For many borrowers, they have a history of bad credit and this has made many lenders and banks reluctant in facilitating their mortgage easily. People have fallen into this situation as a result of prolonged illness, redundancy, divorce, car accident or perhaps a combination of all these situations mentioned earlier. With all these, is it possible to acquire a mortgage loan? According to today’s trends, the answer to this question is an emphatic yes!
A few years back, the application of a loan would involve a checkup on your income background and credit history. But this is different today. With fast pace of technology, any defaults is impossible to hide. Your application is rejected instantly if there is an imperfection in your income or credit history. This has limited the number of individuals applying for loan. There are different lenders who render bad credit mortgage in Montreal with various options available for their clients. While choosing one over another, make sure you know everything that has to do with bad credit mortgages. Most of the times, these types of mortgages are sugarcoated. You should keep your eyes on the following.
Higher interest rates
One of the characteristics of a bad credit mortgage is high interest rate. Borrowers are charged a higher interest rate as a form of compensation in the risk they are taking. The truth is that, there is a loan risk for borrowers with a bad credit record and many lending companies put this into consideration. A higher interest rate is imposed on the borrowers for them to take this loan. One of the reasons behind this is to protect the lender in event of a mishap and a foreclosure on a bad credit mortgaged property.
Bad credit mortgages come with discount points, which is common. The discount point is composed of a percent of the overall purchase price. Borrowers of bad credit mortgage are billed higher discounts points. This is usually between four to five points. Point may go higher for bad credit mortgages as far as ten. This rise isn’t against federal law and unpopular practice. In this case, it is determined by the lending company.
Larger down payments
There is a larger down payment for a bad credit mortgage when compared with other types of loan. Borrowers are charged a large down payment in exchange to ignore their previous credit history. Normally it is 70 to 75 percent of the value of the loan. In this case, the lenders are protected as a result of equity in the property. Upfront price of this type of loan may not be affordable for borrowers. But if you feel that the down payment required is affordable, this might be beneficial for you. The down payment taken by you will cover a considerable part of the entire purchase price and this signifies that a lower monthly rate will be paid on the bad credit mortgage. Whatever the case may be, you should seek the help of an expert.
Most lenders don’t really care how you repay your mortgage as long as you make your monthly payments on time. The law understands that sometimes due to unforeseen circumstances, a homeowner may not be able to complete his payments on a home loan. To answer the above question, yes it is possible for someone else to pay for your mortgage.
Be clear on repayment terms
You need to alert the mortgage lenders in Montreal on the changes and make it clear as to whether you will retain the title of the house or you wish to transfer it to the person making payments. If you wish to transfer ownership then that means that the person paying the mortgage will need to start a new process to get a deed of trust. Usually, the lender will need to check his financial history to make sure they are able to take over the new responsibility. The lender will have to approve first before the third party can start making payments.
If the person is offering to pay without requiring anything in return, then that is treated as a gift. The law requires the person to pay gift tax on his monthly payments. Some lenders don’t accept payments directly from the third’s party bank account and so that means they need to transfer the cash to your account first. You need to have clear records so that it can be clear to the IRS on how much gift tax is deductible. There are some common circumstances that allow other people to pay for someone’s mortgage. Some of the common circumstances include:
Payments from a spouse after divorce
Usually, a couple has to agree who will reside in the house after the divorce is complete. Just because a couple is separated it does not negate them from repaying the mortgage. A spouse can agree to pay the mortgage even after moving out. If the couple has a joint claim on the title of the house and they agree that the one residing in it has to take over mortgage repayments then he or she has to apply for a quitclaim deed. The lending company sometimes has to check financial statements to ensure that the new sole owner is able to repay the home loan.
Children paying for their parents’ mortgage
It is normal for a child to want to pay for his parents’ mortgage as one way of showing appreciation. If the child does not require the ownership of the title or he does not expect a repayment from his parents later on, then this is considered to be a gift. He will still be legible for a gift tax. If by any chance the child wants to assume the ownership title, then he has to undergo a process that takes 60 to 90 days. Lenders use this time to scrutinize his financial records before changing ownership. The parents have to confirm that they are willing to turn over the house title to their son or daughter.
Mortgages are a good option for those who desire to acquire property or equipment fast. Unfortunately, you cannot compare a mortgage to a one-size-fits-all garment. There are different types of mortgages one can choose from to fit different situations. What does this mean? For example, when you go shopping for a vehicle, a salesman can give you all the advantages that come from owning a pickup truck and when you look at it there is actually some sense in owning one. However, what he did not consider was that you could be a salesman working in the city or a soccer mom who needs to drive her kids to and fro school every day.
Yes, the truck sounds like a good idea but will not fit these two scenarios. This is the same with mortgages. The following are mortgages type that you can choose from depending on what suits your situation best.
15 year FRM
A 15-year fixed rate mortgage means that you have to pay off your mortgage in fifteen years. This mortgage type allows you to pay off your mortgage within a short period of time and that come with several benefits. It means that you will not have to put up with payments in your golden years when you are on a fixed income.
The other benefit is that you save a lot of interest to be paid compared to a 30-year plan. The shorter the loan term the less the interest rate! One downside to this mortgage type is that you have to make higher monthly payments than when you have to pay for a longer period of time. This mortgage plan is best suited for someone who is able to make huge monthly payments without too much financial strain.
This is a mortgage type fully known as the 5-year adjustable rate mortgage. There are myths about this mortgage type which can easily scare one away. The 5-year adjustable rate mortgage usually means that you agree on a low interest rate let’s say about 2.75 percent for the first five years. After the first five years are over, the rate changes every year depending on a defined index. This means that your monthly payments will also change depending on how rates change. You save a lot of interest the first five years. This plan suits best someone who is planning to sell off their house after the 5 years are over therefore saving on interest paid.
30 year FRM
The 30-year fixed rate mortgage is popular to many mortgage applicants the reason being the security if offers to borrowers. The mortgage payments are spread out in 30 years on a fixed interest rate meaning that payments stay constant for 30 years. The monthly payments are usually low compared to the 15-year FRM and the first five years of 5/1 ARM. You can use the amount saved on monthly payments to invest in other things therefore, giving you more chances of growing. This plan is best suited for someone who loves security and is looking for low mortgage rates.
Setting off on a journey to get your own home is such an exciting thing. This is because the last thing you will worry about at the end of every month is paying rent. While there is some excitement in buying a new home, there are also a number of challenges that you may face. As you read on, you will learn about three basic things that you need to know to get it right when looking for the most effective finance solution so you can acquire your dream home.
Present your credit report
This should not worry you at all because you are entitled to at least three credit reports from various credit bureaus operating in your locale. It is important to ensure that you have taken a keen look at the credit reports before you start picking houses. If you are intending to acquire a home with a spouse, they should also bring out their credit reports.
Look for anything that may lead to illegibility when applying for a home loan. Try to see if you can settle any outstanding debts or possibly fix certain errors that may exist in the credit report. If there is any serious issue, you can always liaise with the bureau and you will be assisted.
Boost your savings
If you are planning to get a new home, you should consider boosting your savings. You can simply do that by increasing the amount of money you set aside monthly or periodically by a certain percentage. You should increase your savings because when you apply for a loan, the lender will require copies of your bank statements.
Generally, they are interested in knowing the amount of money that you have in your bank account currently. Note that it applies to all the bank accounts under your name. You will have to be transparent and genuine regarding this matter. This is because you may be required to explain any unusual large amount in any of your bank accounts. If you have less savings, that could still be a problem. Just ensure you have the right amount of savings in your bank, which is achievable by saving a little more.
Look for a good mortgage lender
When looking for a mortgage lender, you should not close a deal with the first lender who offers you a loan. Instead, try to approach several other lenders by either telephone calls or email. Finding several lenders will put you in a position to make the right choice. You will be able to determine if you will do well with a particular lender. Different lenders offer varying mortgage rates, varying fees and terms. Shopping around allows you to get the best deal.
Before applying for a home loan, you need to ensure that everything is perfectly in place. If there is anything that seems unclear, you may consult brokers for further explanation. Real estate agents are also in a better position to help you get a better view of things. Essentially, good credit report, adequate savings and a good lender are the crucial factors that will help you get a good mortgage deal.
House hunting always comes with searching for mortgages. You are lucky if you can pay the house that you like upfront, meaning, with the money you have saved in the bank. What if what you have is only enough for the down payment and a portion of other related expenses? The next thing you should bear in mind then is to seek mortgage help. When you do, you have to know how to get the best mortgage rates.
Prepare your finances
Your finances will always affect the mortgage rate and even the mortgage deal you can avail of in its totality thus you have to prepare for one. When preparing your finances, you have to make sure you are ready with the basic 20% down payment required. Alongside this, you also have to take two steps – first is to prepare your credit report and second is to pay CMHC insurance in case you do not have enough cash to pay for the down payment. Paying attention to all these finance-related records and payments will make it even easier for you to have your mortgage processed whilst also making sure you are offered the mortgage rate that you have always wanted.
Ask help from a broker
If you do not love math (or sometimes even if you do), chances are you will have a hard time understanding which mortgage rate will work best for you. A broker is what you need in this regard. A broker can help you do away with the need to visit all the banks in town just to compare mortgage prices and rates. The good thing about working with mortgage brokers is you can always trust them when it comes to being able to talk to multiple lenders and from there, they can make all negotiations on your behalf so that you can get the best mortgage rate that will work within your budget.
Always choose a mortgage that will meet your needs and expectations
In the world of mortgage rates, you are given two choices. The first one is called the variable mortgage rate which commonly starts at a lower rate but depending on what has been set by the Bank of Canada, this rate can change or fluctuate through time. The other choice is called the fixed mortgage rate, one where you are expected to pay the amortisation based on a rate that is fixed throughout the term of the loan.
It will be quite difficult to calculate which between these two rates are better over that of the other. It will then be good to reconsider getting a mortgage that allows you to avail of prepayment options where you can either reduce the term of the loan or pay more than your amortisation.
Choosing from various mortgage rates can be quite tricky. Add to that, you have to bear in mind that not all lenders offering the lowest mortgage rates offer the best rates. With the help of a reputable mortgage broker who can do all the negotiations for you, this should be less of a problem on your part.
Debt consolidation or mortgage refinance is the process of obtaining a new mortgage with a goal to reduce monthly payments. You can choose to refinance when you want to lower your interest rate, or you need cash to cater for large purchases. People with equity on their homes prefer to choose refinancing. Having equity in your home is simply the sum total of the difference between the value of your home and the amount owed to a mortgage company.
Advantages of Refinancing
• People who refinance with their mortgage companies end up paying less interest on their loans and this increases their credit scores. With a better credit score, you can access more loans if need be.
• Refinancing helps a person in obtaining money for huge purchases. Therefore, they don’t end up using their credit cards thus reducing debts.
Risks involved in mortgage refinance
It is important to note that most mortgage agreements allow the company to charge a fee when you choose to refinance your home. These costs sometimes run into thousands of dollars and can be very expensive. Before you finalize your agreement for refinancing ensure that the cost of penalties will be worth it with the value you get in the final run.
You also need to keep in mind the other hidden costs like paying for your attorney who ensures that you get the most beneficial deal possible and bank fees. You can shop around for free refinancing, and this will save you on the bank charges.
The cost of mortgage refinancing
The following are costs involved in refinancing your home.
• The application fee: This cost is usually imposed on by the lenders to cover the expenses when they go through the initial processes of checking your credit score and loan processing.
• The attorney fees: Lenders have to pay for their attorneys who conduct these settlements. The bank then charges these fees to the borrower. You can retain your attorney to represent you in the settlement.
• The title insurance company: This is put in place to cover the cost of policy. The insurance covers the policyholder any loss that may incur due to discrepancies in the title of the property. It also includes the cost of verifying property ownerships by reviewing public records.
When to refinance your home?
Most lenders require one to at least maintain his mortgage for 12 months before thinking of refinancing their home. Each lender has their terms. Therefore, it is best to check with your lender to understand the restrictions that come with the applied mortgage. In most cases it is advisable to refinance with your original lender although this is not always required. Most banks prefer to keep their current clients by offering better prices for those looking to refinance. It saves you in the cost of having to go through a property appraisal all over again since your original lender has this information already. With these facts in mind, you obtain a better rate when you refinance with your original lender.
Obtaining a mortgage is one of the most expensive investments you will ever make in your entire life. It involves a lot of things including utmost commitment which is the main factor with which you can make the investment a success. In the process, you will have to deal with several people – some are there to give you sound advice as to how you can close a good deal whilst others are just eavesdropping into your current situation.
When you are investing in real estate, it is essential to hire the best partner to work with. You cannot just scout for anyone and then hire him or her at once because you are in a rush. This is not how the entire buying scheme works. You need a solid team to work with and you will not be able to have that if you are not careful enough when making a choice. In order to make sure you are getting the right people to work with you during mortgage time, you can follow the tips below:
Hire a mortgage broker with adequate knowledge
When hiring a Canadian mortgage broker, you should be able to find one who has connections in the Canadian mortgage market. A broker is there to help you analyse your needs according to what you can afford. He is the first person to run to in the process. He does all the research for you in the Canadian mortgage market for you and will also make sure you get the higher chances of approval later on. He can make necessary arrangements with your choice of lender too.
Look for an honest real estate agent
From a mortgage broker, you have to be able to look for a real estate agent. The real estate agent takes charge of scouting the actual homes that will fall into your budget. As he gives you all the choices you can get, he will also see to it that he finds you a property that will suit your requirements in terms of accessibility to your workplace, to your child’s school or to groceries or supermarkets. He will also try his very best to give you a property that has lower taxes or even one that is located in a place where property values appreciate through time.
Get the help of a professional home inspector
Inspection and appraisal is important in making property investments. In this case, you will need the help of professional home inspectors. He will look into the property you are eyeing to purchase and check for flaws or defects if there are any so you can make necessary arrangements with the seller or back out if the property does not suit you.
As you can see, there are different people you need to work with during mortgage time but it all starts with the help of a mortgage broker. Along this line, we encourage you to contact us for any queries regarding the ideal mortgage that you are looking for.
Mortgages are great; they help you get to your dream in a financially manageable way. Therefore, you may want to know what works to keep you financially fit in the long run when it comes to mortgages. No one likes going through a financial crisis but unfortunately happens. When taking a mortgage, understanding certain facts will go a long way to help you understand how everything basically works. The last thing you want is getting side-blinded by the terms and conditions of your mortgage. Here is an insightful into the world of mortgages.
Annual percentage rate
Even though it may be kind of challenging to understand how mortgage costs work at first, the complicated parts can be broken down into comprehensible bits. First of all, there is interest that is easy to understand. The next involves costs that arise from direct originating as well as the closing cost. With the annual percentage rate, you are in a better position to create an allowance for all these costs. This provides you with an ideal gauge for making comparisons when looking for the best lenders in town. More often than not, you will realize that a good number of lenders who offer low rates charge a higher percentage rate when you add in other fees.
Change in mortgage rates
As a soon-to-be homeowner, you are more likely to fall in the category of homeowners who make the assumption that interest rates are stable. When making mortgage decision, it is important to understand that mortgage rates change over time and may affect your monthly payments. The rates respond to the change of the market forces that cause a significant change in bonds and stocks among other financial investments. That means that a quote that you have may have secured earlier in the day may become obsolete several days when the rates change.
Quotes from lenders
Even there are standard policies that protect borrowers from any form of financial abuses; there are no policies that restrict all mortgage lenders to a fixed price. That means that you can get different quotes from different lenders. It is up to do your homework before making a crucial choice. Lenders charge different amount of fees in relation to services such as title insurance, credit check and appraisals. By comparing quotes from different lenders, you can ensure that you pay little for these services with the lower rates.
Mortgage refinancing is a helpful when you are in a financial crisis. Sometimes unfortunate things occur leaving in you a in a tight spot. This may mean being behind with mortgage payments. Therefore, you can consider mortgage refinancing when things get rough as it gives you a chance to get lower rates making payment manageable.
These useful facts go a long way to help you make the right choice when taking a mortgage. To successfully manage your mortgage payments, you need to plan ahead and learn a few things regarding financial discipline. You should also be aware of financial backups such as mortgage refinancing that help you in sticky situations.
For starters, the average price of a home in Canada is approximately $440,000. Montreal is one of Canada’s best big-city bargains when it comes to buying a home. Average sale prices, over the past few years, were forecasted to be more than $887K in Vancouver, less than $613K in Toronto, and over $338K in Montreal. Read on to find out more about the house prices in each city as well as the types of houses you can purchase with the value of an average Canadian home pricing.
Types of houses found in Montreal, Vancouver and Toronto
Montreal is built in a way that makes incorporating a wide variety of apartment styles possible. In addition, it has a housing market that consists of more than 50% renters. For starters, you can find studio or loft apartments in Montreal and they typically feature one large open space that comes with a mezzanine for sleeping. There are also two- and three-story apartment buildings that houses units that have their own entrances. Also known as duplexes and triplexes, these apartment units can feature winding stairs as well. In Montreal, full houses (which are available for rent) and multiple apartment buildings are uncommon.
From townhouses, condominiums to penthouses, Vancouver offers a decent range of housing options but at really expensive prices. If you are planning to invest in a property here for the long haul, price won’t matter. Even if the price of your home in Vancouver drops in the short term, you can still afford to hold on to it as it will eventually recover. What’s more, there is a shortage of land here. Toronto, on the other hand, is enjoying a booming condo market, and there more condo projects growing more complex, expensive and larger over the years.
What can the average price of a Canadian home get you in each city?
In Montreal, you can purchase a 930 square foot, two-bedroom duplex that comes with a single bathroom. Vancouver, on the other hand, has 925 square foot, two-bedroom condos that you can purchase at the same value. The average price for a single-family detached home here has also surpassed the $1.4 million mark. The near 20 per cent jump over the past year has widened the affordability gap between condos and houses. The value of a land in Vancouver is one of the biggest reasons why prices were driven higher for detached properties.
Based on the average Canadian home pricing, you can also purchase a 900 square foot, two-bedroom condo that comes with two attached bathrooms in Toronto. Recent studies have also shown that the average price of a house in the Greater Toronto Area has increased by more than 7%.
How to purchase a house in Montreal, Vancouver or Toronto?
If you are buying your first home in Montreal, Vancouver or Toronto, it is pertinent that you consult mortgage brokers for their knowledge and advice, and be mindful of your current financial situation. By having full control over your mortgage, you can also grow your home’s equity as its value increases. Once the technical aspects of buying a home are covered, you can choose the type of house you really like with peace of mind.
You have just taken a mortgage product to build some rental units near your home. Within no time, your rental property is complete and potential tenants have started checking it out. But how do you increase your rental yield? A few years ago, landlords and rental property managers had an easier time letting their properties. Their clients did not expect too much from them and were more accepting of the rental properties offered to them.
Regrettably, all this has changed in recent years and renters want and expect a lot more for their money. And because more people have jumped into the property investment market, tenants have a wider range of options to choose from.
Improving a rental property to attract more clients
Since the majority of rental property owners don’t want to lose their clients, they are now renovating their commercial buildings to meet the needs of their clients. Competition has made these investors to work extra harder to make their properties more desirable and hence to increase their rental yields. For all this to work, they are spending more money to bring their rental properties up to the expected standards. After all, their clients want to portray a specific lifestyle and living in quality rental homes make them feel like they are living that wished for lifestyle.
Giving your rental property a competitive edge is easier than you ever imagined. But before we get started on how, it is important that you find yourself a reliable property manager. This person will be charged with the duty of looking after your property. Some qualities to look out for when hiring this kind of a person include reliability, trustworthiness, organization and hardworking. Reliable property managers are great when it comes to maximizing the returns from your investments. Without much ado, here are some three tips for giving your property that competitive edge you desire
Have it renovated
Having your rental property expertly renovated offers great rewards in the long run. Yes, it might be a costly undertaking, but the rewards are really worth the trouble. For one, it can help you get more income from higher rents in addition to helping secure great tenants who will love your property like it is their own. By simply replacing shower heads, taps, and other fixtures in a bathroom, you have given a fresh and improved look. Repainting the kitchen flooring, walls, cupboards and changing the handles with new ones makes a huge difference when it comes to attracting the right kind of tenants.
Keep your rental property clean
A rental property whether an aging or new one should always be presented in its best light. One of the best ways to do this is having it professionally cleaned at last once per week. Arriving to view a fresh smelling property is an undeniable benefit in winning over potential tenants. Even if your property has the markings of a great home, if the floors and walls are stained or dirty, they it could be sitting vacant for longer than you had anticipated.
Carpets and flooring
It is always a good idea to replace old carpets or flooring when it comes to rental properties. Laminate and timber flooring are a favorite with many renters. Moreover, these types of flooring make rooms to appear fresher and larger. But if you want to make the rooms more homely and warmer, then opt for quality carpets. If your budget does not allow you to replace your carpeting or even flooring, then make sure to hire professional cleaners to have them expertly cleaned.