Mortgage Rates
Everyone wants to get the lowest mortgage rate possible, but with so many different lenders it can be difficult to find the lowest rate. Most lenders have 3 main criteria for the lowest Ontario mortgage rates.
The loan to value ratio must be below 80%, many lenders want the ratio below 75%. The borrower must have a good credit rating, a bad or poor credit will not be accepted. The property owner must have verifiable income and recent notice of assessments from Revenue Canada. Additional factors that lenders may look at are co-signers and additional collateral. The borrower should also be aware of the terms and conditions that each lender has on their mortgage, which can have a significant impact on the cost of the mortgage.
Second Mortgages
Second mortgages are fairly common across Canada. A second mortgage is second in debt obligation priority and can go up to a 90 % loan to value ratio (LTV), but in most cases lender do not exceed 85% LTV. A second mortgage has a higher level of risk to the lender, therefore the lender charges a higher interest rate. There may also be fees such as legal costs and broker fees. Second mortgages can be used to pay off existing high interest credit cards, property taxes, liens and even stop a foreclosure or power of sale.
The exact amount you can borrow on a
second mortgage depends on many different factors such as, equity in the property, location of the property, lenders criteria, credit rating and income. Most second mortgages are provided by private lenders or investments funds. Second mortgage lenders main criteria for approval is the equity in the property and the location of the property. Since a second mortgage is equity based a bad credit rating or low income will not impact the lending process.
Refinancing
At some point in time most people will want to refinance their existing mortgage. The main reason to refinance a mortgage is to get a lower interest rate or better terms than your existing mortgage. Mortgage refinancing will allow you to increase the total mortgage amount of your existing mortgage and allow you to pay off any existing debt. If you have high interest credit card debt, when you refinance your mortgage you can pay off high interest credit card debt with your refinanced low interest rate mortgage.
To find out which lender can offer you the lowest rate and best terms you can contact various lenders yourself or you can ask a mortgage broker to find you the lowest possible rate.
Bad Credit Mortgages
Many people want a mortgage but they have poor or bad credit. These same people have the down payment and the ability to meet all their mortgage commitments, yet the major banks still decline their mortgage applications. The good news is that many lenders now provide bad credit mortgages. Your credit rating is determined by independent credit companies, every time you apply for a credit card or miss a payment it shows up on your credit rating. Unfortunately the major banks (that also offer the lowest interest rates) must base part of their lending decision on your credit rating.
If you have a bad credit rating and still want a mortgage your best alternative is to contact a mortgage broker. A mortgage broker can get you a mortgage at a slightly higher interest rate but as your credit improves the mortgage broker then can switch you over to a lower interest mortgage. A mortgage broker can also tell you how to improve your credit rating or send you to a credit advisor. The overall goal is to get you the lowest interest rate and fees for your mortgage.
Foreclosures
A foreclosure is a legal remedy used by lenders to recover money from a mortgage that is in default. A foreclosure means that the mortgage holder is in the process of taking over ownership of your property. The present property owner will lose any equity in the property and have no claim to the property once the foreclosure has been completed. Each province has its own set of laws regarding foreclosures, property owners and mortgage holders have legal rights in the foreclosure process. A home owner can retain a lawyer, appoint a representative or act on their own behalf to defend against the foreclosure.
The foreclosure legal process can be very expensive and time consuming. Therefore, if you have a significant amount equity in your property, then we recommend you contact a mortgage broker and a lawyer. If you have no equity in your property you should still contact a lawyer or mortgage broker to confirm your situation.
Power of Sale
The "Power of Sale" legal process is only used in a few provinces, most notably Ontario. The Power of Sale legal process has some differences when compared to the foreclosure process. In a Power of Sale, the property owner can be evicted from the property but still retain ownership of the property until the property is sold or transferred to a new owner. The legal cost for all parties involved is cheaper than a foreclosure. A power of sale can be completed in a little as 90 days and there is very little court involvement.
As a property owner you should try to stop the Power of Sale as soon as possible. Keep copies of all legal documents that have been sent to you, contact a lawyer or
mortgage broker as soon as possible. A lawyer can tell you your legal status and a mortgage broker can arrange a new mortgage to stop the Power of Sale.
Private Lenders
In situations where a bank has turned you down for a loan or mortgage property owners can look for alternative lenders commonly known as private lenders. Private lenders do not have the same strict lending rules as the banks. They can lend to people with bad credit or no credit at all and they do not require a minimum income.
Private lenders usually lend an amount based on the value of your property. The maximum loan to value ratio for most private lenders is about 85%. They can provide first and second mortgages or refinance an existing mortgage. Since there is a higher level of risk, private lenders will charge a higher interest rate, there will also be legal fees and possibly a broker fee as well.
Home Equity Loans
A home equity loan is based on the value of your home. Most lenders will not exceed a loan to value ratio of 85% on these type of loans. A home equity loan can be a first mortgage or a second mortgage the interest rate will depend on the level of equity, income and credit worthiness of the borrower.
Reverse Mortgage
Reverse mortgages can be very useful for people that want a steady stream of money paid to them. Reverse mortgages will usually pay up to a maximum loan to value ratio of 65%. You can either take a steady monthly payment or take a up front amount and a steady stream of monthly payments.
Commercial Mortgages
If you have any type of commercial or income producing property you will need a commercial mortgage. Properties such as industrial buildings, warehouses, retail plazas, condo buildings office buildings, multi-use buildings and construction projects require a commercial mortgage.