Refinance Mortgage Guelph

Are you at a point where you are deciding whether to do a Refinance Mortgage Guelph or move to a new home? Does the thought of moving and all the associated costs a little overwhelming.   Before you make that big decision, why not consider using the potential equity in your home that renovations would create.  This is a Refinance Plus Improvement mortgage or also a Refinance Mortgage Guelph. 

 Now, does the thought of doing the work yourself conjure up images of half- finished jobs or months and months of renovationsrenovations as you try and do them in your spare time?   Why not have the funds available so you can pay someone else to do the work! Maybe you just don’t have the time or experience to do the renovation yourself or want it done fast so you can enjoy it now!  Why not at least have the choice!

This unique type of mortgage has allowed many of my clients has been designed for those who already own a home that may require some immediate upgrades.  If the property isn’t exactly what you want, then build it, renovate it, add it, upgrade it!  Maybe you have a desire to add your own personal touch to your home or increase your living space, so create your own dream home by……

  • Adding a new or updated kitchenimprovements
  • Developing the basement for more living space or visiting friends and relatives
  • Updating or replacing the carpeting or maybe adding hardwood
  • Adding a garage or work room
  • Adding a media room or “man cave”
  • A new bathroom with maybe a jetted tub – your personal sanctuary
  • A new roof
  • A more efficient central air or furnace system
  • Adding new siding, eaves or fascia 
  • Replacing or updating doors and windows
  • Adding a swimming pool or major landscaping

So how does it work?  …..

First, you will need at least 20% equity in your home based on its current value.  Before the mortgage financing is arranged, written quotes are obtained from licensed contractors or suppliers for the repairs and/or the improvements to be done to the home.  The application for mortgage financing is requested and is made for 80% of the current value plus 80% of the cost to complete the improvements.  The lender will “hold-back” on closing the “improvement” portion of the mortgage until the work has been completed and inspected, normally within 30 to 60 days of closing.  Once the work has been completed, the lender will advance the balance of the funds to either you or your contractors.

What does this mean? Let me give you an example with 20% equity on a property with a value of $400,000:

  • Current Property Value: $400,000 x 80% = $  320,000
  • Cost of improvements: $  40,000 x 80% = $    32,000
  • Total New Mortgage*: $440,000 x 80% = $  352,000

The Steps: 

  1. An application is made for a total mortgage in the amount of $352,000, which represents 80% of the improved value of your property.
    Now of course you may already have an existing mortgage or secured line of credit on the property and this will either be included in the new mortgage (blended) or paid out completely.   It will depend on what type of existing financing you have on the property on what your options would be.  Let’s assume you have an existing mortgage of say $320,000 which is 80% of the value of the property.
  2. On closing of your new mortgage amount of $352,000 it will replace your existing $320,000 mortgage leaving a total of $32,000 in this case for renovations.   This $32,000 will be held in trust at your lawyers and you will receive it as soon as the work is completed.  This is known as a “hold back”.  The lender of course doesn’t want you to have access to the funds, and then actually not end up using them for the renovations! 
  3. The mortgage is arranged and then the contractor or yourself, complete the improvements as soon as possible and then the lender advances the hold-back of $32,000, and you pay the additional 20% of the cost of the improvements ($8,000) and the $32,000 owed to the contractor or you directly, can be paid as per the original quote for the work.  
  4. Everyone is a winner!  You are happy because you got $40,000 of improvements done to the home with a cash outlay of only $8,000!  With current interest rates still historically low, this is much cheaper than adding the cost to a credit card or line of credit – let the equity in your home pay for the renovations!

Of course, the lender is happy because they now have a mortgage on an improved home!!!

As an expert in this unique type of Refinance of Your Ontario Mortgage, I can answer all your questions and provide you with recommendations for great contractors. You can contact me at 519-760-4391 or melissa@melissabendo.com

Closing Costs On Home Purchase Ontario

Part of the conversations I have with my clients when I start going through the steps of obtaining financing for the purchase of your home or refinance, that many are not aware of what the closing costs consists of. My goal is to outline these costs so they know that on top of their downpayment, there should be at least 1.5% of the purchase price for closing costs although we recommend approximately 2% to be on the safe side.

Below I have listed the closings costs that you might incur, but remember that they are estimates only and should be used as a guideline as of course they may vary depending on your own specific purchase.

Legal Fee and Disbursements
On the day of closing, your lawyer will charge a fee for their services and it will depend entirely upon the mortgage deal. Their fees involve:

  • Drafting the title deed
  • Preparing the mortgage 
  • Conducting various searches 

The disbursements are also out-of-pocket and will involve:

  • Registrations
  • Searches
  • Supplies
  • And G.S.T.

Land Transfer Tax
Land transfer tax is charged on closing when the property is transferred into your name. This can vary depending on the price of the home, if you are a first time home buyer and the city you live in Ontario, Canada.

Here is how land transfer tax is calculated:

Land Transfer Tax Calculation:
$0 to $55,000 = 0.50% x Amount
$55,000.01 to $250,000 = 1% x Amount minus $275
$250,000.01 to $400,000 = 1.5% x Amount minus $1,525
$400,000.01 = 2% x Amount minus $3,525

Mortgage Insurance
Any mortgage that the downpayment is less then 20% will have insurance on your new home. These types of mortgages are called high ratio mortgages and will always be default insured by other CMHC, Genworth or Canada Guaranty.  

Your insurance costs can include default mortgage insurance and can also include:

  • Homeowners insurance 
  • Mortgage life insurance 
  • Title insurance

 Property Tax and Prepaid Utilities Adjustments
At the time of a sale, your lawyer will confirm the property taxes on your purchase property to make sure they have been paid up to date. 

  • Property Taxes up to date – a Tax Certificate is issued and adjustments are made for the buyer to compensate the seller for any prepaid taxes. 
  • Property Taxes NOT up to date – the seller will pay the remaining taxes from the proceeds of the sale. 

If the sell has prepaid property taxes along with the utilities for the year, they will be credited the prepaid portion on closing.
Your lawyer will confirm all this for you.

Property Appraisal
Your lender may request an appraisal to be completed on the property you are wanting to purchase. This is always completed before any mortgage money is transferred into trust at your lawyers office. 

This step is because the lender wants to be assured that the property is worth what you are either paying for it or valuing it for. 

An appraisal will typically range between $250 to $350 depending upon the location and complexity of the property and this cost is always paid by you, the client

Home Inspection
With the going market these days in a major city, a home inspection may not be a condition on the sale of the property. There may be a condition on the property prior to the “firming up” of a Real Estate transaction. These reports indicate any problems in the property and gives the cost to repair. Depending on the size and location of the property, a home inspection is around $350 – $450.

Interest Adjustment (IA)
Your lender may charge you interest on closing up to the first theoretical payment date.  If you choose to make your mortgage payments monthly on the first day of the month and your transaction closes after the first day of the month.  This is called the Interest Adjustment Date (IAD) and I can calculate this for you. 

For example:

  • If your property closes on June 1st, then your first payment will be July 1st = No Interest Adjustment payable. 
  • If your property closes on May 29th and your first payment is on July 1st = 3 day Interest Adjustment (May 29th to June 1st).

I can always be reached at 519-760-4391 or melissa@melissabendo.com. I would be happy to go through these closing costs on your purchase or refinance!

Self Employed Mortgage Ontario

As someone that is also a business owner, I fully understand the challenges or concerns some people might have when it comes to qualifying for a mortgage.  According to statistics, 20% of all income earners in Canada are now self-employed and this is a large and growing demographic.

So why can employees easily get a mortgage but an employer or business owner has challenges or Self Employedlimitations?  Here is why…they may have multiple “write offs” on their tax return that reduces their net taxable income, no guarantee of a consistent income week after week and the fact that 30% of businesses fail in the first 5 years, makes the lenders nervous about handing over a mortgage for hundreds of thousands of dollars, even though they have a home as collateral. It doesn’t make sense does it?

As I work with 50+ lenders across Canada, I have access to those that truly understand the self-employed borrower and I am an expert in this area of financing.

Self Employment Mortgage Guidelines Canada with Genworth – Alt A

Self Employed Borrowers:

  • 2-years self-employed tenure is recommended, however will consider borrowers with less than 2-years BFS tenure depending on the length and type of previous employment.
  • One (1) form of written third party documentation confirming self-employment tenure must be on file 
  • Lender is required to capture the borrower’s “Stated” income and submit to Genworth as part of the application.
  • The “Stated” income should be reasonable based on the type and size of the business, and should be able to service the required mortgage as per the GDS/TDS Guidelines above
  • Reasonableness of the income is a critical factor in the approval of the loan as is the borrower’s ability to service the loan and all other obligations

Commissioned Sales:

  • A commissioned sales applicant is defined as someone who derives 100% of their income from a commissioned source
  • The lender is responsible for ensuring that the borrower is a commissioned sales applicant as defined above, with a minimum of two years tenure, for example by way of letter of employment, T1 Generals or T4’s
  • Lender to ensure borrower(s) have no tax arrears (recent NOA will suffice)
    Commissioned sale applicants who are paid a salary plus commission are NOT eligible under this program and must qualify in the usual manner (e.g. GDSR/TDSR and income confirmation will be required)
  • Lender is required to capture the borrower’s “Stated” income and submit to Genworth as part of the application.
  • The “Stated” income should be reasonable based on the type and size of the business, and should be able to service the required mortgage as per the GDS/TDS Guidelines above
  • Reasonableness of the income is a critical factor in the approval of the loan as is the borrower’s ability to service the loan and all other obligations

Corporations
A limited company or corporation is a legal entity, separate from the persons (all shareholders) who own it. The business can own assets, enter into contracts and conduct business transactions in its own capacity. The company is called limited because the liability of the shareholders is limited to their investment. All provincial Corporations must obtain articles of incorporation from the province in which they are registered or may be federally incorporated. The applicant’s personal income will be reported by T4 from the corporation.
Documentation requirements – Any one of the following:

  • Articles of incorporation
  • Business Credit Report
  • Audited Financial Statements for the last 2 years, prepared and signed by a CA
    Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears

Sole Proprietorship
A one-owner operation where the owner directs all the activities of the business, assumes all authorities and obligations, and is liable for its business debts. The sole proprietor income is reported to revenue Canada on the standard tax return (T1 General) together with Revenue Canada’s required statement of business or professional activities.
Documentation requirements – Any one of the following:

  • Business License
  • Business Credit Report
  • GST/HST Return Summary
  • T1 Generals with statement of business activities attached for a minimum 2 years
  • Audited Financial Statements for the last 2 years, prepared and signed by a CA 
  • Plus a recent Notice of Assessment or a signed affidavit by the borrower(s) to confirm no income tax arrears

 

Do you know someone that is self-employed who would benefit from my services? They can contact me at 519-760-4391 or at melissa@melissabendo.com

Divorce In Ontario

In todays world, the reality is that many couples are going through separations and divorce in Ontario.  It can be a daunting process for both parties when it comes to figuring out the matrimonial assets and family home.  When it comes to selling a Divorcematrimonial home, there is a lot to consider with purchasing the next home in conjunction with also selling an existing home… It can be a daunting process and there are always lots of questions such as “What happens if you don’t sell?”, “How does bridge financing work etc.?”, “Should I keep my existing home and rent it out?” and lots more… I have a
really great article that I have written called “Buy or Sell – What should you do first?

Do you know anyone going through a separation or divorce that would like a copy of this article or to chat about their financing options?  Contact me and let me help guide you or someone you know through this process. You can reach me at 519-760-4391 or melissa@melissabendo.com

Mortgage Guelph Ontario Canada

Welcome to my blog site! This is my very first post and I have fantastic news that I want to share with you! With being in the mortgage brokering industry for a while now – I have had the opportunity to save many people a lot of money.

As a Licensed Mortgage Agent, I now have access to over 50+ lenders in Canada, and essentially all the money in Canada and beyond! I act like a personal shopper of mortgages by negotiating with every lender and find the one that will offer the best options and truly earn the privilege of providing you with a mortgage. As a result of the team I have joined and the volume we produce, I get access to the interest rates the major banks don’t want you to know exist… it is like getting access to wholesale rates! I ensure that you get the best options that meet YOUR needs and save you thousands and that also includes negotiating with your existing bank on your behalf. I now know just how far they can go to earn your business including fantastic rates and terms. Here is the best part…this is free to you as I am paid by the lender that you select from, after I have presented you with all your mortgage options (OAC).

So here are some of the types of mortgages I can do:

  • New purchases
  • Take equity out of your home for renovation purposes, financial investing, or educational financing
  • Renewals of existing
  • Refinance to consolidate debt/renovations/investments/large purchases such as vehicles, boats etc
  • Purchase Investment Properties and cottages… and more

If you are interested in finding out what the current best interest rates are today… maybe just to compare with what you already have… let me know as would be happy to email them to you.

I work with a fabulous team of very experienced mortgage agents and I would like you to be able to benefit from seeing if you can save some money in unnecessary interest… better in your pocket than the banks (and there is no obligation at all)!

I wonder if I can ask a favour… I need some help growing my new business… if you hear of anyone that is moving or looking to purchase a house, they might well need a mortgage and I’d really like to be able to help them… would you mind passing on my information?

On this site, my goal is to keep you up to date with how things in the mortgage world are going. CLICK HERE to send me an email if you have any questions or just to join my mailing list.

Looking forward to posting some great content!

Melissa Bendo
Mortgage Agent M15001866
Mortgage Alliance Lic #10530

T: 519-760-4391 | F: 289-800-9624
melissa@melissabendo.com | www.melissabendo.com

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