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.
If you own a home or have ever purchased a home but did not have more than 20% to use as a down payment chances are that your mortgage needed to be insured by CMHC or another company. Mortgage insurance helps banks and lenders in the event that you stop making mortgage payments and your mortgage goes into default. The insurance premium charged by CMHC and others is passed on to you the borrower and can add up to 2.90% to your mortgage amount. The largest insurance provider in Canada is actually the Canadian government through the Canadian Mortgage and Housing Corporation. Yes you read that correctly. The government charges banks insurance premiums that get passed to you so that if you default on your mortgage the government will ensure the bank doesn’t suffer a total loss.
Talk to any banker, lender, mortgage specialist or broker about paperwork and one of their biggest frustrations would be “when clients send me their information in bits and pieces over dozens of emails and faxes”. It’s amazing that everyone needs access to the documents and information associated with a borrower but there is no streamlined system or platform for everyone to use to easily share their information other than email messages, faxes and plain old fashion photocopies.
As a pick-up from yesterday (click here) regarding why credit scores are so important I thought I would offer another side of credit scores: What if credit scores did not exist? Having worked with borrowers for more than a decade I can tell you that a credit score is a real data point that banks and lenders have to know to determine what type of risk a borrower might be.
A credit score is the result of many different factors including the following: Continue reading
It’s amazing to me that many of the clients that come to us seeking a mortgage or loan do not know their credit score. In fact, not only do they not know their credit score most of them have never even seen their personal credit report. I find it amazing because your personal credit score is one of the core criteria that a bank or lender will use when deciding to approve your request for a mortgage or loan.
This is a great question that we often get asked and often consider when someone really needs cash but may not qualify to refinance their existing mortgage OR they do not want to pay the penalties associated with paying out an existing mortgage. There is no perfect answer or a “one size fits all” solution, however here are some things to consider if you are evaluating a second mortgage.
It doesn’t happen often but sometimes we get to the last days of a deal when all of the pieces can be broken a part by one small unforeseen change. Recently we helped a client purchased a newly constructed townhouse with a well known builder who at the last moment had one of these unforeseen changes happen. The client needed a mortgage that was equal to 80% of the purchase price and had the remaining 20% in cash as their down payment. One of the items the bank had requested was an appraisal Continue reading