The best type of brokerage service

I once heard it said that any type of brokerage business is a result of an inefficiency in a marketplace.  Customers will use brokers to get a job done that they either do not want to do themselves or don’t know how to do.  As a mortgage broker, we earn our value by Continue reading “The best type of brokerage service”

Check your own credit – why?

Getting a mortgage broker, banker or mortgage specialist to check your credit score can lower it. Get any of them to check it within days of each other and watch your score drop like a rock. Most people don’t know that the more often your credit is checked the lower your score will be. This is because the scoring system assumes that you are being declined every time you get your credit checked when in reality you could simply be looking for a good deal. If your credit score falls too far then you may find yourself paying higher interest rates for your financing or you may not have any financing available to you. Continue reading “Check your own credit – why?”

Residential Mortgage Rules Change – finally!

Recently the Government of Canada announced changes to the mortgage lending rules including:

– Maximum amortization for a mortgage is 30 years (down from 40 and 35)
– Refinancing a mortgage is limited to 85% of the property value (down from 90% and 95%)
– Lines of credit will no longer be insured by CMHC (this means that a bank will still provide a line of credit that will be limited to a maximum of 80% of the value of a property) Continue reading “Residential Mortgage Rules Change – finally!”

2011 could be promising

If the past 6 months are any indication of the coming year it could be a good 2011. In our daily work we are busy helping people and businesses get the financing they want so they can do more. Over the past few months there seems to be some confidence in the market as it relates to stability. While no one has shared with us that they are expecting and significant increases in the coming year the consistent message seems to be that if 2010 was ok that 2011 will be the same if not slightly better. Continue reading “2011 could be promising”

How do residential mortgage brokers get paid?

We get asked this question a lot so I thought it would be a good idea to share the answer with everyone. For residential mortgages typically brokers are paid by banks and lenders. The longer the term you choose the more money a broker earns. A one year mortgage might pay a broker up to 0.50% of the financing amount whereas a five year mortgage might pay a broker as much as 1.10% of the financing amount. Not every bank pays the same amount and some pay more than others. As well, most banks and lenders will allow a mortgage broker to use a portion of their commission in exchange for providing a client with a lower rate (called a buy-down). Some banks allow brokers to earn points towards vacations, office equipment and other non-cash rewards. As a borrower it is important to know how your mortgage broker is compensated to ensure that you are getting the mortgage that best matches your needs. It is a very competitive marketplace with many brokers competing for your business so don’t be scared to ask how your broker is getting paid.

On a side note, private mortgages do not follow the same compensation formula and can vary widely from broker to broker. For private mortgages the lender will charge a fee and a broker will either charge a separate fee or share in the lender fee. These fees can be as low as 1.0% of the financing amount and have no limit.

If you have questions about your mortgage or how your broker is being compensated, please email dylan@bridgecap.ca or visit www.bridgecap.ca/dylan

5 questions every bank asks

Whether you are looking to borrow money for a residential mortgage, a commercial mortgage or business loan you should be aware of the 5 most important points a bank or lender will look for in determining your approval.

1. Character – Do you make your payments on time?
2. Capacity – Do you have money to make the payments?
3. Capital – Do you have financial stability and net worth?
4. Collateral – Do you have an asset that can be used to as security for the loan?
5. Conditions – Other items related to your request like location, property type, etc.

Your answers affect your interest rate, the amount a bank will lend you and how much (if any) they will charge you as a fee. A mortgage broker can help you put together your 5 answers and can also explain them to a bank on your behalf. If you want to know how you strong your 5 answers are, please email us at dylan@bridgecap.ca or visit www.bridgecap.ca/dylan

Why does my credit score matter?

There is a lot of advertising and information available about your personal credit score but most people are not aware of the impact their credit score can have on their borrowing. The lowest mortgage rates are available to individuals with high credit scores and if you do not have a high score you may end up having to pay a higher interest rate for your mortgage. There are many private lenders in the marketplace that will charge as much as 5-10% more than a bank for lending money to someone who does not have a high credit score. Banks have specific products available for individuals that have high scores and also change their lending criteria for these individuals. A borrower with a 700+ credit score could borrow more money than a borrower with a score of 699 or less. Your credit score is very important and if you would like more information about how it could impact you – email me at dylan@bridgecap.ca or visit www.bridgecap.ca/dylan.

Owner Occupied vs. Investment Properties

Often times our clients will ask about the kinds of transactions that banks are interested in funding. For the past year banks and lenders have been very competitive to fund mortgages for owner occupied properties over investment properties. An Owner Occupied property refers to real estate that is purchased by the same individual or business that intends on occupying it. Locally, we have many businesses that have leases expiring and have considered changing their monthly lease payment into a mortgage payment. There are many properties to choose from and in a lot of cases a business that purchases a property can save money compared to leasing the same type and size of property. For this reason, banks and lenders are interested in working with these types of transactions as they present opportunities to lend money to solid businesses that have demonstrated cash flow and financial stability. Compared to Investment Properties, which would be real estate that is purchased for investment purposes and not occupancy purposes, banks and lenders are still interested in seeing the transaction but we have experienced slower turn around times and a lower level of interest compared to Owner Occupied properties. If you are considering turning your lease payment into a mortgage payment, send me an email at dylan@bridgecap.ca or visit www.bridgecap.ca/dylan and I would be happy to run some math.