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Friday, 11 December 2015

Changes to down payment requirements coming February 2016 for home purchase

Today Finance Minister Bill Morneau announced changes to down payment requirements. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from five per cent to 10 per cent for the portion of the house price above $500,000. The five per cent minimum down payment for properties up to $500,000 remains unchanged.

The minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000, the finance ministry wrote.

Homes priced at more than $1 million by law require a minimum down payment of 20 per cent. Today's announcement therefore focuses on homes priced between $500,000 and $1 million.



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Wednesday, 2 December 2015

Low credit score can still get approved by Private Lender Inc.

Real Estate Agent with Kamloops PropertyFor Sale
With a credit score under 600, it is likely that you will be turned down by a bad credit or prime lender and you may have to turn to a private lender. Private lenders provide an option to clients with bruised credit. Since it is a fast financing option with a higher risk to the lender, interest rates are almost always higher.
Most borrowers – real estate investors included – think of private lenders as a last-resort option if they can’t secure financing anywhere else. But private funds are gaining traction as a financing option due to the new mortgage rules set by the federal government and the continued post-crisis caution being exercised by institutional lenders. Private lenders have realized that conservative lending guidelines used by banks and conventional lenders exclude many individuals who are in fact able to pay back loans. Most importantly, private lenders take into account a property’s overall value and marketability as opposed to simply the borrower’s credit history.
The one new mortgage insurance rule real estate investors have become all too familiar with is the requirement of a 20 per cent down payment for non-owner-occupied investment property purchases. The Canadian Mortgage and Housing Corporation has also changed its underwriting policy when qualifying real estate investors for mortgage insurance, going from counting 80 per cent rental offset to an to a much lower 50 per cent addback.

Why would I use a private mortgage lender?
You would use a private mortgage under any of the following circumstances:
·         You want to purchase an unconventional property that a prime lender or bank won’t finance.
·         You need fast financing and don’t want to wait for a long approval process.
·         Your bad credit history means you are being turned down by conventional lenders.
·         You only need a short term loan.
·         You have non-confirmable income that is preventing you from obtaining a traditional mortgage.
Carmen Capagnaro, an Oakville, Ont.-based mortgage broker who specializes in real estate investing, says she already sees a bigger demand for private financing due to the new rules, particularly for higher ratio, smaller investment properties like single-family homes and condo units used for rental income purposes (The CMHC can still approve commercial and multi-unit residential properties for up to 85 per cent LTV financing). “Not everyone can come up with a 20 per cent down payment, so one of the options is private money,” she says. “Anyone who is buying in that smaller category has the ability to get up to 90 per cent financing with private funds as opposed to 80 per cent with a traditional lender.”
“What we’ve seen in this marketplace is a big resurgence on the investment property side,” says Chuck McKitrick, CEO of Alta West Mortgage, a private lending company based in Calgary. “There are all these investors rolling back into the marketplace and they’re tired of dealing with the banks’ stringent parameters, meaning they’re fine with private money because it’s quick and easy even though it’s more expensive.” Something else that might drive real estate investors to private lenders are tightened CMHC rules for self-employed borrowers. These newly tweaked rules state that BFS borrowers with more than three years in the same business, as well as commissioned-income borrowers, are required to provide traditional proof of income (or “third-party validation”) to qualify for a loan. Those who have recently become self-employed and don’t have third-party validation can still apply for a mortgage, but have to come up with a 10 per cent down payment. McKitrick says these changes will have a big impact and expects to see more applications from this category of borrowers.
“To apply for a mortgage cannot be simpler than this, at Private Lender Inc. A few minutes to complete the application here and just relax, we will contact you upon reviewed your application, bureau and have a solution for you” says Zoltan Padar president and private lender of MortgagePRO LTD. a licensed and bonded boutique brokerage headquartered in Calgary, serving client across Canada since the turn of the century.

Also, we believe the educated, well informed home-buyer and homeowner makes better decision and save thousands on interest payments. We train you to save money, look here for deep in detailed information to become a better decision maker.