Did you read the fine print in your mortgage? This client didn’t

We recently completed a mortgage for client that was refinancing his property to get a larger mortgage and use the additional funds for investment purposes.  The bank that he was looking to pay out had a clause in their mortgage that basically read “you cannot payout your mortgage unless the property has been sold”.  This means that the bank would not allow the client to payout the mortgage unless he produced a sale agreement showing that someone unrelated to him was purchasing the property.  Needless to say the client was extremely upset and couldn’t believe this clause was not explained to him when he took the mortgage.

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CASE STUDY: Construction complete on an infill

A small home builder approached us to replace the financing that he used to construct two infill properties that are now listed for sale. The construction mortgages were interest only
payments and open for repayment at anytime without penalty. The properties are going to be listed for sale and given the amount of equity the builder has in both properties we arranged no income qualifying 1 year open mortgages that will allow him to sell the properties and repay the replacement mortgages with no penalty. The interest rates on the replacement mortgages are very competitive and the fees were less than 1.0%.

Construction financing has been hard to find over the past several years however recently lenders are coming forward to offer construction financing to strong borrower who can demonstrate real equity and personal net worth. Once construction is completed, mortgages can now be put in place with a growing list of lenders who are comfortable lending to a certain percentage of value and loan size.

If you have a construction mortgage that you would like us to review, please email dylan@bridgecap.ca or visit www.bridgecap.ca/dylan