Going Private: Mortgages for Millennials

private mortgages in TorontoWith the majority of Millennials coming of child-rearing age, more and more of them are turning to private mortgages to get the money they need to buy a home. But consumer buying habits for this segment of the population is quite different than it was for their parents; they want to be close to mass transport, shops, and they’re not big fans of commuting to and from work. Most analysts say it’s not as bad as it seems for Baby Boomers and their big suburban homes far away from the things that make Millennials hearts go all pitter patter.

Hard to See the Future

When it comes to what you want when you have kids, it’s hard to know until it actually happens. Right now it’s expected that Millennials are going to force a big change in the housing market – and that applies to finance. More and more of them (and us as it happens!) are turning to private mortgage lenders (not to be mistaken for private investigator services), talking to Toronto mortgage brokers like us and getting a real education before they buy.

Among Canadians, Millennials are a more ethnically, financially and idealistically different group than their parents. This group wants a healthy mix before they commit to a home, they don’t want homogenous homes that blend into the landscape. They want communities that matter, not to live in a neighbourhood where they have to worry about how many flamingos they can place on their lawn.

Mortgage Habits are a ‘Changing

Millennials are running on flex schedules, they’re ditching credit cards and when they buy a house they tend to obsessively research every last detail. Mortgages right now account for half of the debt they owe, with $14,000 carried by the average Canadian ages 18 to 34.

What Kind of Mortgage Do You Want?

Once you start thinking about buying a home (even if you’re not a Millennial), you need to know what kind of mortgage is right for you. This all depends on what you need.

If you have a high down payment and expect to repay your mortgage within the next 2-5 years, you may want to look at variable rate mortgages. These will have low interest rates that float with the prime (we’ll explain more of this when you speak with one of our Canada mortgage brokers).

If you don’t have a high down payment or you want to repay your mortgage in 10+ years, you’re going to want to look at fixed rate mortgages. These will give you a longer period of time to repay your mortgage, your interest rate will be fixed and you’ll be able to avoid the worries associated with hiking interest rates over time.

So if you’re a Millennial, you’re going to be worried about trying to get the best deal. You could hunt for the one that’s “right” online, or you could talk to a professional.

What is a Mortgage Broker?

Toronto mortgage brokers like us do all kinds of stuff that helps you get the money you need to buy a home. We can help you understand how your credit is affecting your chances for getting a mortgage. We can help you understand how much you’re going to have to pay over the course of your mortgage if you just go with the minimum monthly payment or if you go with a high down payment.

We’ll be here to help you understand everything you need to know before you take the plunge to get a private mortgage or a conventional mortgage. Don’t do it on your own, let us help you! Also, visit our private mortgage page today, to learn more about how we can help you: http://www.homebasemortgages.ca/private-mortgages/

How to Save on Private Mortgages

private mortgagesA private mortgage can be a great way to finance the purchase of a home – even if you don’t have the best credit – but you’re going to want to make sure that you’re getting the best deal. That’s exactly why you’re going to want to work with one of our Toronto mortgage brokers. We’ll be able to help you figure out which lender, which terms and which mortgage overall will be best for you. The lat thing you need to deal with is something that’s a bad fit, so don’t! Let us help you make the most of things.

What is a Private Mortgage?

A private mortgage is like any other kind of mortgage that you can find on the market, but they’re going to be lent out by different kinds of lenders instead of a bank. You’ll be able to borrow even if you have bad credit, this way you’re going to be able to get the money you need. Private mortgage lenders are nowhere near as demanding as a conventional lender can be. Don’t you deserve a way to really get the home you’ve always wanted? Of course you do! That’s why it’s important to make sure that you’ work with one of our Toronto mortgage brokers so you’ll know you’re getting the best deal.

What are the Benefits?

There are many benefits, the easiest to spot are for those of us with less than perfect credit. Conventional lenders will penalize the heck out of you because you don’t have great credit, but who has time and money to deal with that headache? With a private lender you’re going to get the help you need to borrow, and you won’t even have to wait the length of time that you normally would with a conventional mortgage. You shouldn’t have to worry when you’re borrowing money, and with us you’ll be in safe hands.

How do Brokers Help You Save?

If you’re not sure where to start, that’s where we come in. When you choose to work with Toronto mortgage brokers like us you’re going to know all of your options before you decide. Even if you’re not buying a house yet, we can help you get pre-approved by different lenders and find out which ones are the right choices for you. Maybe you need a low interest mortgage; maybe you need enough money to buy a luxury home. Whatever you’re looking for, we can help you save.

Should You Get a Private Mortgage?

Everyone is different and your case is just that, your case. When you talk to one of our Toronto mortgage brokers you’re going to be able to figure out what’s right for you. You may be able to get a great conventional Canadian mortgage and won’t even need to go this route for financing. You’ll never know unless you work with us to find out what’s right for you! Let us help, you deserve to know all your options.

Visit our private mortgage page today, to learn more about how we can help you: http://www.homebasemortgages.ca/private-mortgages/

FAQ: Private Mortgages for Bad Credit

Everyone has bad credit at some point in their lives – 80% of Canadians have been behind on their debts in the last 15 years at SOME point. That’s why it’s important to know that even if you have bad credit you can still get a private mortgage that works for you. There are many lenders out there that specialize in your kind of lending, so don’t worry! Here we’re going to go over a few of the most commonly asked questions about these types of mortgages, so let’s get started.

Can Anyone Qualify?

Virtually anyone can get a private mortgage, but depending on your history, credit and employment you’ll get a different interest rate. It’s important to talk to one of our Toronto mortgage brokers to get a look at your credit report and finances before you even think about applying for one.

How Expensive Is It?

It can be expensive if you go about it the wrong way. You want to know that you’re getting the lowest interest rate possible and that you’re getting great terms. This can all go badly if you’re working with the wrong lender – but by working with us we’ll help pair you with a lender that wants to work with you. There are so many different ones out there, let us help!

How Does My Credit Score Affect Me?

If you have bad credit you could end up facing thousands of extra dollars in interest. We’ll be able to advise you on some things you can do to improve your credit score – it’s important that you get a handle on any consumer debt BEFORE you take out a private mortgage.

How Much Will it Cost Me in the Long Term?

This depends on your terms, interest rate and loan amount. We’ll be able to help walk you through projections (like 3% interest over 30 years for $x amount borrowed will equal out y if you pay the minimum payment each month). There are many different mortgage calculators online that will help you do this, but we’ll help you see the big picture.

How Different Are They From Conventional Mortgages?

They’re virtually identical, except a private mortgage is granted by a private lender. You’ll still have a monthly payment, interest, down payments and closing costs to pay when it’s time.

Is it Right for Me?

Now you know everything you need to know to get a private mortgage. They may be right for you, they may not –you’ll never know until you talk to one of our Toronto mortgage brokers! We’ll be able to look over your finances and really break down what you can and can’t expect to get. Everyone will be different though and it’s important that you talk to us before you think about approaching a private lender. Even if you decide to go with a conventional mortgage lender, we’ll be able to work hard on your behalf to get you the best rate!

Visit our private mortgage page today, to learn more about how we can help you: http://www.homebasemortgages.ca/private-mortgages/

How to Get a Private Mortgage on Your Credit Report

private mortgagesGetting a private mortgage to show up on your credit report can be hard work! They’re designed in such a way that they often just don’t appear… so it’s up to you to make sure that it does. We as Toronto mortgage brokers can help you do this. If you’re paying off your mortgage each month, those payments count! You want different lenders to see that you have a large account that is in good standing, that your credit report is up to date and accurate. There’s nothing worse than telling a lender you have a mortgage that they can’t find on your credit report. Here we’re going to go over the steps you need ot take to have your Canadian private mortgage on your credit report.

Speak with Your Lender

The first step you need to take is to speak with your private mortgage lender. Even if you worked with a Toronto mortgage broker like us, you’ll still need to contact the lender directly. Tell them that you need your private mortgage reported monthly to the three major credit bureaus (Equifax, Experian, etc.) Most will do this if you ask, but some may not. You will need to push them, but if your lender doesn’t cooperate, that’s okay! You still have ways of getting your private mortgage added to your credit report even if your lender isn’t working with you to make it happen.

Speak with the Credit Bureaus

Speaking with the credit bureaus needs to be done, even if you’ve already spoken with your lender. If your lender agreed to alert the Big Three that you have a mortgage with them, give it a week before you speak with the credit bureaus. Have all of your documentation ready like your balance, who your lender is, your account number, principal information. Basically everything that you have on your bill each month is what the credit bureau is going to need to know to get you listed.

Keep an Eye on Your Credit Report

When you worked with one of our Toronto mortgage brokers to get your private mortgage initially, you most likely had a credit report pulled up. You’re going to need to watch your credit report for the next six months to make sure everything is running smoothly. Every 30 to 45 days your private mortgage lender should be sending information to the reporting agencies and that information should updated on your credit report. It will tell you how much of the principal is owed, how much you’ve paid in the last x amount of months, etc. It’s important that you keep on top of your information.

Many lenders will report once and then never again; make sure you keep an eye on your credit report to know that they’re reporting every month. The more they report, the better your score will be and the more credit you can get in the future!

Need to know more about private mortgages? We can help! We’re experienced Toronto mortgage brokers who know how to get you the best mortgage, contact us today.

Can You Get Private Second Mortgages?

private mortgage lenderIf you want to be able to get a private mortgage as part of a Canadian home refinance, you can. A private mortgage isn’t limited to buying a home out the gate, but you should talk to one of our Toronto mortgage brokers before you get started. You’re going to need the help to make sure you find a good private lender; there are many lenders that make these kind of loans and sadly a good deal of them are terrible to work with. You’ll also need some equity in your home to take out this kind of loan, so let’s get started.

What is Equity?

Equity is how much you actually own in your home when everything is said and done. So whatever debts you hold subtracted from the appraised value of your home will let you know how much equity you have. Here’s a good example:

The house you own is worth $500,000 (one can dream right?), but you still haven’t paid off your mortgage. You owe $100,000 still on your first mortgage, and that means that you have $400,000 in equity. This is great! Only 20% of your equity is tied up with debt, meaning 80% of your home is straight up cash. You will need to know that you can only borrow 80% of what you own; this means that you’re going to be able to borrow up to about $300,000 out of your whole home.

How do Private Lenders Work?

Private lenders will loan money to virtually anybody, which is awesome! Even if you have abd credit you’re still going to be able to get a second mortgage from them. They work just like any other kind of mortgage lender, but where they get their money is a little different. Banks and private lenders both have investors, but private lenders have individuals backing them. Their lending criteria isn’t as strict but you’ll still have to fill out some forms and pledge some of your equity as collateral.

Isn’t This Just a Home Equity Loan?

One of our Toronto mortgage brokers will be able to better explain all of this to you in person, but basically yes. This is a home equity loan. Second mortgages work off how much equity you have in your home and they’ll help you get all the money you need to get things done. You shouldn’t be trapped in a bad situation just because you may have poor credit or no credit. With the right private mortgage lender you’re going to be able to get the money you need.

Working with a Broker Saves You Money

When you work with one of our Toronto mortgage brokers you’re going to save money. We know where to look to get the best mortgages and we’ll help you save. From getting the lowest interest rates to getting the highest loan to value ratio for your next mortgage, we’ll work hard to help you. Contact us today and see what we can do for you.

How to Calculate Private Mortgage Insurance

private mortgagesCalculating private mortgage insurance isn’t nearly as hard as you might think – but it will take a little time to figure out. If you don’t already know, you pay PMI to protect the lender in the case that you default; if you didn’t know, this doesn’t pay you any benefit. You’re basically paying their insurance and hedging your bets against yourself. If you’re paying less than 20% down when you buy a home, you have to have mortgage insurance – there are a few cases where this won’t apply to you, but it’s extremely rare.  Before you buy a home, know how much you’re going to pay!

What’s the Purchase Price?

The first thing you need to figure out is how much the purchase price will be. If you’re not sure which home you’re buying just yet, we’ll go with $250,000 for the sake of easy math. Now that you know what the purchase price is, you’ll be able to figure out the next step in the chain: the loan to value ratio.

What is your Loan to Value Ratio?

Figuring out your loan to value ratio is so important – everyone has a different amount. If you’re borrowing against the equity in a home you already own, like a second mortgage or home equity line of credit, you’re going to see all kinds of LTV ratios. You want the highest LTV available, and for this you’ll want to work with us as your Canada mortgage broker. We’ll be able to help you figure out just how much you can save over the life of your loan. For the sake of easy math, we’re going to go with 90%.

What is Your Loan Term?

If you have a short term mortgage, you’re going to pay more in monthly payments and PMI but you will pay it off faster. If you have a longer loan term you’ll pay less each month to your mortgage and PMI but it’ll be drawn out over time. We’re going to say you have a 25 year term mortgage.

What is your MIR?

Your MIR or Mortgage Insurance Rate is determined by a formula table. We’re just going to guess that you have a .52% rate.

Now it’s time to do the math.

Once you’ve done all this research and figured out all your numbers, it’s time to get to work! You’re going to need to multiple and divide a few things to figure out how much you have to pay.

Let’s first determine how much you’ll pay per annum or year:

$250,000 x .0052 = $1300

Now divide this number by 12 to get your monthly private mortgage insurance:

$1300 / 12 = $108.33

Now you’ll add this along with your projected monthly payment and you know about how much you’ll be paying. Once you reach 80% owed, you’ll be able to stop paying PMI and move on to paying your house down. Give us a call today and see what we can do for you.

Piggyback Loans are Back with a Vengeance

private mortgagesPrivate mortgages like “piggyback” mortgages are back with a vengeance – but why? What the heck is a piggyback mortgage anyway? For years a single monolithic “jumbo” loan was the way to go, but now more and more borrowers are seeing that they can save big by going with 1 or 2 private mortgages instead of just one big conventional loan. Many save thousands of dollars in interest over the life of their mortgage, especially if they just don’t have the money for their down payment. Here we’re going to talk about how you can avoid the high down payments and usurious interest rates with a private mortgage instead.

What is Piggybacking?

When most people buy a home, they look for a single lender and a single mortgage – after all, it makes sense right? You wouldn’t want to end up with all that debt spread out across multiple lenders, and your bank is giving you a sweet deal, right?

Probably not. It’s been shown that lenders and financial institutions reserve the best deals for new customers – their current customers are already banking with them and making them money. But the CPA or cost per acquisition of a new customer tends to get them the better deals.

Instead of just getting one large loan from your lender, you can get two. One of these loans will help you get a larger down payment (capitalization) and look like less of a risk for the other mortgage you take out with another lender. You will have to work with two different lenders, but you’ll be able to have a lower interest rate and down payment across two mortgages than you would with one traditional jumbo loan.

What’s the Difference?

Jumbo loans cost more, period. A jumbo loan will, in general, cost about 1-2 points more in interest each year for the life of the loan. Smaller amounts of money borrowed usually give you a much lower interest rate.

If you do look into getting two mortgages instead of just the one, be careful. Some lenders will make you pay deferred fees if you pay off your mortgage early – they may also have penalties applied if you miss a late payment. But this is just another one of those reasons that you want to work with us!

Smaller loans also give you a higher LTV, or loan to value ratio. If you can get an 85% LTV across two loans, compared with 65% or less for a jumbo, you’ll be able to squeeze that much more value out of your equity in the long run.

It’s important to note that these are not bridge mortgages. Getting two mortgages to piggyback is a bit similar to a bridge mortgage, but you won’t have to worry about a fistful of lenders to deal with – just the two.

Have questions about your next mortgage or home equity loan? As Toronto mortgage brokers we help you look at a variety of lenders to understand which ones will be the right ones for you to do business with. It’s not hard to find a bad lender with a bad loan, but when you work with us you’ll find the one that’s right for you.

Are Private Mortgage Lenders a Good Fit for You?

private mortgagesEveryone has their own borrowing style, and every lender isn’t a fit for everyone; it goes without saying that you should speak with a Toronto mortgage broker before you decide to borrow! Here we’re going to talk about private mortgage lenders and how they work. Make sure that it’s a good fit before you borrow.

Conventional Vs. Private

In Canada the rate of private mortgages has skyrocketed, and with good reason. Instead of having to grovel at some bank and hope that one lender approves you, private mortgages give you the freedom to shop and find the right financing for your needs. You shouldn’t have to hope that a single lender will give you a good rate, and you don’t have to! When lenders compete you save.

When working with a Toronto mortgage broker you’ll be able to find the right fit for your borrowing needs. You’ll be able to choose from both private mortgage lenders and conventional mortgage lenders to see who will offer you the best interest rate. You’ll be able to separate lenders by different interest rates, mortgage terms, repayment terms, and everything else to make sure that you’re getting the best one that’s right for you.

How to Get a Private Mortgage

Private mortgages are best found through a Toronto mortgage broker. They’ll be able to help you find the right lender for your needs. You’ll have to fill out an application like you would with any other kind of mortgage, then they’ll be able to go to different lenders. You can ask that they query both conventional and private lenders if you like; this way you know you’re getting the full spread of options and will be able to put any offers from a private mortgage lender in perspective. This type of mortgage isn’t for everyone and you’ll need to be very careful when you borrow.

Use a Mortgage Broker

Whatever type of mortgage you’re trying to get, you’re going to want to talk to a Toronto mortgage broker! They’ll be able to help you explore different options in your area (if you’re not in Toronto talk to one near you). They don’t get paid until the home is closed, they work for you and not for the bank. They’re a perfect advocate for making sure that you get the right mortgage for your needs. Why get a pre-packaged deal when you can get the right one?

Mortgage brokers play a vital role in the process, but you will still need to get pre-approved and do your research to make sure you’re getting the right mortgage for you. It’s the largest debt that most Canadians will take on in their lifetime, and you want to know that you can repay this debt. Our grandparents didn’t have mortgage burning parties when they paid off the note for no reason! Ask for a GFE (good faith estimate) of how much this mortgage is going to cost you monthly and overall. Visit our private mortgage page to learn more!

Should you get a private mortgage?

private mortgagesIf you’ve had trouble getting traditional financing in the past, a private mortgage may be in your future! They’re not for everyone, but you may be surprised at how easy it is to get this kind of financing. Here we’re going to discuss the benefits of a private mortgage, all the pitfalls you can expect to face, and help you make sure that this is the right choice for you. Always make sure you work with a Toronto mortgage broker like us so that you know you’re really getting the deal that works best for you.

What is a private mortgage?

A private mortgage is just like any other mortgage – you’re still going to have a lender, interest payments, and the monthly bill you have to keep on top of. Doesn’t sound all that different, does it? The interesting thing about these kinds of mortgages is that you don’t have to worry about having the best credit. Sometimes we all make mistakes, things happen and these lenders understand that! Depending on who you work with, you’ll be able to get a great deal that you just wouldn’t get out of conventional lender.

What are the benefits?

The benefits are many – most people will notice that it is much easier to qualify for this kind of mortgage. Instead of having to bite your nails, hope that they pick you, and hope that they don’t ram you with a really bad interest-rate, you’ll know that you have somebody backing you. You still want to be very choosy about who you work with though! Just because a lender’s willing to do business with you doesn’t mean you should do business with them. You just never know who is genuine, and anything wants to steal your home right out from under you.

Are there risks?

Like every other kind of borrowing under the sun, there are risks associated with private mortgages. Many people end up with a lender that’s not all that great – then they end up losing their homes, filing for bankruptcy, and are still on the hook for all that interest. When you work with one of our Toronto mortgage brokers, you’ll get all the help you need to make sure that you mitigate all of your risks. Just because you have bad credit, and unstable employment history, or some other factor that makes you undesirable to conventional mortgage lenders doesn’t mean you have to get a bad deal. Let us help you make sure that this is the right choice for you.

Is this what you need?

You want to make sure that this is what you need to get a mortgage. You may be able to qualify for a conventional mortgage somewhere else, but you just have to find the right lender. This can be the hardest step your journey, and that’s why we’re here to help! Let us help you find the private mortgage that’s right for you today!

3 Things You Didn’t Know About Private Mortgages

private mortgagesWhen it comes to private mortgages you might think that you know all the facts, but you might not! Here we’re going to cover three interesting things that might make your life easier when you check them out, and you’ll be a little better prepared to get out there and start borrowing. Here we’re going to talk about how different inquiries to your credit report can affect you, if paying off old collections will hike your credit score and if your credit score really only changes once a month or not. Let’s get started!

“Paying Off Old Debts in Collections Will Improve My Credit Score”

This depends! If it’s a really old debt and it’s buried deep in your credit report it may actually not bear that much on a lender’s decision to give you a private mortgage. But if you start paying it off but you haven’t paid it off in full and you haven’t been able to get them to remove it from your report just yet, you may see a negative impact. Sometimes leaving things in the past is the best thing you could do – if you’re not sure what you should do, talk to one of our Canada mortgage brokers.

Your Credit Score Only Changes Every 30 Days

Totally not true! Credit reporting agencies actually have different reporting cycles – so if a company reports your debt at the beginning of the month another company could report your account activity in the middle of the month or at the end. Everyone is different and this is one area of your credit report that doesn’t deal in absolutes. You’ll want to be very careful about this part of things, and not obsess about checking it every part of the month. If you’re really worried about things, consider getting a subscription to watch your credit from one of the major Canadian credit bureaus like TransUnion.

“Multiple Inquiries from Lenders Will Wreck Your Credit”

You’ll actually have a window where this won’t be a huge problem when it comes to private mortgages (or any kind of mortgage) – but you will want to make sure that you’re applying for mortgages all within a 2 to 4 week window. This way you’ll be able to only have one mortgage inquiry on your credit report and the other 10 applications you put out won’t show up behind it. They’ll never know if you applied for one mortgage or 15, which is great for you.

You’ll want to work with one of our Toronto mortgage brokers when you’re trying to figure out how much you can borrow. After all, even a private mortgage can be hard to get if you don’t know what you’re doing. We’ll help walk you through all that paperwork and make sure that you understand all of your options. If you need help with your credit or if now is just not the right time for you to apply for a Canadian private mortgage, as your Canada mortgage broker we’ll help you figure things out.