The Right Mortgage For Every Stage.

That’s why professional advice is recommended when making one of the most important financial decisions of your lifetime.

Work with a mortgage broker to build your home buying budget that includes considerations of your lifestyle, closing costs, and home ownership costs beyond the monthly mortgage payment.

Having a realistic budget to start will bring you confidence, knowing that you are not overextending yourself.

As for the all-important down payment, there are a few options to consider for first-time homebuyers who may have smaller amounts to start:

1. The Home Buyers’ Plan (HBP) – first-time homebuyers can withdraw individually $35,000 (or $70,000 as a couple) from their RRSPs, provided they adhere to the repayment plan.
2. Gifted down payment from a parent or blood relative can be a source of funds as long as the homebuyer receives in writing that they are not required to pay the money back at any time.
3. Start off small – the dream house may be priced too high, so a starter home might be the right option for a first-time homebuyer. A smaller home or maybe a house just outside of the expensive area will help get a foot in the door. The homebuyer can take advantage of the low interest rates to pay off the home quicker and use the equity from the first home to buy the dream home later.

Mortgage brokers can also provide strategies that will help you pay the mortgage off faster and shave thousands off interest costs. For instance, your broker may advise you to set your payments now at rates that could be expected at your renewal date so you pay down more principal and don’t experience payment shock should rates be higher at renewal.

There’s so much to consider. Professional advice can get you into the market to start your wealth building with smart debt and can save you thousands over the course of your mortgage.

The importance of a secondary home is that it could be purchased with as little as 5% down payment (as opposed to investment properties which require 20%). Furthermore, the rates on secondary properties are the same as on principal residences and as such typically lower than investment properties.

Depending on the initial down payment, rental demand, location and the specifics of the property itself, investment properties may not be self-sustaining in its initial investment years, especially in the areas such as the GTA. However, with time, the balance will eventually shift towards a positive cash flow. It’s important not to forget about the potential appreciation of the property itself as well as the fact that someone else is paying your mortgage down.

Investment properties are also a great source of retirement funds. If purchased early enough in one’s lifecycle, chances are the property will be paid off prior to one’s retirement, providing a clear cash flow to the investor.

Barriers to entry into the investment world are not high – indeed, they are very affordable to average Canadians. With a minimum down payment of 20%, you can become a proud owner of an investment property.

Ask us how you can refinance your principal residence to come up with the down payment towards your first investment property. Ask us how you can structure your finances so that you can take advantage of the Canadian taxation system before investing in a real estate.

Solutions, however, exist.

If you are self employed for a minimum of 2 years and have as little as 10% down payment but are unable to provide traditional income verification, you may qualify under a Business for Self (ALT A) Program through an insurer such as Genworth Canada.

Alternatively, you can explore options through one of the alternate lenders commonly known as “B Lenders”. Sure, their interest rates and fees are somewhat more expensive than traditional lenders but could still be less than what you would pay in taxes by increasing your taxable income. All we have to do is explore your options and choose the one that makes most financial sense.

If the past or present issue is minor and caused by your lack of better knowledge, it is often possible to build a strong business case with the lender and grant an exception to your application. This will ensure you get your mortgage approved by a major lender, with the minimum down payment, at most competitive rates.

Where the credit issue is still beyond the appetite of major lenders and/or mortgage insurance companies, we always have the option of taking your case to a smaller lender, such as credit union, and structure your application as a combination of first and second mortgages. This way, you will still be able to get relatively competitive interest rates with relatively small down payment.

We also have access to non-traditional lenders who offer financing solutions to individuals with larger credit issues. Although these lenders have higher rates, very often it makes complete financial sense to accept their mortgage terms in order to move into your home earlier versus later. Remember, this is only a temporary solution that will bridge you while working on repairing your credit. The idea is to make you a homeowner sooner, but most importantly to move your business to a major lender as soon as possible.

Cottages and vacation properties are becoming ever more popular and demanding, with aging baby boomer population being flush with capital. On another hand, many young individuals who cannot afford growing prices in cities such as Toronto and vicinity opt out for these types of properties.

And with technical advances such as internet and satellite telephone services, these properties are more increasingly used as office away from office for those in remote working environments, or retirement homes in other cases.

Not to mention that these properties in most cases represent a solid financial investment.

You find the property. Let’s assume the purchase price is $700K and you have 20% down payment. Your standard mortgage would be $560K, or 80% of the value. You then call a couple of contractors and ask them for written quotes on how much it will cost to put a new kitchen in. Let’s assume the cost is $40K. Your mortgage broker then submits the application to the bank along with the quotes. The bank approves the mortgage based on the improved value of the property, i.e. $740K. If you maintain the 20% downpayment, your new mortgage becomes $592K. You’ve just added 80% of your total renovations to your mortgage.

You should be aware that the renovation funds will be held by your lawyer until all renovations have been completed. The bank will ask for an inspection to ensure everything that was provided in the quote was completed. For this reason, you have to ensure that you have access to some money to start your renos, or find a contractor who can wait for the payment after the completion.

While most of lenders limit the program to 10% of the purchase price, up to a maximum of $40K, don’t worry – there are lenders that will make an exception where it makes sense (like in the GTA, right?).

Types of renovations can include bathrooms, basements, flooring – pretty much all common sense cosmetic and/or structural improvements.

And, no – you don’t have to use the contractors who originally quoted you to do your work. It could be the proud uncle who was in Cuba at the time your quotes were due. Or you can do it yourself. But give the original contractors a chance, it’s fair enough.

To qualify, you need to be employed full-time for at least 3 months, demonstrate a strong credit profile through international credit report or alternate sources (such as rental payment history or bill payment while in Canada) and you need to prove that you are new to Canada, whether as new permanent resident, or with a valid work permit.

Since “New to Canada” programs slightly vary across insurance companies for insured mortgages and across lenders for conventional mortgages, it is important that you talk to a mortgage broker and establish where your unique situation fits.

Mortgage brokers can streamline the mortgage process for new immigrants, from counseling on credit in Canada, to obtaining credit references from foreign banks, to confirming foreign income. A broker can work with new immigrant clients to present their financial history to the satisfaction of the lender.

First option is to contact the lender located in the country where the subject property is located. These lenders usually offer products for non-residents who are looking to purchase properties in their country. Their standard requirements would typically include a down payment in the neighbourhood of 35%, as well as some type of income confirmation, to ensure you can carry your mortgage obligations. Certain Canadian banks have affiliations in other countries, which you may be interested in exploring.

Your second option is to use the equity in your Canadian home. If you have substantial equity to purchase a property in another country, that is excellent. If not, hopefully you have at least the 35% that is needed for the down payment, and then you can approach the lender in the subject country to finance the difference.

Before purchasing a property outside of Canada, however, we advise you to consult your accountant about important tax implications that this purchase may create.

Construction mortgage is a typical example where private mortgage makes complete financial sense. Traditional construction mortgage programs offered by the banks are typically very restrictive, require proof of income and almost always demand that upon completion of your project you remain with them for at least one full year. So, if you are a contractor who makes good income but declares less, if you have plans to sell the property upon its completion – the low nominal interest rate offered by the bank will be offset by large penalties, and that is if you can even qualify for the program. Using private funds to finance a construction project makes complete sense, provided the time-frame is not too long, there are no hidden exit fees and set-up fees are fair.

“Flipping” a property is another scenario where you should use private funds to finance your project. While the banks can offer low fees, you have to take into consideration high penalties for breaking the mortgage early. If you plan to finalize your project within a few months, compare all offers carefully and decide the one that makes more financial sense.

Small private mortgages, even over a longer term, can also make financial sense. Let’s assume that you have collected some debt over time, for whatever reason. This could have impacted the quality of your credit score to the point that the bank will not be interested in refinancing this debt by adding it to your existing mortgage. Getting a small private mortgage for a period of a year or two could help you consolidate your debt, rebuild your credit history and prepare you to go back to a traditional lender.