The requirements of the conventional lenders are strict ; however, The Mortgage Centre's extensive portfolio of private lenders enables us to arrange financing for those who may not have met the requirements of the conventional lenders.
Requirements for 1st Mortgages from Conventional Lenders:
- Up to 75% of appraised value of home
- Up to 95% of appraised value of home on a refinancing
Many of the borrowers who contact us are having trouble meeting some of the criteria that conventional lenders require to qualify for a loan. Often this is the result of:
- inability to verify income
- a recent bankruptcy
- poor credit history
The Mortgage Centre prides itself in its ability to help borrowers meet these criteria or find other lenders where:
- criteria is not as strict
- lender enables the borrower to meet the criteria in a more realistic manner
We counsel our clients on how to meet the criteria for 1st mortgages with conventional lenders. Often this isn't as cut and dried as the lender would have you believe. We also have an extensive and expanding portfolio of private lenders which enables us to provide alternate solutions to this problem. Contact us for more information or to arrange a consultation to learn more.
|
CMHC |
1st & 2nd Mortgaging |
| Sale Price |
$180,000 |
$180,000 |
| Cash |
$18,000 |
$18,000 |
| 1st Mortgage |
$162,000.00
@
6.95% 5/25 |
$135,000.00
@
6.95% 5/25 |
| 2nd Mortgage |
N/A |
$27,000.00
@
12.25% 1/25 |
| CMHC Fee |
$4,050 |
$0 |
| CMHC Application Fee |
$235.00 |
$0 |
| CMHC P.S.T. |
$324.00 |
$0 |
| Appraisal Fee |
N/A |
$187.50 |
| Brokerage Fee - 1st Mtg |
$0 to qualified purchaser |
$0 to qualified purchaser |
| AMC Admin Fee - 2nd Mtg |
N/A |
|
| Total Mortgage |
|
|
| Total Payment |
$166,374 |
$162,300.00 |
| Balance owing after 1 year |
$163,770.14 |
$160,001.24 |
| Difference in Mortgage Balance after 1 year
|
$3,768.90 |
| Difference in Mortgage Payments after 1 year
|
$812.52 |
| Equity difference in favour of 1st and 2nd Mortgages
|
$2,956.38 |
CMHC Mortgages
Requirements for CMHC:
- Up to 95% of appraised value of home
Extra costs: 8% Provincial Sales Tax added to cost of the first mortgage.
CMHC Mortgages are first mortgages guaranteed by the Government of Canada. Some of the advantages to CMHC loans are:
- only require a 5% downpayment
- you can use RRSP contributions as part of your downpayment.
- cheaper rates (3 3/4%)
Yes, the interest rate is lower than private lender loans. Yes, you can use RRSP contributions but you can now also use them as downpayment on any mortgage. Yes, they only require 5% as a downpayment, but, when you look at these loans closely and do the math they aren't quite the bargain they seem to be.
Above you may have noticed that we bolded some text under the requirements for a CMHC Loan. The bolded text is the key to why we feel that these loans are not quite the deal you think they are!
The 8% Provincial Sales Tax is a great deal of money and an expense that should be figured into the TOTAL COST of the loan. When you add the 8% sales tax to the total cost of the loan you quickly realize that it may be much cheaper to find an alternative solution.
You have two choices if you only have a 5% downpayment. The first, is to find a friend or family member willing to give you a personal loan of the 5%. The other alternative is to arrange a loan for the difference. Contact us for more information or to arrange a consultation to learn more.
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