Every once in a while, a bank will advertise a cash back mortgage. It sounds great but there are a few things to consider.
When you purchase a home, you may find that you need some extra cash. You may want to renovate, purchase some furniture, or start on building a fence or landscaping.. Fortunately, some Canadian lenders offer mortgages that give you a cash back rebate when you take out your mortgage.
With a cash back mortgage, your lender advances you a cash lump sum when your mortgage closes. The most common sum you receive is 5% of your mortgage amount, but it’s possible to get between 1% and 5% depending on the lender you choose. Note that you receive these funds when the mortgage closes. The funds cannot be used for your down payment, however if you borrowed your down payment you could use the funds to pay back the loan.
This sounds like a great idea but there are some down sides to this type of mortgage. First- you will pay about 1.5% higher interest rate for the duration of the mortgage term. Usually this is a five-year term and if you take a look at how much extra interest you are paying you will find that it takes you five years to pay this sum back to the lender.
Another point to consider is that Canadians move on average every three years. What if you have to break the mortgage? In that case, you owe the lender the usual three months interest or Interest Rate Differential (IRD) as well as the balance of the cash back balance. This could be a very pricey move. If your lender allows it , it’s best to port your mortgage to your new home to avoid the double hit of the penalty and paying the cash back.
A cash back mortgage is a great option but it’s not for everyone. Be sure to tell your mortgage broker if it’s at all possible that you will have to move before your mortgage term is over so that he or she can advise you on what your penalties would be. If you have any questions, contact

Iko Maurovski

647-200-0723

Approximately 32 per cent of Canadians are in a variable rate mortgage, which with rates effectively declining steadily for the better part of the last ten years has worked well.

Recent increases triggers questions and concerns, and these questions and concerns are best expressed verbally with a direct call to your independent mortgage expert – not directly with the lender. There are nuances you may not think to consider before you lock in, and that almost certainly will not be primary topics for your lender.

Over the last several years there have been headlines warning us of impending doom with both house price implosion, and interest rate explosion, very little of which has come to fruition other than in a very few localised spots and for short periods of time thus far.

Before accepting what a lender may offer as a lock in rate, especially if you are considering freeing up cash for such things as renovations, travel or putting towards your children’s education, it is best to have your mortgage agent review all your options.

And even if you simply wanted to lock in the existing balance, again the conversation is crucial to have with the right person, as one of the key topics should be prepayment penalties.

In many fixed rate mortgage, the penalty can be quite substantial even when you aren’t very far into your mortgage term. People often assume the penalty for breaking a mortgage amounts to three months’ interest payments, which in the case of 90% of variable rate mortgages is correct. However, in a fixed rate mortgage, the penalty is the greater of three months’ interest or the interest rate differential (IRD).

The ‘IRD’ calculation is a byzantine formula. One designed by people working specifically in the best interests of shareholders, not the best interests of the client (you). The difference in penalties from a variable to a fixed rate product can be as much as a 900 per cent increase.

The massive penalties are designed for banks to recuperate any losses incurred by clients (you) breaking and renegotiating the mortgage at a lower rate. And so locking into a fixed rate product without careful planning can mean significant downside.

Keep in mind that penalties vary from lender to lender and there are different penalties for different types of mortgages. In addition, things like opting for a “cash back” mortgage can influence penalties even more to the negative, with a claw-back of that cash received way back when.

Another consideration is that certain lenders, and thus certain clients, have ‘fixed payment’ variable rate mortgages. Which means that the payment may at this point be artificially low, and locking into a fixed rate may trigger a more significant increase in the payment than expected.

There is no generally ‘correct’ answer to the question of locking in, the type of variable rate mortgage you hold and the potential changes coming up in your life are all important considerations. There is only a ‘specific-to-you’ answer, and even then – it is a decision made with the best information at hand at the time that it is made. Having a detailed conversation with the right people is crucial.

It should also be said that a poll of 33 economists just before the recent Bank of Canada rate increase had 27 advising against another increase. This would suggest that things may have moved too fast too soon as it is, and we may see another period of zero movement. The last time the Bank of Canada pushed the rate to the current level it sat at this level for nearly five full years.

Life is variable, perhaps your mortgage should be too.

As always, if you have questions about locking in your variable mortgage, or breaking your mortgage to secure a lower rate, or any general mortgage questions.

Your Interest is my Only Interest

Iko

647-200-0723

As many of you may remember, this past October the Office of the Superintendent of Financial Institutions (OSFI) issued a revision to Guideline B-20 . The changes will go into effect on January 1, 2018 but lenders are expecting to roll this rules out to their consumers between December 7^th – 15^th, and will require conventional mortgage applicants to qualify at the Bank of Canada’s five-year benchmark rate or the customer’s mortgage interest rate +2%, whichever is greater.

OSFI is implementing these changes for all federally regulated financial institutions. What this means is that certain clients looking to purchase a home or refinance their current mortgage could have their borrowing power reduced.

 What to expect

It is expected that the average Canadian’s home purchasing power for any given income bracket will see their borrowing power and/or buying power reduced 15-25%. Here is an example of the impact the new rules will have on buying a home and refinancing a home.

 Purchasing a new home

When purchasing a new home with these new guidelines, borrowing power is also restricted. Using the scenario of a dual income family making a combined annual income of $85,000 the borrowing amount would be:

Refinancing a mortgage

A dual-income family with a combined annual income of $85,000.00. The current value of their home is $700,000. They have a remaining mortgage balance of $415,000 and lenders will refinance to a maximum of 80% LTV. The maximum amount available is: $560,000 minus the existing mortgage gives you $145,000 available in the equity of the home, provided you qualify to borrow it.

In transit purchase/refinance

If you have a current purchase or refinance in motion with a federally regulated institution you can expect something similar to the below. A note, these new guidelines are not being recognized by provincially regulated lenders (i.e credit unions) but are expected to follow these new guidelines in due time.

Source (TD Canada Trust)

These changes are significant and they will have different implications for different people. Whether you are refinancing or purchasing, these changes could potentially impact you. We advise that if you do have any questions, concerns or want to know more that you contact me

Iko 647-200-0723

imaurovski@gmail.com

The question most often asked: ‘Is my mortgage portable?’

The answer most often given: ‘Yes.’

This answer is increasingly wrong.

In reality you qualify to move ~80% of the balance… maybe.

If you are thinking of:

• Moving (upsizing or downsizing)
• Locking a variable-rate mortgage into a fixed-rate product

… you would be well served to keep reading.

The above question is incomplete. To be fair, you would have no way of knowing this. The person answering it should know better than to give you a one-word answer.

The proper question: ‘Do I need to re-qualify for my current mortgage to move to a new home?’

The proper answer: ‘Yes, your mortgage is portable, but only if you re-qualify under today’s new and more stringent guidelines.’

The person answering the portability question should only be your Dominion Lending Centres mortgage specialist. They alone can answer the question accurately, and only with a complete and updated application, along with all supporting documents to confirm the maximum mortgage amount under current guidelines.

Too many clients learn this lesson the hard way. They sell their existing property before speaking with their Mortgage Broker, and in some cases they also enter binding purchase agreements under the mistaken assumption they can just port their mortgage.

Key Point – Do not ask if your mortgage is portable (99% of them are). Ask if you currently qualify to move your mortgage to a new property.

Key Point – The federal government has created a dynamic in which there are two different qualifying rates for mortgage approvals. And the one used yesterday to get you into a five-year fixed rate mortgage is not always the same one that is used if you want to move that same mortgage to a new home down the street, even just one day later.

Key Point – One day into your five-year fixed mortgage, you are now subject to the stress test. In a nutshell, the stress test applies the higher qualifying rate and effectively reduces your maximum mortgage approval by ~20%.

Meaning that you may only be able to port 80% of the current balance to another property… just one day later.

So, what’s the fix?

The best fix – The government could add a simple sentence to their lending guidelines along the lines of ‘If a borrower qualified for their mortgage at the five-year contract rate at inception, then the borrower shall be allowed to re-qualify at that original rate when moving their mortgage to a new home.’

Currently this fix does not exist.

The current fix – Well it’s no big deal at all. You simply pay a penalty to break your current five-year fixed mortgage and then apply for a new five-year fixed mortgage. Said penalty amount? Typically, around 4.5% of the mortgage balance – i.e., a $14,000 penalty on a $300,000 mortgage balance.

Seems reasonable, right?

It’s entirely unreasonable. This is a horrible ‘fix’, because it is not a fix at all. If you bought with 5% down, and then a few months later were transferred to another province and had no choice but to move, this represents your entire down payment vanishing due to an oversight by the federal regulators.

If you have been personally caught in this ‘portability trap,’ it felt more like total devastation than it did ‘anecdotal’. And by all means you should make your voice heard. Share your story with via www.tellyourmp.ca

Your Interest is my Only Interest

Iko 647-200-0723

Being fully pre-approved means that the lender has agreed to have you as a client (you have a pre-approval certificate) and the lender has reviewed, approved ALL your income and down payment documents (as listed below) prior to you going house hunting. Many bankers will say you’re approved, you go out shopping and then they sorry you’re not approved due to some factor. Get a pre-approval in writing! It should have your amount, rate, term, payment and date it expires.

Excited! Of course you are, you are venturing into your first or possibly your next biggest loan application and investment of you life.

What documents are required to APPROVE your mortgage?

Being prepared with the RIGHT DOCUMENTS when you want to qualify your mortgage is HUGE; just like applying for a job or going for a job interview. Come prepared or don’t get hired (or in this case, declined).

Why is this important?

You can have a leg up against the competition when buying your dream home as you can have very short timeline (ie: 1 day to confirm vs 5-7 days) for “financing subjects.”
Think? You’re the seller and you know the buyer doesn’t have to run around finding financing and the deal may fall apart? This is the #1 reason deals DO fall apart. You will likely get the home over someone who isn’t fully approved and has to have financing subjects. The home is yours and nobody’s time is wasted.

If you just walked into the bank, filled an application and gave little or no documents, and got a rate – you have a RATEHOLD. This is NOT a pre-approval. This guarantees nothing and you will be super stressed out when you put an offer in, have 5-7 days to remove financing subjects and you need to get any or all of the below documents. That’s not fun is it? Use a Dominion Lending Centres mortgage specialist ALWAYS. We don’t cost you anything!

When you get a full pre-approval, you as a person(s) are approved; ie: the bank’s done their work of reviewing (takes a few days) to call your employer, review your documents, etc. All we have to do is get the property approved, which takes a day or two. Much less stress, fastest approval…faster into your home!

Here is exactly the documents you MUST have (there is NO negotiation on these) to get your mortgage approved with ease. Key word here is EASE. Banks/Lenders have to adhere to rules, audit files and if you don’t have any of these or haven’t been requested to supply them…a big FLAG that your mortgage approval might be in jeopardy and you will be running around like a crazy person two days before your financing subject removal.

Read carefully and note the details of each requirement to prevent you from pulling your hair out later.

Here is the list for the “average” T4 full-time working person with 5-15% as their down payment (there is more for self employed, and part-time noted below):

Are you a Full-time Employee?

1. Letter of Employment from your employer, on company letterhead, that states: when you started, how much you make per hour or salary, how many guaranteed hours per week and, if you’re new, is there a probation. You can request this from your manager or HR department. This is very normal request that HR gets for mortgages.
2. Last 2 paystubs: must show all tax deductions, name of company and have your name on it.
3. Any other income? Child Support, Long Term Disability, EI, Foster Care, part-time income? Bring anything that supports it. NOTE: if you are divorced/separated and paying support, bring your finalized separation/divorce agreement. With some lenders, we can request a statutory declaration from lawyer.
4. Notice of Assessment from Canada Revenue Agency for the previous tax filed year. Can’t find it? You can request it from the CA to send it to you by mail (give 4-6 weeks for it though) or get it online from your CRA account.
5. T4’s for you previous year.
6. 90 day history of bank statement showing the money you are using to put down on your purchase. Why 90 days? Unless you can prove you got the money either from a sale of a house, car or other immediate forms of money (receipt required)…saved money takes time and the rules from the banks/government is 90 days. They just want to make sure you aren’t a drug dealer, borrowed the money and put it in your account or other fraud issues. OWN SOURCES = 90 days. BORROWED is fine, but must be disclosed. GIFT is when mom/dad give you money. Once you have an approval for “own sources” you can’t decide to change your mind and do gifted or borrowed. That’s a whole new approval.

Down payments
Own Sources: For example for “own sources”: if you are a first time buyer and your money is in RRSP’s then, have your last quarterly statement for the RRSP money. If your money is in three different savings account, you need to print off three months history with the beginning balance and end balance as of current. The account statements MUST have your NAME ON IT or it could be anyone’s account. I see this all the time. If it doesn’t print out with your name, print the summary page of your accounts. This usually has your name on it, list of your accounts and balances. Just think, the bank needs to see YOU have money in your (not your mom’s or grandparents) account.

GIFT: If mom/dad/grandparents are giving you money…then the bank needs to know this as the mortgage is submitted differently (this is called a GIFT).

If you are PART-TIME employee?
All of the above, except you will need to bring 3 years of Notice of Assessments. You need to be working for 2 years in the same job to use part-time income. You can have your Full-time job and have another part-time gig…you can use that income too (as long as it’s been 2 years).

If you are Self Employed?

• 2 years of your T1 Generals with Statement of Business Activities
• Statement of Business Activities.
• 3 years of CRA Notice of Assessments
• if incorporated: your incorporation license, articles of incorporation
• 90 day history of bank statement showing the money you are using to put down on your purchase

Going to the bank direct is such a big disservice to you. That is like walking into Ford and asking for a Mercedes or Toyota. As a broker: I am FREE! I work with ALL the banks and know ALL the rules. The bank you choose pays me to give you great service and a fantastic product. There are over 300 of them…so don’t sell yourself short.

Have you been approved for a mortgage and waiting for the completion date to come? Well, it is not smooth sailing until AFTER the solicitor has registered the new mortgage. Be sure to avoid these 10 things below or your approval status can risk being reversed!

1. Don’t change employers or job positions
Any career changes can affect qualifying for a mortgage. Banks like to see a long tenure with your employer as it shows stability. When applying for a mortgage, it is not the time to become self employed!

2. Don’t apply for any other loans
This will drastically affect how much you qualify for and also jeopardize your credit rating. Save the new car shopping until after your mortgage funds.

3. Don’t decide to furnish your new home or renovations on credit before the completion date of your mortgage
This, as well, will affect how much you qualify for. Even if you are already approved for a mortgage, a bank or mortgage insurance company can, and in many cases do, run a new credit report before completion to confirm your financial status and debts have not changed.

4. Do not go over limit or miss any re-payments on your credit cards or line of credits
This will affect your credit score, and the bank will be concerned with the ability to be responsible with credit. Showing the ability to be responsible with credit and re-payment is critical for a mortgage approval

5. Don’t deposit “mattress” money into your bank account
Banks require a three-month history of all down payment being used when purchasing a property. Any deposits outside of your employment or pension income, will need to be verified with a paper trail. If you sell a vehicle, keep a bill of sale, if you receive an income tax credit, you will be expected to provide the proof. Any unexplained deposits into your banking will be questioned.

6. Don’t co-sign for someone else’s loan
Although you may want to do someone else a favour, this debt will be 100% your responsibility when you go to apply for a mortgage. Even as a co-signor you are just as a responsible for the loan, and since it shows up on your credit report, it is a liability on your application, and therefore lowering your qualifying amount.

7. Don’t try to beef up your application, tell it how it is!
Be honest on your mortgage application, your mortgage broker is trying to assist you so it is critical the information is accurate. Income details, properties owned, debts, assets and your financial past. IF you have been through a foreclosure, bankruptcy, consumer proposal, please disclose this info right away.

8. Don’t close out existing credit cards
Although this sounds like something a bank would favour, an application with less debt available to use, however credit scores actually increase the longer a card is open and in good standing. If you lower the level of your available credit, your debt to credit ratio could increase and lowering the credit score. Having the unused available credit, and cards open for a long duration with good re-payment is GOOD!

9. Don’t Marry someone with poor credit (or at lease be prepared for the consequences that may come from it)

So you’re getting married, have you had the financial talk yet? Your partner’s credit can affect your ability to get approved for a mortgage. If there are unexpected financial history issues with your partner’s credit, make sure to have a discussion with your mortgage broker before you start shopping for a new home.

10. Don’t forget to get a pre-approval!
With all the changes in mortgage qualifying, assuming you would be approved is a HUGE mistake. There could also be unknown changes to your credit report, mortgage product or rate changes, all which influence how much you qualify for. Thinking a pre-approval from several months ago or longer is valid now, would also be a mistake. Most banks allow a pre-approval to be valid for 4 months, be sure to communicate with your mortgage broker if you need an extension on a pre-approval.

Your Interest is my Only Interest

Iko 647-200-0723

The Liberals will make public their long-awaited National Housing Strategy this week – specifically, how they will spend the $11.2 billion earmarked in the last federal budget.

Details on the strategy will be announced by social development minister Jean-Yves Duclos as early as Wednesday. But we already know the Liberals want to build more affordable housing, cut the level of chronic homelessness in half and repair existing affordable housing stock.

The focus on the most vulnerable is laudable. But the emphasis on social or affordable rental housing means that housing affordability for the vast majority of Canadians inevitably becomes a secondary consideration.

As a new report by the Macdonald Laurier Institute makes clear, social housing represents just 6 per cent of the market, while home owners make up the other 94 per cent.

The debate about how to get on the bottom rung of the housing ladder, and then how to cope with rising interest rates, has become a national pastime.

A Nanos Research poll for Bloomberg last week suggested 88 per cent of Canadians are concerned about the price of housing.

The MLI report, by former Conservative economic adviser Sean Speer and Jane Londerville, a retired University of Guelph professor who taught real estate finance, points out that Toronto and Vancouver have become two of the least affordable cities in the world, with Toronto prices jumping 33 per cent in 2016 alone to an average of $875,000 and prices in Vancouver rising to over $1 million on average.

The federal government has a minimal ability to grow housing supply – provinces and cities control land use regulation – but it can affect demand through a mix of public policies.

One of the most comprehensive but least understood ways Ottawa impacts the housing market is through the Canada Mortgage and Housing Corporation, a federal entity created 70 years ago to provide low-cost mortgages and support for returning veterans.

These days, CMHC sells insurance to residential mortgage lenders to protect them against mortgage default. Any residential loan of more than 80 per cent of the value of the home must be insured.

On a 90- to 95-per-cent loan, homeowners saw fees rise to 4.5 per cent, up from 3.85 per cent. It’s still unclear whether this had much impact on the market but it bolstered CMHC’s bottom line to the point where it will be able to pay the federal government a special dividend of $4 billion over the next two years.

The premium rate charged by CMHC is one area where the government could take action by ensuring the Crown corporation charges just enough to cover its costs and risks, without penalizing first-time homebuyers, who are currently subsidizing government spending.

More likely, that revenue will be eyed a source of funds for more social housing spending in the new plan.

A look at mortgage arrears over the past quarter century suggests the risks — viewed by policy-makers through the lens of the 5-per-cent default rate in the U.S. during the financial crisis —  are, in any case, greatly overstated.

Ottawa’s most direct lever on housing demand is control of mortgage rules that stipulate the minimum downpayment on purchases; equity requirements for re-financing and maximum amortization periods.

Finance minister Bill Morneau has already used this mechanism to try to curb the market and there is speculation he may do so again.

We are a long way from the heady days of 2007, when buyers were allowed to buy a house with zero down and an amortization period of up to 40 years. Further tightening could block entry to the housing market at all for some first time buyers and the authors recommend Morneau stays his hand for now.

A further federal government policy lever on the housing market is fiscal policy.

The First Time Home Buyers’ Tax Credit (to help defray transaction costs), the Home Buyers Plan (which allows individuals to borrow from their RRSPs to buy a house) and non-taxation of capital gains on the sale of a principal residence cost around $6.1 billion a year in foregone revenue.

Speer and Londerville recommend policy changes that encourage savings, higher down-payments and equity accumulation. That might include re-thinking the mortgage insurance model, for example, by reducing fees for first-time buyers.

Another suggestion is a savings vehicle similar to a Registered Education Savings Plan, where qualified households pay into a Tax-Free Savings Plan and receive a matching contribution from government that can be used as a downpayment.

The authors may be on thin ice when they suggest consolidating existing pro-ownership tax policies – any attempt to tax capital gains on home sales would probably lead mild-mannered suburbanites to take to the streets with pitchforks.

But the Liberals have committed to a review of all federal tax expenditures and it is conceivable that a new tax credit that helps defray the cost of buying a home could be designed in a revenue-neutral way.

Speer and Londerville say they welcome a National Housing Strategy to bring greater coherence to federal housing policy, which currently involves a large measure of simultaneous sucking and blowing.

Yet expectations should be measured.

Mathieu Filion, Duclos’ communications director, said the strategy will cover the “full continuum of the market.”

But the focus on affordable housing, rather than housing affordability, means there is likely to be more talk about building social housing units than easing the anxieties felt by almost every middle-class home-owner – and those working hard to join them.

Your Interest is my Only Interest

I’VE NEVER HEARD OF THAT LENDER BEFORE

One of the benefits of working with an independent mortgage professional; compared to getting your mortgage through a single institution, is choice. And as there are even more mortgage rules coming into place January 1st 2018, now more than ever, having access to a wide variety of mortgage products is going to ensure you get the mortgage that best suits your needs.

Working with an independent mortgage professional will give you access to varying products from many different lenders, some of these lender you may have never even heard of, but that’s okay. Sure, RBC, BMO, and CIBC, are more household names compared to say, MCAP, RMG, or Merix Financial, but as each lender has a different appetite for risk (there is always a risk when lending money) how do you know which lender is going to have the products that are going to be the best fit for you?

Typically the conversation develops into something like this: “I’ve never heard of this lender before, are they safe, I mean… I have no idea who they are”? And although that is a valid question, there is a simple answer. Yes. Yes they are safe. All the lenders we work with are reputable and governed by the same regulator as the big banks. Ultimately, you have their money, they don’t have yours!
But let’s answer a few of the common questions often asked about these lenders accessed only through an independent mortgage professional.

Why haven’t I heard of any of these lenders?
Instead of spending all their money on huge marketing campaigns (like the Canadian big banks) which drives up the cost of their product, broker channel lenders rely on competitive products and independent mortgage professionals to secure new clients.

What happens if my lender gets purchased by another lender?
This actually happens quite a bit, however, it’s business as usual for you. Even if your mortgage contract gets sold, the terms of your mortgage stay intact and nothing changes for you.

What happens if my lender goes bankrupt or is no longer lending at the end of my term?
This would be the same as if the lender was purchased by another lender. The only difference is, at the end of your term, we would have to find another lender to place your next term. And as this is already good practice, it’s business as usual. Again, you have their money, they don’t have yours. The contract would stay in force.

Why don’t these lenders have physical locations?
Much like why you haven’t heard of these lenders, they save the money on advertising and infrastructure, and instead focus on creating unique products to give their clients more choice. These lenders rely on independent mortgage professionals for awareness and compete on product not public awareness.

Do they really have better products?
Yes. Well, I guess we have to define what is meant by better products. If by better products you mean a variety of products that suit different individuals differently, then yes. Across the board, each lender has a different appetite for a different kind of risk. For example, while one lender might not include child tax income as part of your regular income, another might. While one lender might look favourably on a certain condo development, another might not. Each lender sees things a little differently. Knowing the products and preferences at each lender is what we do!

When it comes to mortgage qualification, some broker channel lenders are more flexible than others (or the banks) and offer different programs that cater to self-employed, people who are retired, own multiple properties, or rely on disability income. While as it relates to the features of the mortgage, different lenders offer many different features.

Some mortgages can be paid off at an accelerated pace with little to no penalty, some accommodate different payment structure, some products are set at lower rate, but sacrifice flexibility.

At the end of the day, the goal should be to qualify for a mortgage that has the features that suit your individual needs. Regardless of which lender that is. If you would like to talk about your financial situation, and see which lender best suits your needs, please don’t hesitate to contact me @ 647-200-0723

Your Interest is my Only Interest

Sometimes in life, things don’t always go as planned. This could not be truer than in the world of Real Estate. For instance, let’s say that you have just sold your home and purchased a new home. The thought was to use the proceeds of the sale of your house as the down payment for the new purchase. However, your new purchase closes on June 30th and the sale of your existing house doesn’t close until July 15th—Uh-Oh! This is where Bridge Financing can be used to ‘bridge the gap’.

Bridge Financing is a short-term financing on the down payment that assists purchases to ‘bridge’ the gap between an old mortgage and a new mortgage. It helps to get you out of a sticky situation like the one above and has a few minimal fees associated with it.

The cost of a Bridge Loan is comprised of two parts. The first is the interest rate that you will be charged on the amount of funds that you are borrowing. This will be based on the Prime Rate and will vary from lender to lender. As a rule, you can expect to pay Prime plus 2.5%. The second cost to consider is an administration fee. Again, this will vary depending on the lender and can range from $200-$695.

The amount that you are able to borrow is easily calculated. The calculation looks like this:

Sale price
(less) estimated closing costs of 7%
(less) new mortgage of the purchase property

=Bridge Financing.

*Note: the closing costs included the expense of realtor commissions, property transfer tax, title insurance, legal fees and appraisal costs if applicable*

So that’s the cost side of things, now the next question is: how long? The length of time that you can have Bridge Financing is going to vary again from lender to lender as well as with what province you are in. For most, it is in the range of 30-90 days but there are some lenders that will go up to 120 days in certain cases.

Before applying for Bridge Financing, you must also have certain documents at the ready to present. These documents include the following:

1. A firm contract of purchase and sale with a copy of the signed and dated subject removal on the property that you are selling and the property that you are purchasing.
2. An MLS listing of the property being sold and purchased.
3. A copy of your current mortgage statement.
4. All other lender requested docs to satisfy the new mortgage of the upcoming purchase.

Once you have those documents, you can work with a qualified mortgage broker to apply for bridge financing. It is an important tool to understand and a great one to have in your back pocket for when life throws you one of those ‘curve balls’. You can have peace of mind knowing that if/when that situation arises, you are not without a strong option that can provide you with interim financing for minimal cost.

As always, if you have any questions about Bridge Financing, or any questions about your mortgage (be it new or old) contact a Iko M. @ 647-200-0723 or imaurovski@gmail.com

Your Interest is my Only Interest