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First Time Home Buyer Incentive

This year on September 2nd the first-time buyer incentive will be available.  It is a program designed to reduce mortgage payments for qualifying first-time buyers with a minimum 5% down payment required for a fully insured mortgage.  This is achieved by sharing in the equity of your home.  Canada Mortgage and Housing Corporation (CMHC) will provide you with 5% of the cost of an existing home, or 10% of a new home. 

This does not have to be paid back until you sell the property and there is no interest charged!  Of course no great deal is without some fine details, so please take note of the following:    

1.  If your household income is more than $120,000, you are not eligible for this incentive.    
2. Your total borrowed amount (including the CMHC equity incentive) must not be more than 4  times your household income.

 An example scenario would be if your household income is $120,000, the maximum purchase price would be approximately $505,000 with 5% down and $565,000 with a 15% downpayment.

*You are required to pay the incentive back when you sell the home or after 25 years and the repayment amount is based on fair market value.

To help you secure the best possible rates and terms. Contact us today at 1-416-822-5886. 

Don’t just dream about home ownership! Let us help you make this dream come true!

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Bad Credit Mortgage

What is a mortgage actually?

It is money borrowed from banks and other commercial lending institutions to cover the cost of a home, and pay the principal back over time with interest. This type of loan is called a mortgage. When it comes time to purchase a home, many people are unaware of all the different mortgage options from which they can choose. Purchasing a new home is stressful enough, which is why it is imperative that you understand all of the different mortgage options you have available. Regardless of whether you are a first time home-buyer or you have been down this road before, it never hurts to have information about the various programs to see if a better option exists for your needs.

Attractive mortgage rates make this an optimal time to improve credit scores. If you have equity in your home but have had credit problems, a bad credit mortgage may provide an opportunity to set things in a rightful way. If you own your home, need bridge financing or have at least 15% toward a down payment, you have mortgage options despite credit blemishes.

Those with blights on their financial records often think a mortgage with bad credit is not possible. But whether you seek a second mortgage, equity line of credit or another type of home financing loan, bad credit mortgage loans are possible and may be the best way to repair and improve credit rating.

In fact, credit rating is not an important part of a loan assessment process for a bad credit mortgage process. The result is that securing home loans with bad credit is possible when a large enough down payment is made, or the credit rating has been improved, as well as meeting the basic criteria.

The greatest long-term benefit for the borrower with bad credit is that by making regular payments on their new loan for a reasonable period of time and it will strengthen their credit score. This better credit rating will then allow the borrower to refinance the bad credit home mortgage loan at a better interest rate in the future.

The process of getting a bad credit mortgage in Canada can seem overwhelming to first time homeowners, which is why it is important to do some research and work with a mortgage broker. Many people in this day and age get by just fine without owning or leasing a car. Some can even get along with no credit cards in their wallet. However, while lots of Canadians are content to rent apartments, there is certainly a large number of Canadians that are striving towards one goal, one of home ownership. Getting a house to raise their family in. However, for those with bad credit, their prospects can seem grim. In fact, bad credit mortgages are also known as “high-risk” mortgages, because of the level of financial risk that the both the borrower and lender are taking.

There are basic concepts that come along with mortgages in Canada.

Open mortgages

It allows you to pay off your mortgage in part or in full at any time without penalties, you can select any time to renegotiate the mortgage, flexible, but comes with a very higher interest rate.

Closed mortgages

It usually has a lower interest rate but does not have the flexibility of an open mortgage. You have a fixed or variable rate for a term, and to break this mortgage before the end of term will incur some costs.

Conventional Mortgage

If you have 20 percent of the purchase price on your new home to use for a down payment, you will be able to apply for a traditional mortgage. You may not have to apply for default insurance when applying for a conventional mortgage.

High Ratio Mortgage
A high ratio mortgage is a mortgage in which a borrower places a down payment of less than 20% of the purchase price on a home. A high ratio mortgage will require mortgage insurance. Mortgage insurance is usually purchased by the lender through one of Canada’s three default insurers.

Have you been rejected by your bank, because of poor or bad credit? Notably, many big banks consider borrowers who do not have a good credit rating to be high-risk.

Moreover, the big brick and mortar lenders have all but stopped lending to clients who don’t have a great income and perfect credit. More so, with the new lending rules in force in Ontario, homeownership is beginning to get elusive for many middle-class families.

Fortunately, there are still lots of options when it comes to bad credit mortgages in Canada. There are many monoline lenders with programs geared in making the dream of homeownership a dream come true. Same is true to those who want to a refinance or renewal of their current mortgage.

Do well to contact us for all your mortgage questions. We work with all major lenders including banks, credit unions and trust companies in Canada. We also provide private lending for clients, working with private lenders with very flexible terms, fees and rates. We will work with you, understand your unique needs and no matter your credit score, provide a solution to your mortgage needs. And our services are free.

MONEYVALUE

200 Consumers Rd, Suite 700
M2J 4R4 Toronto ON
t: 416 822 5886
e: mortgage@moneyvalue.ca

https://moneyvalue.ca

Case Study 12

Purpose Applicant wants to refinance home to pay off all outstanding debt and have monthly cash flow savings Income and Debt Servicing Commission-based income earning $90K annually, confirmed by previous 2 year's T4A gross and Year to Date commission statement Employment verified by employment letter and verbal confirmation by employer GDS/TDS is 37/37% with stressed TDS of 44% using the mortgage rate plus 200 BPS Mortgage Details LTV 80% Property Value $500,000 GDS/TDS Calculation Commission-based Income 100% $90,000 $90,000 GDS/TDS 37/37% Stressed TDS 44% Credit 540 Beacon due to missed bills during marital conflict  Excellent mortgage repayment history Property $500,000 property value Good condition, well maintained property Suburban area with DOM under 90 Deal Rationale: Client was offered a 1 year mortgage at 80% LTV. The client was able to consolidate all of their loans and credit card debt and is saving $500 monthly.  Tell Us Your Story MoneyValue www.moneyvalue.ca contact@moneyvalue.ca t: 416 822 5886

Case Study 11

The applicant is a sole proprietor of a salon.  He has accumulated $65K in debt, spanned across multiple credit sources, from renovating his apartment. His applied for a one year mortgage at 80% LTV and provided the following documents to qualify the $90K BFS income: Documentation Provided: 6 months business bank statements 6 recent contracts/invoices Copy of business licence Statutory declaration from the lawyer showing no taxes owing HST/GST number He submitted a signed Income Declaration Form which calculated the client's qualifying income:    A) Gross Revenue Annualized Bank Statements $193K B) Annual Expenses Salaries and Wages (minus client's own salary/drawings) $35K Lease for office/store space (if applicable) $25K Other Annual Expenses: Cost of goods/materials $33K Phone $10K Total Annual Expenses $103K C) Qualifying Income (A - B) = C $90K Deal Rationale: The client's GDS/TDS was 36/36% with stressed debt service ratio of 43%. The client qualified for a one year mortgage at 80% LTV to consolidate debts with $1.2K in monthly savings. After paying off $65K in debt, the client had enough leftover equity to purchase a new grooming station for the salon and expand its operational capacity. TELL US YOUR STORY MoneyValue t: 416 822 5886 e: contact@moneyvalue.ca www.moneyvalue.ca

Case Study 10

Here is a scenario where a couple with a past bankruptcy secures 80% LTV to renovate their home to include a basement rental suite and improve their cash flow. Clients: Married couple Verifiable incomes proven by letters of employment and recent pay stubs Credit: Primary applicant has a 582 Beacon due to previous bankruptcy Client has strong repayment history since bankruptcy Stressed TDS of 41% using the mortgage rate plus 200 BPS Property: Marketable owner-occupied detached property with unfinished basement Comparable homes average 26 days on market Deal Rationale: The client qualified for a 1 year mortgage at 80% LTV to pay off their existing first and second mortgages. The remaining equity was re-invested into their home to renovate their basement into a rental suite. The couple now has an improved cash flow of $600/month and a rental suite to generate additional income. TELL US YOUR STORY. CONTACT US TODAY MoneyValue t: 416 822 5886 www.moneyvalue.ca

Case Study 9

Here is a scenario where a seasonal landscaper/snow removal applicant qualified for a $450K home using self-employed income. The applicant is is a seasonal worker. They earned $60K as a snow remover from November-February and $50K as a landscaper from March-September. With a Beacon score of 560, the applicant is looking to purchase a new home. His broker provided the following documents to qualify the $83K BFS income: Documentation Provided: 12 months business bank statements* 3 recent contracts/invoices for landscaping 3 recent contracts/invoices for snow removal Copy of business licence Statutory declaration from the lawyer showing no taxes owing HST/GST number *12 months of statements showed income that allowed us to offer a better rate than just using 6 months for self employed mortgage A) Gross Revenue Annualized Bank Statements $110K B) Annual Expenses Salaries and Wages (minus client's own salary/drawings) $0 Lease for office/store space (if applicable) $0 Other Annual Expenses: Cost of goods/materials $26K Phone $1K Total Annual Expenses $27K C) Qualifying Income (A - B) = C $83K Deal Rationale: The client's GDS/TDS was 35/35% with stressed debt service ratio of 42%. The client qualified for a 1 year mortgage to purchase a detached home in a great neighbourhood where all comparable homes were 10 days on market or less.

Contact MoneyValue and Tell Us Your Story
t: 416 822 5886
e: contact@moneyvalue.ca
https://moneyvalue.ca

Case Study 8

Purpose Applicant wants to refinance a newly constructed home to consolidate 1st and 2nd mortgages and payoff $25K in debts Income and Debt Servicing Salaried income earning $89K annually Employment verified by employment letter, pay stub, and verbal confirmation by employer GDS/TDS is 36/36% with stressed TDS of 43% using the mortgage rate plus 200bps Mortgage Details LTV 80% Pre-Construction Property Value (2016) $400,000 Post-Construction Property Value (2018) $500,000 GDS/TDS Calculation Salaried Income  100% $89,000 GDS/TDS 36/36% Stressed TDS 43% Credit 550 Beacon due to piling of bills during past unemployment Excellent mortgage repayment history Property Newly constructed home purchased in 2016 $500,000 current appraised value 3 comparables in a highly marketable prime lending area with DOM under 90 Deal Rationale: The client was able to refinance their home for $400K on a 1 year term at 80% LTV. The client was able to consolidate their 1st and 2nd mortgages, $35K in debt, and improve their cashflow by $700 monthly.

Contact Us Today
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Case Study 7

Purpose

• Applicant wants to purchase home while away from work on maternity/paternity leave
• Recently seperated from spouse and currently renting apartment

Income and Debt Servicing

• Stable salaried positions earning $55,000
• Employment verified by employment letter, pay stub, and verbal confirmation by employer
• $1.5K in monthly child and alimony support
• $541 in monthly Canada Child Benefits
• GDS/TDS is 39/39% with a stressed TDS of 46% using the mortgage rate plus 200bps

Mortgage Details
LTV	80%
Property Value	$400,000

GDS/TDS Calculation Salaried Income (Maternity/Paternity Leave) 100% $55,000 Additional Income Sources Child and Alimony Support 100% $18,000 Canada Child Benefits 100%  $6,492  $79,492 GDS/TDS 39/39% Stressed TDS 46%

Credit

• 550 Beacon
• Payments and bills were missed during the difficult period leading up to the applicant's divorce
• Excellent mortgage repayment history on previous home

Property

• $400,000 property value
• Good condition, well maintained property in suburban area

Down Payment

• $20K down payment from client's own savings
• $60K from the seperation settlement 

Deal Rationale:

Client was offered a 1 year mortgage at 80% LTV. The client was able to purchase a new home to raise their child in. 

Contact Us Today
Please Visit:  https://moneyvalue.ca