market and the 5 year Canadian bond yield.

The best 5 year has gone from 2.89% to 3.39% in only 3 weeks.
This is happending because of the turmoil in the US surrounding the government possibly cutting the
economic stimulous program. The bond prices have gone up as a result and Mortgages are funded by bonds.

This happened 3 years ago and rates went from the low 3.29% range to as high as 4.89%.
They did trickle back down over a 6 month period.
My advice is to work through a broker and get a rate set through pre approval to hold todays current rates.This will stop the bleading.

I think these rates a nearing a peak and clients serious about buying a home or refinancing should be prepared to shop hard or use a broker. There are still some great deals out there. If rates drop in the next 90-120 days, the client will get the lower rate provided they haven't closed their deal.

Another Rate Hike

Hold onto your hats, rates are rising again tonight at midnight.
Several Banks and other mortgage lenders have anounced another increase in the 5 year fixed term.
Most companies will charge 3.19% for a 5 year mortgage tomorrow.

Thats why I preach pre approval all the time.
2 weeks ago we had 5 year money at several lenders prices at 2.89% and a rate guaranteed for 120 days.

On an average mortgage in Burlington, this increase of 30 bps can cost up to $75.00 a month.

Hopefulyl the Bond market will settle down and allow competition amongst the banks to draw the rate below 3% again.

Rental Property Financing

Five years ago, it wasn't difficult to get 80% financing for a Rental Property. These days you really need the help of an expert like me to maneuver  through the policies and models banks use.

My best advice is to be prepared to put 25% down and try to find properties that have at least a 1.10% Debt Service Coverage.

Confused? Don't worry its not that difficult to explain once we talk. Thats my job

Some Lenders surcharge the rate as well. 2.89% 5 year can quickly climb to 3.34% if you dont find the right Lender.

My preferred Lender does rentals at 2.89% and 75% financing for good applications.

As always, get pre approved before you offer and remember what I always say.
Its never been a more important time to have a Mortgage Broker relationship.

Banks Tightening Up

I've said it before and will say it again. lending policies are tightening up at the major banks.

This month I have processed several mortgages for self employed clients.

The banks have asked for NOAs for several years but now they are asking for T1 Generals on most deals.  As a Broker, I have experience handling these deals and I make sure up front to ask for the correct documents to be available anticipating the Lenders request.

The good news is that we are having very little difficulty getting these deals done once the paperwork is in process.

What next, hang tight to find out and remember what I always say.  Its never been a more important time to have a Mortgage Broker relationship.

Mortgage Rates on the Rise?????

Several of our Lenders announced increases in the 5 Year Fixed term last week.

Increases have taken the 5 year from 2.89% to as high as 3.14%

Reasons given ranged from cost of funds to simply "we are too busy!"

Most of the Lenders that I like to use are still hungry and competing for as much market share as they can grab.
So, the good news is I have several Lenders at 2.84%-2.89% 5 year terms. at 3.69% for 10 year term.

However, things change quickly, so get Pre Approved and take advantage of my 120 day rate hold!

Its never been more important to have a Mortgage Broker relationship!

5 Year vs 10 Year Mortgage Terms

 Decisions, decisions.            

Choosing the 5 Year term at 2.89% is very tempting but I am telling my clients to take a good look at the 10 year term available at 3.69%.
My concern is what the rates will be in 5 years. A quick survey of my peers and lenders comes up with 4.75% to 5% as a probable rate.
A 5 year 2.89% 25 year am. mortgage carries for $1286. per month.
A 10 year 3.69% mortgage carries for $1401. per month. $115. more per month.

If you take the 5 year and come up for renewal with a balance of $234.557 and renew for another 5 years at our estimated rate of 5%,  you will pay $1541 a month. Choosing this scenario you will pay $90,205 in interest vs $86,859. in interest taking a 10 year term. Even the balance at the end of a 10 year term is $1796. less taking the 10 year term. These results will be even more amplified if you take accelerated Biweekly payments.
With the 10 year term you get rate security and savings.

Federal Government Wants Mortgage Rates to Rise

Today's Star says the Federal Budget announced in March contains a suggestion that CMHC may be limited in the future when it comes to insuring conventional mortgages. This will effect some Lenders fundings and they will have a difficult time doing their normal mortgage backed securities routine. As a result, their cost of funds will likely increase forcing up mortgage rates..
A few weeks ago, Jim Flaherty was accused of influencing lenders mortgage pricing by calling Manulife and Bank of Montreal suggesting they  cancel their special on the 5 year Mortgage.

All this because he thinks 2.89% is influencing buyers and mortgage seekers. Of course it is. So what?
In my Mortgage Broker Practice we see intelligent well qualified clients using these rates to buy a first home or a move up home. Its the best way to build wealth and avoid wasted rent payments.

The government should leave Canada's well run Banks and Mortgage Companies alone when it comes to pricing their products. The banks are highly profitable and don't mind helping consumers at these low rates.

Not all Mortgage Agents are equaly qualified

If you have chosen to work with a licenced Mortgage Agent or Broker, you should ask a few questions.
How long have you been in the mortgage business? And if only a few years, what did you do before becoming an agent? Were you in the Financial Services area?
How much business do you do in a year?
Do you do this full time?
What are your qualifications?

Here is why you need to know these answers.
It takes one week in a classroom or 6 weeks on line plus an exam to
qualify to apply for a Mortgage Agent license.
Other than a satisfactory criminal background check and a decent credit bureau
someone with any career background can become an agent and process mortgages
if a Principal Broker thinks they are suitable and will hire them.
Here is the issue. Getting a licence to sell and arrange mortgages does not mean the  agent knows very much about the business. They can be working part time in a completely different field and then the next month be a licenced mortgage agent.
Here is what a client needs to ask. If an agent is new, who is supporting them and reviewing their business?. Does this new agent have a Broker available to answer questions and provide advice?
The mortgage business is getting more complicated every year. A person must be full time and active to keep up on the new government policies and changes.
My advice is select an Agent or Broker with years of experience and  knows the business.

Ask the question. How Long? How much and what qualifies you to take care of me?


Bob Beach....BTW here are my answers. Over 30 years, 5000 mortgages arranged and still helping clients every day.

Two New Lenders Signed

This week I have added 2 new Lenders to our approved list.
What does this mean to our clients.  Both of these Lenders have an important Niche that Banks do not have!

Lender #1 will mortgage rental properties up to 80% financing and up to 5 Units.
This blows the Banks out of the water and at prime rates and np Brokerage Fee's

Lender #2 will approve mortgages for people who do not qualify for the required mortgage at this time. For example, a client works 20 hours a week but plans to go full time in the near future. This Lender will use the potential income. The rates are slightly higher than A lender rates but not obsene.

There has never been a more important time to have Mortgage Broker relationship.

Better than Bank Mortgage Rates

This past week, I arranged 3 mortgages for Burlington clients that had been to their own bank and then contacted me.
I each case I was able to arrange a mortgage suited to their needs and at lower rates than their own bank had quoted.
One client received a rate 20 bps below their banks best offer saving them $3000. in interest over the 5 year term.
It's also interesting that they were not offered alternatives such as a 3 year term or a 10 year term.
As I always say, its never been a more important time to have a Mortgage Broker relationship.

10 Year Mortgage Rate Special 3.79%

One of my preferred Lenders has reduced their 10 year fixed term mortgage to 3.79%.

I feel this term is good for many clients. Its portable, its assumable and you want have to think about a mortgage renewal 5 years from now.
 This mortgage comes with a free 12 month Home Warranty and amazing on line access to make your own changed the mortgage.
The payment difference between a 5 year mortgage and the 10 year make this a compelling product.

10 year at 3.79%. call me for details and special conditions

New A Lender

We had a visit from an old BDO friend this week who has joined an Lender just entering the A market.

The A market is the mortgage market occuppied by mostly banks.

This new Lender has some pretty impressive people in charge and I think they are going to do well in the market with a strong focus on common sense underwriting and serve.

 Follow me for more information.

New Line of Credit

Mortgage Centre Canada Brokers are now able to offer their clients an unsecured Line of Credit through CIBC. This is an exclusie offer for our clients and can be used for Deposits on Offers, renovations, RRSP contributions or any useful purpose.

Limits are approved up to $50,000 and rates are as low as Prime plus 2.75%

2013 Mortgage Rate Predictions

Some expect fixed mortgage rates to rise this year as the  Federal Government tries to keep a lid
on the housing market.  The problem with this belief is the Federal Government does not control the bond market or bank treasury departments. That's where the money comes from.

I think we are going to see a fairly flat year in fixed pricing. Fixed Rates likely won't go down below the record low rates (2.99% for 5 years)we are currently enjoying but an increase of .50% would not be devastating.

Greed  amongst the lenders for market share and a large piece of the smaller pie will keep rates priced sharply and competitive in 2013.
Tip of the day.   Get a Mortgage Broker to shop the Market for you and get Pre approved for a purchase or refinance well in advance to lock these great rates down.