Rental Property Mortgage

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Rental Property Mortgage

Purchasing or refinancing a rental property can be a lot more complicated when it comes to getting a rental property mortgage. Another industry description of it is investment property mortgage; where investment property could be a residential rental property, or none residential property.

In Canada the Chartered Banks and many National institutional lenders offer the same discounted rates and features as regular owner occupied mortgages for rental property mortgages up to 4 units. But once you go passed the 4 unit cap then the mortgage becomes categorized as a commercial transaction and it is underwritten and viewed as such, including more strenuous ‘stress’ tests and mortgage conditions and policies.

Rental property mortgage or investment property mortgages

Are still available through the Chartered Banks but they can be very difficult to be approved by them, whereas other institutional lenders and private lenders can be more flexible and forgiving on certain personal and corporate borrower realities that the banks won’t be flexible on.

Many times than not, when a borrower cannot get their rental property mortgage application approved by the Chartered Banks they approach mortgage brokers, or mortgage agents for help. Mortgage Brokers or Mortgage Agents have specialized training and knowledge of the mortgage industry and can help with finding the suitable lender who would be the right fit for their client’s rental property mortgage.

A rental property mortgage would generally be called and categorized by some as a commercial mortgage. With these types of mortgages the time needed to get the mortgage approved and closed is much longer than traditional residential owner occupied mortgages. On average it can take one month or longer to complete a rental property mortgage transaction.

There are different sub categories or types of rental property mortgages and we will go through each of them in terms of the borrowing features they have:

Multi-Unit up to 2 units

One of the units must be occupied by the owner

duplex rental property mortgage

Can borrow up to 95% of the appraised value

Most of the time the mortgage is portable to another property

If providing less than 20% down payment the rental property mortgage must be insured through Canada Mortgage Housing Corporation CMHC

Although CMHC allows flexibility of where the down payment comes from, most lenders do not, and require that the borrower of the mortgage has the down payment in his or her bank accounts for at least three months (two months if not insured)

Maximum amortization is 25 years

All employment and credit history / strength requirements apply

Have mortgage questions about rental property mortgages or investment properties in general? Reach out to us. We can help.

Multi-Unit 3-4 units

One of the units must be occupied by the owner

Can borrow up to 90% of the appraised value

Most of the time the mortgage is portable to another property

If providing less than 20% down payment the rental property mortgage must be insured through Canada Mortgage Housing Corporation CMHC

Although CMHC allows flexibility of where the down payment comes from, most lenders do not, and require that the borrower of the mortgage has the down payment in his or her bank accounts for at least three months (two months if not insured)

Maximum amortization is 25 years

All employment and credit history / strength requirements apply

If you are considering purchasing this type of property or refinancing an existing one please contact us.

Multi-Unit 5 units and up

With any properties of 5 units or higher Chartered Banks refer the application to their commercial departments and Mortgage Brokers or Mortgage Agents would submit their applications to specialized commercial lenders, and some who have relationships with local commercial bank branches in the locality of the subject property may also submit the application to them.

rental property mortgage

Chartered Banks work with CMHC when the clients have between 15% and up to but not including 20% down payment. Some of the National lenders also work with CMHC and may accept applications with less than 20% up to 15%.

With CMHC insured rental property mortgages a minimum of 15% down payment is required when purchasing or refinancing.

Most commercial lenders for rental property mortgages work with CMHC even if the client provides 20% down payment. This is to protect themselves in the event of a default.

CMHC also charges a premium fee for each unit in the property. Detailed calculation of the premiums are done by CMHC and provided to the lender, which is then forwarded to the Mortgage Broker or Agent to share with the client. The fee schedule could also be found on CMHC’s web site

To mitigate risk and to avoid CMHC insurance lenders will consider a lower mortgage amount and higher down payment by the borrower, normally anywhere between 60% to 70% of the appraised value.

We are here to help and accompany you through the complicated mortgage application process of multi-unit 5+ properties. Contact us and let’s work together.

 

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Mortgage Renewal

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It’s Mortgage Renewal time

Is your mortgage coming up for renewal within the next several months? Don’t settle for less. If you don’t look around you’ll never know if your existing lender is offering you the best mortgage renewal package. This is where we come in. As a mortgage brokerage we shop around on behalf of our clients to make sure they get the best overall suited mortgage product for their mortgage renewal needs. And never compare yourself with another person’s mortgage as everyone’s personal situation could be different, which in turn will require customized approaches towards getting the right mortgage at mortgage renewal time.

mortgage renewal

 

 

 

 

 

 

 

 

 

Different Reasons for mortgage renewals

So you’ve been thinking lately about what to do with your mortgage. Contact us and lets think about it together. You’ve also heard that the lower your mortgage balance is the higher your home equity would be and the more money you can access from your home. That is true, as your mortgage balance decreases the percentage of the equity you can access from your home increases.

Here are some reasons why you should contact us:

  • You want to do a mortgage renewal for a better rate than what your current lender has offering you
  • You want to do a mortgage renewal to consolidate your debts and pay a lower interest rate on the new larger mortgage amount
  • You want to do a mortgage renewal with a new lender to add a home equity line of credit to your house
  • You want to do a mortgage renewal so you can change lenders to a new one because you’ve heard good things about them and like their offerings, or have other accounts with the new lender
  • You have other personal doing a mortgage renewal with a new lender

Perks to switch to a new lender

The lenders have internal perks, unadvertised for the general public for switching your mortgage that only the mortgage broker community knows about. For example, if we switch your mortgage the new lender could cover the legal, appraisal, and the discharge fees. Therefore not only are you benefiting with getting expert unbiased professional advice for your renewal from Trusterra Mortgage, you are also getting competitive mortgage rates, and are switching your mortgage at minimal cost to you.

 

If you recently got a new mortgage or renewed your existing one, you can always give us your details and let us know when to contact you for when the time comes to renew again by using our free Mortgage Renewal Reminder Service.

Ready to start or maybe you have some questions to ask first? Contact us and we’d be happy to help you.

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Mortgage Panic

Mortgage Panic

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Having a Mortgage Panic incident?

mortgage panic

Well, don’t panic. There is a light at the end of the tunnel. As home prices in major cities across Canada increase they become less and less attainable by the average Canadian. Naturally this is a cause of concern, or shall we say a Mortgage Panic, as many first time home buyers could be pushed out of the market.

Sometimes a mortgage panic is justifiable and sometimes it isn’t. We’re here to help you figure out whether your mortgage panic attacks are rightly so or not. As well, we should keep in mind that maybe its just not your time to buy your first home, because if you do it could put you in a real mortgage panic as the mortgage payments start to pile up and put stress on the other parts of your financial responsibilities.

That’s why we always advise the consumer to first consult with a mortgage professional and have them analyze your financial health and strength. You can call it a personal financial stress test.

A common result of a mortgage panic is confusion

Confusion as to what steps to take first, then second and so on. When in a mortgage panic mode you can inadvertently create unduly high stress levels and further confusion as to what to do with the whole home buying process. Many times when we consult with our clients it becomes clear for them where they stand in the affordability chart and it provides them with a sound level of knowledge to make an informed decision as to whether to buy their first home or to wait a little longer.

If you are feeling the mortgage panic and the confusion coming we advise you to contact us so that we can consult with you, and bring things down to perspective, which will in turn calm you down allowing you to better assess your situation and make the right decisions.

At the end

You find out that there is in fact a light at the end of the tunnel and your mortgage panic will disappear allowing you to start working towards your home ownership goals and dreams. After the consultation and analysis of your financial health and reality we will advise you on what steps to take next. For example, it may be that you don’t have enough down payment, and all you have to do is to spend the next year saving more money. Or it may be that your credit score is poor. The goal here would be to accompany you and guide you on what to do to improve the health of your credit report and its score, known as the beacon score. It could even be a combination of several issues that need attention and nourishment.

So don’t be shy and reach out to us. We’re here to help!

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Refer Friends

Refer Friends

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Refer friends, Refer family, Refer colleagues

refer a friend

Let’s cut to the chase,

WE WANT YOUR REFERRAL! There, we said it. Phewww, glad that’s off our shoulder. Refer friends, Refer family, Refer colleagues. Whether its for business or any other form of transaction, word of mouth referrals are a time tested way of getting quality leads for whatever you are doing; providing a service, selling something, or anything else that requires people to be part of your venture.

At Trusterra Mortgage,

We value referrals and appreciate it greatly when you Refer friends, Refer family, Refer colleagues, because it show’s that you put great trust and value in our company and the services we provide to the consumer. Our company is based on ethical and moral values such as honesty, integrity, truthfulness, and providing a positive customer service experience for all our clients; just to name a few. One of the nicest compliment’s we could receive would be when you Refer friends, Refer family, Refer colleagues.

Home Sweet Home,

For the majority of the consumer purchasing real estate – home sweet home – will be the largest investment they’ll ever make, and we feel it’s that much more important for them to work with credible, well mannered, and trustworthy people and company. When you Refer friends, Refer family, Refer colleagues to us we know that you’re putting your neck out on the line and vouching for us. We wouldn’t want to disappoint you or your friends. We will work with our clients from day one, and all the way to the last day when their mortgage closes, looking after them and making sure that the right mortgage solutions and decisions are made that best suit their financial reality’s and needs. Although once the mortgage closes it is out of our hands, but we still, after the closing, continue to assist all and in any way we can our clients when they have mortgage questions.

This is the Call To Action part

This is the part of the blog that we ask kindly for your trust in us and to Contact Us and Refer friends, Refer family, Refer colleagues. You won’t regret it, and we’ll humbly appreciate it and ever be thankful.

refer friends

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Resources for Home Buyers and Sellers

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Resources for Home Buyers and Sellers

The Canadian Real Estate Association of Canada (CREA), one of Canada’s largest single-industry trade Associations has recently updated and relaunched a web site full of resources for home buyers and sellers.

The CREA resources for home buyers and sellers site is catered for families, individuals, and investors who are looking to buy or sell real estate in Canada. The resources for home buyers and sellers site is full of helpful, educational, informative, and fun tools for everyone of all real estate investment backgrounds.

Resources for Home Buyers and Sellers

To wet your appetite here are some of things you will find on the the CREA resources for home buyers and sellers site:

1.) Assess Financial Readiness

Assess your present household budget and your annual income to determine if you are eligible for a mortgage and how much you can comfortably afford.

2.) Consider Mortgage Options

A mortgage is a loan, generally used to buy a property. How much you pay depends on how much you borrow (the principal), the loan’s interest rate, and how long you take to pay it back (the amortization period).

3.) Mortgage Default Insurance

When you buy a home with less than a 20% down payment, the mortgage needs to be insured against default. This type of insurance protects the mortgage lender in case you are not able to make your mortgage payments. It does not protect you.

4.) Research Government Programs

The federal government has assistance programs to help homebuyers. Research government program requirements to see if you are eligible.

5.) Finding a Home

Finding your perfect home can be a long process. Your REALTOR® will help identify the right type of home for you and continually research new listings in neighbourhoods that meet your needs.

6.) Making an Offer

After seeing many different homes, you have finally found one worthy of an offer! What are the next steps?

7.) Closing and Related Costs

Closing costs are the legal, administrative and disbursement fees associated with buying a home. Understanding these fees will help you budget more accurately. Remember these are additional costs over and above the price of the home.

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TREB Market Outlook June 2014

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TREB Market Outlook June 2014

Watch the TREB Market Outlook June 2014 video produced by the Toronto Real Estate Board.
Providing market analysis and report on home ownership and sales, including mortgage rates and affordability of home ownership.

 

Video Highlights

Sales activity for GTA South Simcoe and Orangeville

Home ownership affordability

Mortgage rates and the average household income

Toronto MLS new listings overview

Home price growth evaluation

2014 average price outlook

 

To learn more about the Toronto Real Estate Board and to take advantage of their diverse resources and tools visit their web site by clicking ‘TREB‘.

TREB Market Outlook June 2014

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