Rick was laid off from a large area manufacturing company and his wife Sue carried the family on her minimum wage job. The Elora couple kept themselves afloat by racking up their credit cards for over 6 months and then and maxed all their credit  out. When they couldn’t meet their monthly obligations they stopped paying their smaller cards.  Then went to their bank but the bank couldn’t help them because their credit score was now too low.

We established that Rick and Sue had good credit history over the long term and we could see that they were responsible people. They simply had a current problem that required a short term solution, which is what private mortgages are designed for.

We arranged for a $38,000 second mortgage at 12 per cent for one year. The new money paid off all their credit cards (at 18 -29%).  Our private lender met with them, saw the property and became comfortable with their ability to make the payments which are much less than their current credit card payments.  The 2^nd mortgage will give them time to re-establish good credit.   With one year left in their first mortgage, we will be able to get them a new low rate first mortgage at that time, and payout the private lender.

If you have a problem, and (most importantly) you have sufficient equity in your home, a private (short term) mortgage may be the answer. Think of it as a band aid to stop the bleeding, put out the fire, and give you the time your need to recover from your troubles.

Life’s unexpected circumstances happen all the time.  It is crucial that you find a reliable, reputable mortgage broker (we know one). It is always best to deal with someone locally who you know will act in your best interests.

As the government has tightened lending guidelines making it more difficult to access  home equity, the demand for private second mortgage money has increased.

Many of our private lenders have come to us (for a better return) because both interest rates on savings accounts and their stock (bank) investments provide negligible returns any more. Investing in second mortgages can be very lucrative yielding returns in excess of 12 per cent.

Of course private lending carries certain ‘risks’ with it, but as experienced professionals, we help our investors mitigate those risks as much as possible with proper deal structuring, property credit assessment and credit counselling to the borrower.

Private lending typically is a short term (1,2 or 3 year) solution. Private lending requires common sense and a good understanding of the borrower’s ability (and plan) to repay the debt. An ‘exit’ strategy  is an integral part of the transaction.

Loan default and loss is actually quite rare, and our private lenders risks are well diversified over numerous real estate properties at any  given point in time. The key is not to invest too much of your investment funds in one property but rather spread it out over multiple property loans and earn additional fees.

If you have investment funds, or want to consider using some of your equity to place in private mortgages, please give us a call today.

Jillian called us right after she had signed her mortgage renewal with a private mortgage at a 10% interest rate.  She told us she had put her house up for sale because  she couldn’t pay her income taxes and she was behind a year on her property taxes.  Although she was self-employed and receiving $2,500 in spousal support, a big $25K bill from Revenue Canada was impossible for her to pay.   She was paying $2,000 per month on a private mortgage and Jillian was feeling, “like the walls were caving in”.  We told her we could help.

We arranged a mortgage for $250,000 at 3.5 % five year fixed rate mortgage, with one of our prime lenders.  Her payments are reduced to $1,119  per month, a savings of $900 per month on the mortgage alone.  Since prime lenders will only lend to people who have income taxes and property taxes up to date, we also arranged a private mortgage for one month to clean up the unpaid taxes.  With taxes paid, the new mortgage we arranged for her can close.  The best part of the story is that Jillian who had her house up for sale, now doesn’t need to sell.  “I really didn’t want to move,” said Jillian.  And thanks to our solution, Jillian doesn’t  need to.

Needless to say, the banks couldn’t help her but we could and did. Folks, once again, we have so many more options and solutions having access to many institutional and private lenders. We always do our best for our clients, because we care.

When Sue and John were talking to their long-time friends Jim and Heather, the subject of mortgages came up.  Five years ago, the Guelph couple purchased their first homewith financing from one of the major banks and had just recently received their renewal notice.  They were young people with kids and typically hadsome consumer debt.  Jim and Heather had dealt with us before and told their friends to call us because they found out firsthand how we save people money . They called us telling us the bank was offering them a five year posted (full market) rate at 5.19%. The renewal notice was very confusing as was the whole document they received.  If their friends had not alerted them to our services they would have signed their renewal at 5.19 % thinking it was an OK rate.

It didn’t make sense for Sue and John to simply renew, let alone at a 5.19 % mortgage because they also had $26,000 in consumer debt at high interest rates.  We were able to refinance them at 3.44%.  They would have paid the bank a total of $60,794 interest over the next 5 years versus $39,879 with our mortgage. In addition, with our lower rate, they will have a principal balance of $6,462 less than the banks’ offer for a total mortgage related savings of $27,377.  That is a year’s salary for a lot of people. Not only that but their credit card payments of $674 per month were gone saving them an extra $40,440 in interest. Our solution just added the equivalent of $67,817 to Sue & John’s pockets.

We see it everyday, homeowners paying way more than they need to.Over 80% of Canadians accept bank renewal offers. No wonder why the banks continue to make excessive profits during hard times.

Call us when you get your next renewal offer. We’ll put a big smile on your face.We look after your interest(s) pun intended. Our team will save you aggravation, time, and most importantly money.  And best of all there is no cost for our service, OAC. Call us anytime, our office hours are 8 am to 8 pm Monday to Thursday, after hours and weekends by appointment.

Consumers hate mortgage prepayment penalties, largely because they don’t understand them. How can they when the exercise amounts to ‘smoke and mirrors’, when they are simply given the penalty amount without explanation, when it is not fully disclosed/discussed at their bank or even at the lawyer’s office on closing? The wording (found in the ‘Standard Charge Terms’) which relates to the penalty a bank can charge has, over the last several years becomevague and confusing.

Recent new clients of ours left their banks after having to pay penalties of $8,000 and $15,000 both with less than one year left on the term. They were shocked and angry and in disbelief how the penalties could be so high.  It seems the three month interest rarely applies anymore and that penalties have somehow evolved instead into an IRD or Interest Rate Differential charge and beyond.

A recent class action lawsuit filed against CIBC Mortgages Inc., started with a single parent in B.C. whose marriage ended. That individual had to sell the family home and was stuck with a $47,000 interest rate differential penalty from CIBC. The lawsuit claims that CIBC improperly calculated penalties for customers who broke their mortgages from 2005 to present. The claim alleges “CIBC applied terms and conditions to certain mortgage contracts to allow it ‘unfettered’ discretion for calculation of mortgage prepayment penalties. Lead counsel for the lawsuit says that “prepayment penalties applied by CIBC are in breach of the mortgage contracts” and that thecontract language is “Invalid and unenforceable.”

It is estimated that CIBC bank branches and bank affiliates FirstLine Mortgages and President’s Choice have about 500,000 mortgages on the books of which 5-10% or some 25,000 – 50,000 people break their mortgages every year. The lawsuit is “into tens of millions of dollars”.

This is a huge issue which could potentially involve all the big banks and other lenders who operate in similar fashion. Mortgage penalties continue to be a ‘top consumer banking complaint’, and industry wide standardization of penalties urgently needed. Our industry has been calling for ‘new penalty calculation and disclosure regulations’ for some time. It is time for the government (The Finance Department) to stop dragging its feet on this and take action. Please note that it has not yet been established that CIBC has done anything wrong. The lawsuit may signal the advent of changes that better protect consumers in this regard.*

We are here to protect you and we use every effort to place you with lenders whose policies on penalties are both clear and fair. Call us for your next mortgage need. We’ve got you covered.

*The above are the opinions of The Price Team/DLC and are not necessarily shared by Forest City Funding Inc., or Dominion Lending Centres.

The primary reason our mortgage marketplace is as competitive as it is, is because of mono-line or non bank lenders. These are lenders who are neither owned nor affiliated with the big banks, do nothing but mortgages and who compete ‘tooth and nail’ with the banks for mortgage market share.

We have 47 different lenders, with 43 of them (including credit unions) being non-bank institutions. They are highly regulated, capitalized and secure entities, most of whom have been in business for  many years. To be successful, they have had to offer better rates, products, terms and service. In short, non-banks keep the big banks on their toes. Without non-banks who take a more common sense approach, getting a mortgage from the banks would be more difficult. And without this competition, you would pay more. End of story.

As far a mortgage rate is concerned, we offer you (through the non-bank lender) the best rate from the get go. We don’t do the big ‘dance’ by  offering you a higher, more profitable rate (in the hope that you won’t shop around) and only reduce it when you take your business elsewhere.

The non-banks pay us a ‘finder’s’ or origination fee for generating and packaging the mortgage application, submitting it to them, being the interface between them and the consumer.  They also rely on us as mortgage experts to provide professional counsel and advice.  Accordingly, non-bank lenders can operate with lower overhead without the branch networks which the big banks rely on.

If your banker, or anyone for that matter tells you that the non-bank lenders may go out of business or operate in the ‘B’ business category, (non-prime mortgage), this is false. Most non-banks do only AAA business just like the big banks, while a few do non-prime, fee based mortgages at higher rates. There were no casualties of non-bank AAA lenders during the recent financial meltdown, and in fact if any mortgage lender in Canada were to ‘close down’ the consumer is fully protected and their mortgage would continue to be administered and unaffected . So in fact there are nothing but positives to us placing you with a non-bank lender.

While we do send some business to the big banks, we overwhelmingly support non-bank lenders. Arguably, you should too (via mortgage professionals like us) because ultimately you  the consumer benefit in a big way. A worse case scenario would be, that Canadians could only obtain a mortgage from a big bank with no other choice. In that case, the banks would have a virtual monopoly as is now the case in Australia. Bottom line? We all need the non-bank mortgage lenders.

Getting a mortgage is much more than about ‘Rate’. We have said this many times in past articles, but it has never been more relevant than today. Beware of the fine print.Mortgages have become very complex documents, especially so in the last couples of years with the introduction (by the banks) of collateral mortgages. Also the fine print regarding the penalty to break a mortgage before maturity has become daunting and varies significantly from lender to lender.

Take Rick a new client who had less than a year left in his term, and who was told by his bank that his penalty was $15,000. To make matters worse his bank would not give him a proper explanation, let alone their calculations as to why the penalty was so high. Turns out the fine print was never explained to him by the bank nor b a lawyer because the bank convinced him (to save money) not using an independent lawyer.In recent years the bank(s) have cleverly crafted the mortgage docs such that they can now recover any discount ‘FOR THE ENTIRE TERM’. Rick’s contract rate was 3.89% and he wascharged  the difference between posted(market rate with no discount) 5.19% and 3.89%.The mortgage penalty has become a huge issue where there needs to be much more consistency, accountability and up front disclosure to protect the consumer. Until this happens consumers are vulnerable when they obtain a mortgage directly from the bank themselves.

And so it goes. The banks do everything they can to get people to take a fixed rate mortgage versus variable rate, and to ‘lock in’ to a fixed, because they know the odds are in favour of a high percentage of borrowers will move or refinance before the end of term and INCUR A PENALTY. You have no protection at what ‘lock in’ rate you will be offered by your bank, whereas with us, we make sure you will be offered the lowest discounted fixed rate since we make sure it is in the fine print.

Over the past several months the banks have been eliminating the discount on variable mortgages(it has dropped from a high of .90% to .20%) thereby removing the incentive to choose variable, in effect ‘forcing’ people to choose fixed.We still have variables at .50% below prime, and prime is expected to remain stable.

Folks, when you come to us for a mortgage, we make sure that we get you a mortgage that best suits your interests, and equally as important, we take the time to explain all the important ‘fine print’ details that you should be aware of.Isn’t it clear who you should get your next mortgage through?

Myths have been perpetuated by man since the dark ages. They are mysterious and can evolve into ‘beliefs’ to such an extent that they are thought to be ‘true’. Examples of nouns analogous with the word ‘Myth’ are ‘legend, fable, parable, fairy story, folk tale, urban myth, illusion, delusion, falsehood, fabrication’ etc. A myth can also be a popular belief that has become associated with a person, institution, or profession. In our profession/industry several myths are alive and well.

Some of the most popular ones come from clients of ours who have been told by their banks, quote: “Mortgage brokers should only be used ‘as a last resort’; Mortgage brokers always charge fees; Mortgage brokers hurt your credit rating when they pull several credit reports; Mortgage brokers use lenders who aren’t reputable or stable and who may  collapse” etc. Earlier this year, a bank mortgage specialist tried to perpetuate the misconception very publicly ‘in print’ that mortgage brokers are unreliable, here today gone tomorrow entities who charge ‘set up fees’ and have ‘hidden costs’.

It is true that over 30 years ago mortgage brokers main source of money was from private lenders. Our industry was in its infancy and had not developed the channel of institutional lenders that we have today. Our industry was not organized, regulated or sophisticated then, and yes fees were charged for services rendered as it was the only way to be compensated. Today we have over 40 institutional lenders including banks, (all highly regulated and reputable) who pay us a ‘finder’s fee’ for sourcing and sending them new business. In the vast majority of deals we do not charge any fee, we only charge fees for deals for more difficult transactions, and we cannot charge a ‘set up’ fee. Also because we are highly regulated we must provide full disclosure, something which the banks are not required to do.

We only pull one credit report for each client/transaction which is accepted by all our lenders. We also discuss credit reports and issues in detail with our clients, something that the banks also do not do. Most importantly, we are independent professionals who provide you with unbiased advice, in your best interests, not the other way around.

These are just some of the reasons that our services and market share have grown so dramatically, especially in the last decade, and that our industry will continue to grow and ‘Win’ business from the big banks as Canadians become more aware of the benefits and value of our services.

Mortgage rates are once again at ‘all time’ lows, in fact lower. Yes we still have 40 year amortizations and we still have 100 per cent, no down payment mortgages too, at rates you won’t believe. Anyone who is renting should do everything they can to own real estate because it is much cheaper than renting.Not looking to move, but would like to buy a cottage or investment property?Do it now!

If you are a renter: $1,295 rent per mth can buy you a $350,000 home with 5% down. With no down payment the price drops to $250,000.If you have 20% down you avoid a 3.25% CMHC fee and you can afford a $400,000 home with a mortgage payment of $1,295. Incredible isn’t it? How about buying that dream home at $750,000 ? Your payment can be as low as $1,820 per mth. A $1,000,000 home will carry for as little $2,346  permth with $275,000 down. All above payments are OAC.

Real estate has and will continue to be the safest and best long term investment with the greatest return. If you have good equity in your present property, why not tap into some of it to buy an income producing property, put in a basement apartment, do that renovation you have been dreaming of?

Financial experts tell us that having all our eggs in one basket, meaning low or no mortgage is the least effective approach to wealth creation. Why? Because you only have one investment generating a (paper only) return for you. Why not take some of that equity to purchase more real estate, especially income producing real estate that will help you pay down the mortgage much faster thereby creating more wealth and financial security for your future. Think about using some of your equity to invest in private mortgages or our RENT TO OWN program as an investor.

Our services not only save you money but we help you create wealth. Please call us today to see what we can doto help you achieve greater financial security.

A new trend we are seeing is more people refinancing their homes to consolidate debt and put away funds for the proverbial ‘rainy day’ should it come unexpectedly.

There is growing concern about job security in this volatile economy as export manufacturers have seen demand diminish for their products as both the U.S. and European markets grapple with the threat of another recession. RIM in Waterloo recently laid off 2000 workers in a proactive move to weather the storm should things worsen. This has had a ripple effect on other businesses as well in south western Ontario.

The current consensus on our ‘near term’ economic future has turned pessimistic as unemployment increased last month and remains a persistent problem. Canadian consumers are putting off or delaying ‘big ticket’ purchases ‘just in case’.

With mortgage money so cheap, savvy Canadians are deciding to ‘self insure’ against job loss by using home equity to put away (usually) 6 month’s worth of living expenses just to be safe. Of course this can also be done proactively for anticipated maternity/paternity leave, sickness and injury, and so it is looked at as low cost ‘insurance’ against the unexpected.

We had a couple recently do this very thing AND borrow funds to put in a basement apartment to generate rental income to help them pay down their mortgage faster. Since prepayments are voluntary, creating rental income can be viewed as another form of ‘insurance’ and is a very smart thing to do. It also increases both the value and marketability of a property.

If you are concerned about your job, or are looking for professional guidance or advice on financial strategies that may be helpful to you, call us today. We are on your side and remember, we have many more options than the banks can offer you, and our services are free, OAC.