Financing - Recent Threads

To be or not to be...on Title, that is

MG911 — Thu, 06 Jun 2013 19:29:32 GMT

Can anyone refresh my memory as to the pros & cons of being or not being on title with JV deals?

Would an investor feel too exposed by being the only party on title? In other words, it would be him on the hook for a deal that went sideways for whatever reason.

Would the real estate expert be at a disadvantage by only having a JVA in place without being on title?

How do lenders treat investors that only have JVA's instead of being on title? I was recently asked for all the titles of my properties in obtaining a refi on a deal which made me wonder had I not been on title.

Would it be unethical for a investor/money partner to obtain financing with me as a partner only having a JVA in place? Would this need to be disclosed?

I believe RW mentioned he had done most of his deals without being on title so it makes me wonder how necessary it is.

Thanks for any insight on this topic.

Penalty for selling early

denilarein — Tue, 04 Jun 2013 14:28:35 GMT

It is time for me to renew my mortgage and being 64 and open to many, many possibilities, I would like to be able to sell anytime without the usual penalty for not going the full length of the amortization. Is it possible to add a clause to that effect and, if it is, what is the price.

TDS and mortgage qualifying Is there something we're missing

BrandonLindley — Sat, 01 Jun 2013 17:23:15 GMT

Just got off of the phone w/ our mortgage broker about acquiring about a 3rd mortgage/ primary residence The details: Christine (my common law) owns a house bought in 2010 as a primary It's currently valued at 292K (city tax assess) and rented for 1800/m PITH- 1167$/m We own a primary in another city valued at 635K ( purchase price in 2012) and currently rent the top floor for 3000/m We occupy the basement suite and market value for the basement is roughly 2200-2400/m PITH 3100/m We are looking at a primary w/ a legal basement suite for 740K Our 2012 tax line 150 is Christine: 135 937 Brandon 101 334. Between us we have a car loan at 22K (525/m) and the regular day to day expenses (nothing unusual ) When we do our TDS we get 44%(PITH of the 3 houses+ car loan /gross income) not including rental income When the mortgage broker does it she comes up with 70% What are we missing? She says that we need to make more money to qualify. Does anyone have any advice?

35 year amortization

boaz — Wed, 29 May 2013 03:21:56 GMT

Hi,

Has anyone got 35 year amortization on a rental property lately?
If yes, with what rate and from which lenders?

I am hearing it is not likely to get one.

Best Regards,
Michelle
Boaz Parko Management

Refinance - Ok to sign Mortgage Approval at the Bank? or Lawyer's office better?

Nir — Fri, 24 May 2013 16:07:07 GMT

Hi,

Say you met a new banker you know and trust in order to refinance a property.
During the say 2nd meeting they give you a Mortgage Approval to sign and accept. You like and understand the financing conditions, it's a big bank and you have no problem singing it. However, would you sign it there and then, Or out of respect for your lawyer or a new lawyer - take it to your lawyer first to review then sign within say 3 days after reviewing with the lawyer?

On one hand, you don't really need your lawyer to review it at this stage so why waste her/his time (she/he will be involved later for closing anyway). On the other hand maybe it gives (the wrong lawyer?) the wrong message you do not see the lawyer's value add if you already signed the first but 'most important' document without them(?)

Thoughts?

THANKS,
Nir

Assuming a mortgage in Alberta

harland — Thu, 23 May 2013 18:40:33 GMT

Hello,
I am looking at a property in Calgary. The asking price is $295,000 and the mortgage owing and what I would be assuming is $200,000.
I would be putting 20% down ($59,00) leaving me with a remaining $36,000 owing.
My questions are what are my options for this $36,000? Could I blend it with the assumable mortgage? If so how does this work?
There are3 yrs left on the term of this mortgage and it is a variable rate of prime minus .85
Also, do I need to qualify for this mortgage?
Any information, tips or concerns on assumable mortgages is welcome.

Thank you,
Delanee

Private Money (2nd mortgage) options

arniec — Tue, 21 May 2013 13:32:15 GMT

Hi REIN,

I am wondering if there are any preferred private lenders REIN works with? Is there an easy way I can find and evaluate different private lenders? I am looking for a 2nd mortgage on a 10-unit building in Toronto. Does anyone know people that might be interested?

Thanks!

Mortgage Cash Back - Promised/Confirmed but not Deposited(!)

Nir — Sat, 18 May 2013 23:48:51 GMT

Hi All,

Mortgage Expert,

A friend has recently refinanced a property - moved mortgage from a smaller bank to one of the 5 big banks in Canada.

The banker from the new big bank whom my friend worked with directly, confirmed a 2% cash back will be paid, deposited 5 days after closing, meaning after the day the mortgage is transferred from the other bank and the equity take out amount is deposited.
In other words, 2% cash back is deposited separately based on the banker's explanation and done after the transfer/after closing.

Interestingly, my friend has a lot of documents the banker provided but Not one clearly confirming he will be getting 2% cash back. Now, a month after closing the 2% cash back still has not been deposited to his account as promised(!)

The banker is not denying it was promised to him or something, but rather explained he asked about it and is "waiting to hear from the other office about it".
(perhaps luckily for my friend) my friend did find cash back is mentioned once.. indirectly in one of the pages of the 'mortgage disclosure statement' that my friend does have. Under Prepayment Charges section:
".. If you prepay your mortgage loan in full, you will be required to repay the full cash back amount of $5,000.00 that you received."

Is this probably all he needs as proof the bank must deposit the amount ASAP? would you suspect some weird activity behind the scenes here of bank/banker or bank's lawyer? Or is my friend being too suspicious here?

We just can not believe this is happening. not because someone is trying to steal but because it is one of the big banks and he apparently has a proof as mentioned.

How long would you wait, what would you do next? The banker was very nice and professional till now and my friend was really hoping to continue working with him on other deals in the future.

It would be great and appreciated if can get some feedback from experts like Rob, Sherilynn or Thomas.

Thank you.

Sincerely,
Nir

Choosing PLC vs mortgage for reno costs

livingthedream — Tue, 14 May 2013 23:54:01 GMT

Just bought a house [Victoria, B.C.] which will be our principal residence with a 3 bedroom suite downstairs after $40,000 of renos. We only need to finance a $20,000 mortgage to purchase the home. Wondering if the reno costs should be added to the mortgage request or finance them through the equity in the home.

Regarding tax deductions, can the interest paid [on the percentage of the home that is the suite] be deducted off the the rental income regardless if the interest is being paid on a mortgage or on a PLC?

Foreign JV Partner Financing

derekchien — Tue, 14 May 2013 21:24:31 GMT

Can my foreign JV partner qualify for mortgage here in Canada? What kind of Loan to Value Can I expect from the Canadian banks? What kinda of documentation I need to show to the banks? Would it make a difference if it's a commercial deal VS residential deals? Any input would be greatly appreciated. :)

VTB options with lenders

derekd — Sat, 04 May 2013 15:16:53 GMT

I am looking at a fourplex in Ontario with 4 gas meters and 4 hydro meters that cash flows well in a city that is stable. All units are fully rented. The vendor is willing to hold the mortgage with at least 30% down from the buyer with strong credit over a 3 year term at 5-7% depending on credit strength of purchaser. I would like to propose a LTV of 80% on 1st mortgage, VTB second mortgage of 15% and I pay 5% down and legal costs. My credit is strong and have equity but am trying to use as little cash as possible for down payment in order to purchase more properties.Are there any lending institutions that would entertain this? If too little down on my part, what would be the bare minimum on down payment and VTB ratio? Would it be possible to propose a VTB of 20%, and down payment of 5% to create a LTV of 75% on first mortgage to open more doors of lenders?

Re-financing a three house deal - expert opinions requested!

TangoWhiskey — Sun, 28 Apr 2013 22:39:19 GMT

Hi all,

we have three SFH's that we're doing RTO on. These were bought in mid Mar for an average of 174K with 25 % down, had approx 7 K in renos done to each, with a market value of about 200K now finished. Two of these are now tenanted with RTO clients and the third should lease up within the next three weeks or so based on the experience of the first two. Assuming the 200K market price, and there are the exact same homes on the same street that sold for this, we now have mortgages of approx 130K with resulting total equity of about 70K per house X 3 = 210K or so.

The mortgages are residential mortgages and are open loans that can be paid off at any time in the next three years. However they cannot be refinanced for a minimum of one year because I'm a commercial client on larger deals and the bank (BMO) has these odd underwriting rules for commercial clients that can't be broken regardless of these being residential mortgages.

I need to access about 150K in the next two-three months for a commercial deal (which will also be funded by BMO as they do great construction lending here and this other deal is a 300K construction project).

If I switch banks and refi the three residential homes at another chartered bank, or another lender as arranged by a broker, will I get 80 % financing based on having RTO tenants in place and market appraisals for 200K per house? I have no personal income outside of RE but I do have a solid net worth due to the RE portfolio.

Refinancing would generate about 90 K or so in funds (.8X200=160-130 X 3), but I'm concerned about how BMO will react to me switching mortgages away from them to get $$$ to do another deal with them. How do the pros (and of course Thomas) see this?

Thanks so much

Tris

REIN system following Mortgage Brokers

Rishelle — Sat, 27 Apr 2013 22:55:31 GMT

My husband and I are looking for a mortgage broker to help on our road to success. The last one we used didn't seem to realize that we have to have our mortgages in our company name and the result was only having one option to go with. Is that the best anyone can do?

If not, I would appreciate any ideas or options that might be available for us to use in the very near future.

We live and (so far) invest in Edson, Alberta.

Thank you for your help in this matter,

Rishelle Reid

What to do about rates?

ChristinePell — Thu, 25 Apr 2013 22:36:46 GMT

I have a mortgage on a house I bought in 2010 as a primary residence for 35yrs @ 3.94%
Contacting that institution, I can get the same amortization (32.5yrs left) @ 2.99% 5 yrs or 2.8% 3yrs
The penalty pay out fee is $4866 with a 10% discount if I renew w/ them ($4380) plus $75 renewal fee. cash up front.
The property currently cash flows @ 473/month
with the 5 yr term it would cash flow @604/month
with the 3 yr term @ 630/month
Math is hurting my head.
Is it worth it to get the lower rate? What sort of things should I be considering ?(What kind of math should I be doing!!!?) And if it's worth it, should I be going for 3 or 5 yr?
Thanks in advance,
Christine

HELOC portability?

kfort — Thu, 25 Apr 2013 02:02:21 GMT

Can I transfer a HELOC from my current primary (selling soon) to a different property? It's at P+ .5% if I recall and I wouldn't mind keeping it.

Hard to finance with month-to-month leases?

aspcanada — Wed, 24 Apr 2013 00:00:00 GMT

Hey all,

I'd like to know if having my tenants on a long-term fixed lease will benefit me when qualifying for mortgage funds. Or will a long-term lease that has now gone into a month-to-month be sufficient? I have a couple of tenants that have been with me for 2 years now, but both leases are now in a month-to-month.

I have asked them if they would sign another lease and they are very hesitant... Do I continue to pester them to sign a lease or leave them be. They have been AWESOME tenants and I don't want to "stir the pot".

Please advise,
-Alain

Financing without personal guarantee, is that possible?

rzhang930 — Sat, 20 Apr 2013 21:02:09 GMT

Hi, all,

I have got into a situation that is confusing.
We are a family of immigrants that with real estate background but has not established solid credit history or career background in Canada yet.

According to the acre system, it seems financing a single family investment need extensive of personal guarantee.
Is there anyways to structure a mortgage without such requirements?
Or if it will be better if we more into commercial property field that the property mortgage is back by property itself?

P.S. Is multifamily above 6 units considered commercial property?

Any advice is appreciated!
Ruiye

Has anybody assumed a mortgage lately? Wondering if possible for this RTO scenario.

MG911 — Thu, 18 Apr 2013 01:26:13 GMT

Hi there, just wondering if it would be worth assuming a mortgage from an owner wanting to be a tenant/buyer on an RTO. They currently own the property with a co-signor (a friend) who wants off title. They are unable to qualify on their own due to some bruised credit from a divorce. Client and deal look quite strong however $552,000 is owing on the mortgage. $570,000 was last appraisal from July 2012. Tenant/buyer/owner has 16 months remaining on mortgage @ 3.99%. They are able to put up $16,000 as an option payment.

If I was to buy property FROM them traditionally, and RTO it TO them, it would require a traditional mortgage @ 20% DP = $115,000 with closing costs. I'm wondering if there was a less capital intense method of getting into the property, and still doing the RTO with the client? ROI's are still very strong (36% p.a.) with $115,000 down but would be even nicer with less money into it.

Would a lender ever swap a stronger candidate with stronger credit in a deal like this assuming they qualified without any cash involved? In other words, get me on title and release the other party? Any other way of getting into this with no or low money down - just like a cheesy late night infomercial?

Thanks for any replies...Michael

CIBC

Nir — Wed, 17 Apr 2013 19:39:30 GMT

Hi, We had some pleasant experience working with CIBC in the past. Wanted to ask the experts in financing, how is CIBC for both residential and commercial (apt. buildings) financing? Thank you, Nir

2.33% gotta love it!

margaretcowan — Wed, 17 Apr 2013 04:30:48 GMT

I've just got a CMHC insured, 5 year term, 25 year amortization mortgage on my 11plex in Edmonton. People's Trust, who gave me an interest only mortgage for my first 18 months, approved a mortgage at 2.33%. Loan to value is same at about 63%. Gotta love it!

When I first applied for the CMHC mortgage, I asked them about a 30 year amortization and their rate was 1/4% higher. I added up differences in the monthly payments and looked at the two balances (25 year & 30 year scenarios) in 5 years and it wasn't worth it to me.

Conventional non insured rare is now 4.5%.

Hope this helps!

Margaret
Mama Margaret & Friends Cooking Adventures in Italy
www.italycookingschools.com
www.facebook.com/MamaMargaretandFriends

Joe bought a condo..

Nir — Wed, 17 Apr 2013 00:24:35 GMT

Good day Everyone,

Say Joe bought a pre-construction 600K Condo 2 years ago which is only closing next year.
He got a 450K mortgage approval 2 years ago and put 100K deposit 2 year ago.
As you can see Joe should pay an additional 50K on closing next year.

My question is:

Does everyone involved just assume he will have the 50K needed on closing?
Or will the bank want to see 'proof of 50K payment' few months before closing?

More specifically regarding this, say Joe has 100K LOC limit and zero balance today in all his bank accounts including the LOC:
Can Joe simply use his LOC to pay the 50K on closing no problem? In other words, at this point nobody cares where the money to close the deal will come from right?

THANKS

Apartment Building Financing Questions - from ACRE Toronto

Nir — Sun, 14 Apr 2013 23:50:06 GMT

Hi All,

Few financing related questions from REIN Amazing event this weekend:

If I understand correctly, in order to qualify for a mortgage on apartment buildings say 10-plex, you need, among other things, to show Net Worth of 25% of the value of the building you are buying as well as proof of down payment.

- Is it correct that proof of down payment can include your wife's RSP accounts but proof of net worth should Not?

- Is it correct proof of down payment can include bank statements from abroad say from banks in Israel? Or the amount must be in Canada/Canadian banks only? Again, I think for net worth buildings and bank accounts must be in Canada. for down payment proof .. not sure(?)

Assuming you buy under a corporation which is of course common when buying apt buildings:

- Is it correct for financing purposes it is OK if you own 100% of the shares (only your name on the corp.) as long as you can can show 25% net worth Not including your wife's accounts (like her RSP)? and IF you can not, then your wife's name should be added to the corporation, meaning to the purchase from the bank's point of view?

Assuming you are buying with a JV partner, again under a corporation. You both own 50% of the shares of the corp. this time please assume nobody's married:

- Is it correct for Either net worth OR down payment proof purposes, the bank will want to see you have 25% down and net worth 25% of the building COMBINED? so if building costs 1Mil, and 250K down is required, then it's ok to show each of you have 125K down and 125K net worth? Or will bank expect at least one of you (one of the JV partners) to be able to qualify alone!?

THANKS,
REGARDS,
N.

Scotia Total Wealth Credit Solution.

johnanddonna — Fri, 12 Apr 2013 19:18:46 GMT

Is anyone familiar with this product for financing real estate?

Better yet is anyone using it, and what do you think of the product?

Basically you need to consolidate all your assets ( stocks and bonds, personal residence, etc) with Scotia Bank, who then offers you a access to a private banker and a LOC based on your asset base. Apparently this product is based on commercial money , and not retail money, hence "hitting the wall" becomes a more distant worry. Loans are then apparently provided readily on any real estate deals at an interest only basis, and then you need to pay down the line as you see fit ( basically a self administered "mortgage").

If anyone is currently using this, I'd like to chat. I've been approached by Scotia to join their Private Client Group to take advantage of this.

Clarification regarding Canadian Law & fees for breaking a mortgage >5 yr term

bhl — Thu, 11 Apr 2013 00:55:04 GMT

Dear experts,

Regarding the recent comments I heard at ACRE about Canadian law & breaking mortgages that exceed 5 years,
I have been able to locate the following: Section 10 from the "Interest Act"
http://laws-lois.justice.gc.ca/eng/acts/I-15/FullText.html

This specifically applies for breaking said mortgages only after having them for 5 years.

I have a mortgage > 5 year term, but have had it less than 5 years. It would appear no law exists for this case.
Can you comment?

Thanks
Brian

Compiling a Sophisticated Investor Binder

RStJean — Fri, 05 Apr 2013 02:55:54 GMT

Hello All,

I am new to REIN and real estate investing. I am currently in the process of setting up my Sophisticated Investor Binder in preparation for applying for my first mortgage. I have decided to buy my properties through a newly formed corporation. I am the sole shareholder / director.

My question is this; when compiling my liquid assets and net worth should I or can I also account for assets in my wife's name? I have managed our RRSP's and TFSA's on a 50/50 split so a large portion of our net worth is in her name. If need her funds would be available to the corporation through my accounts.

Thank you in advance for any assistance.

Rob