Refinancing when Title in Name of Corporation

[Nir]

Hi All,

When refinacing say three 4-plexes which are under a corporation (corp. on title, owner on mortgage), is it correct that as long as the corporation exists for more than 2 years and can prove income, input on the corp`s owners is not required? (except maybe their credit score and net worth but not their income?)

example:

corporation 123 owns three 4-plexes (residential) with a total appraised value of $1,000,000
current mortgage principal: $500,000

can the above be refinanced up to 90% CMHC or Genworth insured applied under a commercial/business category? can interest be at prime minus (VRM) thanks to it being CMHC insured, although business?

THANKS.

 

[Thomas Beyer]

QUOTE (investmart @ Nov 13 2010, 10:12 PM) ..

corporation 123 owns three 4-plexes (residential) with a total appraised value of $1,000,000
current mortgage principal: $500,000

can the above be refinanced up to 90% CMHC or Genworth insured applied under a commercial/business category? can interest be at prime minus (VRM) thanks to it being CMHC insured, although business?
you can get non-CMHC money at around 3.5 to 4% these days, up to 80% LTV .. and sub 3% with CMHC, up to 85% if commercial or 80% if classified as residential one 4-plex at a time [but not 90% anymore]

Usually it is also fixed, not variable ..

The key metric is debt coverage ratio (i.e. mortgage payment divided over NOI). This has to be 1.2 or 1.3 or better .. depending on bank !

You will have to sign a personal guarantee on loan if over 50% LTV. And yes, your personal situation is less relevant than the property`s but still relevant !

Talk to a mortgage broker that knows CMHC and also does commercial besides residential !

 

[kboughen]

A 4 plex falls under residential CMHC, so the maximum LTV will be 80% with or without CMHC. The mortgage will be personally guaranteed by the owner of the Corporation. Generally, the deal will be qualified using the guarantor’s taxable income, however, exceptions can be made if the corporation has strong financial statements.

 

[Thomas Beyer]

QUOTE (kboughen @ Nov 15 2010, 08:42 PM) A 4 plex falls under residential CMHC, so the maximum LTV will be 80% with or without CMHC. The mortgage will be personally guaranteed by the owner of the Corporation. Generally, the deal will be qualified using the guarantor’s taxable income, however, exceptions can be made if the corporation has strong financial statements.
even if 3 4-plexes are in the same corp. i.e. different than a 12-plex ?

 

[kboughen]

If the (3) 4 plexes are individually titled, in different locations, they are usually treated as individual residential properties. We have had exceptions where multiple individually titled properties are in the same complex, for example, one entity (person or corp) owns 20 individually titled townhouses in a townhouse complex, this was successfully picked up by CMHC Commercial. I have not seen CMHC Commercial do (3) 4 plexes in different locations. A Commercial/Equity Lender would finance them conventionally, but the LTV and rate would not be equal to CMHC LTV and rate.

 

[Nir]

Thank You Kevin and Thomas!