Legally, a mortgage is not a loan. It is an interest in land created by contract as security for a loan made by a lender or an investor (the mortgagee) to the borrower (the mortgagor). A mortgage is an evidence of a debt. The borrower transfers the equitable interest in land to the lender or an investor on the condition that the interest will be returned when the loan is paid in full. In other words, when one invests in a Benevolent Bancorp, the collateral is real estate secured by a Mortgage recorded in the Land Title Office where the property is located under your name.
As for as Private Mortgages are concerned, you are not loaning the money to the borrower. You are loaning the money to the property because Private Mortgages are basically equity based mortgages. The borrower can move and even leave the country but the property is not going anywhere. Your mortgage investment is secured by a charge on the property under your name.
If the borrower defaults, there is a simple foreclosure procedure which any good mortgage lawyer can handle. It will take some time but so long there is equity in the house, you will get all your money and even interest back. The key is that the mortgage is originated right.
Since the Benevolent Bancorp is mainly equity based, the more the equity the borrower has in his property the better the security. It may be a bit over simplification but this will illustrate to you how well secured your mortgage investment is provided it is done right.
Let’s say a borrower has a house worth a million dollars and it is paid for. He wants to borrow $600,000. There is $400,000 equity left in the house. That is called protective equity or the cushion. $600,000 of one million is 60%. That will make the loan to value ratio (LTV) 60% which is super good. Anything goes wrong, the borrower stand to lose $400,000. If you were the borrower, would you lose $400,000?
Look at this way. What if I want to borrow $60 dollars from you and offer you my $100.00 to keep with you as security. If I do not pay back your $60.00, you get to keep my $100. It is a no brainer and that is why trillions are invested in mortgages by banks, mutual funds, pension funds, insurance companies, trusts, mortgage funds, mortgage investment corporations and individual investors.
Last but not the least, you fund your investment through a lawyer or a Notary who acts as neutral third party. You receive title insurance which guarantees certain things that are important to you as an investor. The borrower pays for all that.
First of all the mortgage investment is a secure investment. You as an investor is named on the recorded Mortgage, secured by real estate, a familiar and tangible asset that is easy to evaluate.
Unlike the stock market, your investment does not fluctuate every day. It is rock solid stable. Mortgage investments give you steady monthly interest income while yur principal is intact and generating income for you. It is passive income. Basically, just like any other financially successful person, you are also making your money make money for you. You get your principal back at the end of the term.
Mortgage Investment give you yet another vehicle to diversify your portfolio. Contrary to the common belief, you do not need a bg chunk of money to invest. You can start your investment with as little as $10,000. You can use your RRSP
Benevolent Bancorp provides Mortgage Investors an efficient online marketplace to view, evaluate, and acquire quality Mortgage Investments secured by real estate.
Benevolent Bancorp recommends that investors seek and obtain advice from independent third-party real estate and investment advisors, including but not limited to, professional tax and legal counsel.
Benevolent Bancorp recommends that investors seek and obtain advice from independent third-party real estate and investment advisors, including but not limited to, professional tax and legal counsel.
A Conventional or a Residential Mortgage is a mortgage for no more than 80% of the purchase price or appraised value (whichever is lower) of the property.
The remaining amount required for the purchase (20%) comes from the borrower’s savings account and is referred to as the down payment. The down payment cannot be borrowed. The borrower must have excellent credit and great debt ratios. Conventional mortgages are almost always originated by banks.
If you expect to live in your home for many years, the interest rate of your loan may be your primary consideration. You may want a fixed-rate mortgage that will ensure that your interest rate will remain the same for as long as you have your mortgage.
If you decide that you like the stable, predictable payments of a fixed-rate mortgage, then the best mortgage program for you is the fixed rate mortgage.
Open Mortgages: Open mortgages often have higher interest rates but they give you the freedom to pay your mortgage off anytime or make extra lump sum payments occasionally.
Open mortgages are great if you want to make extra payments, pay-off the mortgage sooner than the due date or if you plan to sell your home before the term of your mortgage ends.
Closed Mortgages: Closed mortgages usually have lower interest rates but will place a limit on the amount of extra principal payment you want to make. Closed mortgages are good if you plan to keep the property for a long time and not intend to make any early extra lump sum payments.
You can, however, still pay-off the closed mortgage early but with extra three months interest as penalty or the interest rate differential.
An Open Variable-Rate Mortgage is a mortgage with the interest rate that changes when the prime rate changes. It could be a prime plus or prime minus rate.
The rate on the note is periodically adjusted as and when the bank’s prime rate changes. With an open variable rate mortgage, you can make additional payments or pay-off the mortgage any time.
There is no prepayment charge for paying it off early. It also gives you an option to convert your variable rate to a fixed rate. The interest is compounded monthly, unlike fixed-rate mortgage where interest is compounded on a semi-annual basis.
The Closed Variable Interest Rate Mortgage is where when your interest rate changes, your payment amount remains the same. However, the amount that is applied toward interest and principal will change.
If your interest rate decreases, more of your payment is applied to the principal. If your interest rate increases, more of your payment will go toward the interest. It has prepayment penalty but can be converted to a fixed rate.
The difference between a fixed-rate and a variable rate mortgage, also called VRM, is that for fixed rates, the interest rate is set when you take out the loan and will not change. With a variable rate mortgage, the interest rate may go up or down.
Many VRMs will start at a lower interest rate than fixed-rate mortgages. The appeal of variable rate mortgages is that the interest rate is typically lower than that of fixed rate mortgage products.
However, the main drawback is the risk involved. Without warning, interest rates could increase or decrease.
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The amount of your down payment will determine whether you'll have a residential mortgage or a high-ratio mortgage, which must be insured.
If you have to borrow more than 80% of the money you need, you’ll be applying for what is called a high-ratio mortgage. The maximum property value for high ratio insurance must be less than $1,000,000.
High ratio mortgages must be insured by the Canada Mortgage and Housing Corporation (CMHC), Genworth Financial Canada or Canada Guarantee.
This insurance is required by law in Canada to insure lenders against default on mortgages with less than 20% equity.
The premiums are paid by the borrower and can be added directly to the mortgage amount.
The amount of the premium will depend on the amount you are borrowing and the percentage of your own down payment. See below but these rates are subject to change without notice.
up to 85% 2.80%
up to 90% 3.10%
up to 95% 4.00%
Effective February 15, 2016, the minimum down payment for new mortgages have been modified. The new breakdown is as follows:
Some banks also have a subprime division to help the borrowers who do not meet the rigid underwriting guidelines for the conventional mortgage.
If you are an A- or B+ borrower you will save lots of money by opting for an Alternative lending mortgage instead of a Private Mortgage.
With nearly one in four Canadians being self-employed, you’d wonder why it is still so hard for them to obtain a mortgage. Well as a business owner, you likely expense a large portion of your income as a time-honored strategy for minimizing your taxes.
While a great tax strategy, this reduces your net income, making it hard to qualify at most banks. Not only do we recognize and understand this strategy—as self-employed Mortgage Brokers—we live it.
You will use an Alternative lending lender only if you do not qualify for a conventional mortgage.
If your credit score is decent but your debt ratios are a little high and or you are borrowing money for the down payment or it could be for any other reason.
Alternative lending products do not have the same strict underwriting guidelines as the residential mortgages.
Alternative lending has flexible guidelines and can lend to clients who have been turned down by the banks due to income, credit or down payment.
With the variety of products and the increasing number of Alternative Lenders, it can be hard to navigate all the options. In fact, it can be a full-time job.
Actually, it is a full-time job. Mortgage Brokers spend the time staying up-to-date, keeping abreast of changing regulations, researching, and comparing the various options to find the product that best suits you.
If you go directly to a Bank and if you do not qualify because you do not meet the specific underwriting guidelines of that particular bank, now you have to go to another banks and start all over and you may again get turned down.
Bank’s don’t tell you how fix your file. They just turn you down. Whereas a mortgage broker knows how to highlight your plus points and explain your minus points.
The mortgage broker also know which bank or lending institution will approve your mortgage. On top of that you get the wholesale rate with a mortgage broker and save money, too.
Sometimes things can happen over which one has no control like losing a job, sickness or a divorce. We understand that. That is why we have mortgage products to suit every income and credit situation.
Having a bad credit rating doesn’t mean you can’t get a mortgage. There is a lender out there for all credit ratings and for all income situations. At Benevolent Bancorp, we also have mortgage products that are approved on equity, not credit.
We look for reasons to make the loan, not for reasons to decline. Hopefully, the reason for your derogatory credit no longer exists. We are a common sense lender.
Here is the best part, even after closing the mortgage, Benevolent Bancorp, and only if you will want, will stay with you and assist you, as we have assisted hundreds, in improving your credit score.
Benevolent Bancorp will wholeheartedly help you to get back on track and be able to refinance to a residential mortgage at a bank rate in a year’s time and save thousands of your hard-earned money. At high-interest rates, your money is evaporating into the thin air. You are actually working for the lender.
Call us today and get the best advice on your mortgage. With the right guidance, you even have the power to shift from being a borrower to become an investor. It all begins with one easy and tiny little first step: a call to Benevolent Bancorp.
Private mortgages are not necessarily used only by the credit challenged or riskier borrowers. Lots of times, borrowers with excellent credit need money super fast and therefore opt for a private mortgage.
Maybe they are self-employed or between jobs and have difficulty verifying their income.
Private mortgages are considered a band-aid mortgage and are generally for one year with a balloon payment at the end of the term. Needless to say, they carry higher interest rates and fees.
Yes, Benevolent Bancorp does mortgages for self-employed. If you are a self-employed, you know how hard it is to explain to banks about your deductions that create significant reductions in your declared income.
We understand that. In some cases, you do not even have to prove your income. We have enough experience and expertise to estimate your income.
Call us today to discuss your particular situation with no obligation.
You may have been turned down by banks because of your income issues. Maybe you are self-employed and your income for last year is less than your income for the previous year.
Most banks can turn your loan down just for that. Even though they will do income averaging but they still do not like to see the downward trend in income.
Benevolent Bancorp has many common sense lenders. These lenders are not restricted as rigidly as the banks in their underwriting guidelines. They can look at your other sources of income and factor them in.
Having a bad credit or low credit score doesn’t mean you can’t get a mortgage.
By building a proper loan package with reasonable credit explanation and supporting documents, Benevolent Bancorp has funded lots of mortgages that otherwise could not have been funded. You may be surprised to know that you can still get a mortgage.
Whether you are behind in payments, over the limit and even past bankruptcy, let us help you get the mortgage. Not only that, after the closing, we help you repair and improve your credit score so you can eventually get back to the bank or residential or conventional mortgage.
So long you will let us, we are with you every step of the way till we get make you a prime borrower.
Besides having our own funds, we have business relationships with not only the banks but with non-traditional lenders who specialize in funding mortgages for borrowers who have credit issues that cannot be addressed by the banks.
Let us look at your situation and come up with solutions. That is what we do and specialize in.
Banks absolutely cannot make exceptions when it comes to debt ratios. The industry standard for a gross debt service ratio (GDS) is around 36% and for a total debt service ratio (TDS) is around 40%%.
But these ratios are simply industry guidelines and vary from lender to lender, both within the same category of the lender as well as across different types of lenders (banks vs. non-depository lenders, B paper lenders and private lenders). Therefore, they are not set in stone. It is not uncommon for banks to approve mortgages with TDS as high as 44 with other compensating factors.
Some lenders will emphasize other factors when determining the validity of an applicant. For instance, the loan-to-value ratio (LTV) is much more important to B paper lenders, as they are lending based on equity and income can simply be stated to alter the TDS/GDS ratios. The LTV is a simpler calculation; it’s the ratio of the size of the loan to the value of the property.
In some cases, the loan may be the high loan-to-value ratio (which means that the down payment for that loan was less than 20 percent), which requires it to be insured by the Canadian Mortgage and Housing Corporation (CMHC) or by private insurers Genworth or Canada Guaranty. In the case of insured loans, the GDS or TDS can be as high as 39 to 44 percent with a credit score of at least 680.
If you have high ratios, the banks do not guide you on how to bring your ratios down. They just turn you down. Benevolent Bancorp, on the other hand, will show you how to bring your ratios down so you can qualify for the mortgage. If that is absolutely not possible, we will still be able to get your mortgage funded but under the Alt-A or private mortgage program. Alt-A and sub-prime programs are flexible in our debt ratios and can consider your other sources of income that you cannot verify.
If your property is listed we can still give you a mortgage. And if you have an accepted offer, you can get money for a deposit on another property or for any other purpose even without a credit check by us or income verification.
If you are a new immigrant, you do not have to wait to buy your first home. So long you are employed; either have no credit or good credit and have enough down payment and income to afford the monthly housing payments, chances are you can get a mortgage.
Just make sure you pay your rent and all other bills with a cheque or online so you can provide a proof that you pay on time. If you do not have a credit card, we can help get you one to open your credit file in Canada.
Every day you are without owning real estate, you are being left behind. Real estate is the best asset and best hedge against inflation. By renting, you are only paying the mortgage payment for your landlord.
Even if you think you will not qualify, it does not cost you a nickel to call us and get free advice without any obligation. One call to us and we can qualify you and even get you a pre-approval. If not, then at the minimal we can guide you as to what steps you can take in next few months so you can qualify to buy your first home in the near future. Preparedness is the key to success.
And the first step is to get pre-approved. If you are pre-approved, you will have an advantage over other buyers who do not have pre-approval because the seller will not be sure if they will get approved. You will also know what you really can afford so not waste your time. Your rate will be locked in for 90 to 120 days so you will have that security. If the rates go down you will get the lower rate. If the rates go up, you will get the rate that is locked in for you. All these amazing benefits at no cost to you.
Call us today to get started in your search for your first or your next dream home.
Refinancing is the replacement of an existing debt obligation with another debt obligation. The terms and conditions of refinancing may vary widely.
Most borrowers refinance or renew their first mortgage when the balloon payment comes due. However, as the equity in your home builds up, you may want to refinance to borrow more money. Opting to refinance your mortgage before the maturity date may result in prepayment charges.
Refinancing can be an effective financial strategy if you have plans to use the additional money in beneficial ways. For example:
Consolidate higher-interest debts into one manageable payment with a more affordable interest rate by paying off those debts with the mortgage proceeds.
To take advantage of lower interest rate and therefore reduce your monthly payment, if the cost of prepaying your current mortgage will be outweighed by the savings from lower interest rates.
To consolidate other debt(s) into one loan (a potentially longer/shorter term contingent on interest rate differential and fees)
Add to the value of your home by making improvements or tackling a renovation project.
Investing the net proceeds at a higher return than the interest rate on your mortgage so you make a net profit.
To just free up some cash.
A loan (debt) might be refinanced for various reasons.
Most borrowers renew their mortgage at the end of therm. Mortgages are amortized over a period of time (e.g. 25 years) with the terms and conditions negotiated in a series of terms (e.g. 5 Year Fixed Closed). At the end of each term, the mortgage can be fully paid off or, if offered, the mortgage may be renewed for a new term.
Before your renewal date approaches, you need to start thinking about giving some thought to any changes in your financial situation or priorities. Renewal is a great time to make adjustments to the type of mortgage you have or the amount and frequency payments of your. For example:
Has your tolerance for interest rate fluctuation changed over the years? If so, a variable rate mortgage may work for you.
Would you like to take advantage of flexible payment options that let you make prepayments, increase the frequency of your payments or plan for a payment vacation from your mortgage payments?
Would you like to use your home equity to pay for renovations, repairs, tuition or a well-deserved vacation? If so, consider the refinancing option below.
Are you held back by high-interest rate debt? Get debt-free sooner and immediately increase monthly cash-flow by consolidating all your debts into one lower interest rate! Why pay high-interest rates on your bank's credit card debt when you can add that debt to your mortgage and pay a much lower interest rate!
One important part of a strategy is knowing "good debt" from "bad debt". A well-planned mortgage can help you turn those bad debts into good debts and get them out of the way.
1. Consolidate high-interest rate credit cards to one lower rate.
2. Save money and increase cash flow.
3. Improve your monthly cash flow, have one easy payment, and be mortgage-free quicker.
You can sell or assign your mortgage to anyone else any time. If and when that times come, let us and we can handle the process for you and get you the cash quickly.
Tired of passing your hard earned money over to your landlord? Maybe you've built up some savings and have at least 5% down payment for your own property.
No matter what your situation is, talk to us and chances are we can make it happen for you and you can be on your way to owning your first home.
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Benevolent Bancorp was started keeping “what is good for all” in mind. Benevolent Bancorp’s goal is to help its clients flourish and we are so very proud of our goal. Each and every human Read More
