Knowledge is power, and when it comes to making a major life decision, you want to make it a powerful one that you’ll feel great about. Our blog is designed to communicate the latest news about industry changes, as well as our thoughts on smart purchasing. Keep up to date with the latest news from BROWNE Mortgages + More right here–because we’re not going anywhere, and mortgage news never gets old or stops.

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B-Lenders & Private Mortgages

B-Lenders & Private Mortgages.

As Chilliwack Mortgages Brokers, we’ve decided to give you all an easy read on everything you need to know about B-lenders & Private Mortgages.

Most of us are vaguely aware of private mortgages, although B Lender Mortgages & Private Mortgages are the fastest growing segment in the Canadian mortgage industry, because they’re much easier to qualify for then the A-side.

The A side is getting tougher to qualify for now than at any time in recent memory. High prices in major cities, large mortgage requirements and a higher stress test, which can put qualification out of reach for homeowners who have had no concerns. This is where B-Lenders or Private Mortgages are needed to step in and help the homeowner get on track.

B Lenders are necessary, but all are very similar, watch out for lenders that add on High Fees.

 

4 most common cases when B lenders are needed to step in

  1. Consolidations – by doing a debt consolidation, it lifts the burden of debt. But also helps lift your credit score, which will get you back to the best rates on the markets.
  1. Stated Income – There are cutbacks on self employed lending for those who do not “claim” enough income. If you’re a self employed individual, the more you write off the less of a mortgage you will qualify for. Give short term capital while figuring out income.
  1. Construction Financing – Banks have tightened up on construction financing leaving fewer options.
  1. CRA Debt– Most Banks will not let you use a mortgage to pay off CRA debt. If you have CRA Debt, you must pay that off before applying for your mortgage.

Buying a Foreclosed Home

Buying a Foreclosed Home

As Chilliwack Mortgage Brokers we’ve taken it upon ourselves to share some Pros and Cons about buying a foreclosed home.

Process of purchasing a foreclosed house:

  1. Original offer goes in and is reviewed by the foreclosing company.   If the offer is accepted a court date will be set for any additional parties, to put a bid on the property.  Once the offer is accepted, the price is posted for the public to see.
  1. At court if no other parties show up the original bid wins and the property is theirs.
  1. If additional parties show up, then usually bids are sealed in an envelope and handed to the judge (at this point the original bidder can adjust their offer).  The judge unseals the bids and then decides which bid is best for the foreclosing company.  While price is a large factor on this decision, he will consider other factors such as closing date.   The secondary factors are generally the tie breaker if two bids are very close.

The pros of buying a Foreclosed home:

  • When shopping for a foreclosed home, the lender is eager to recuperate their loss and will want to sell the property quickly.
  • They often sell the home at a lower price than it was initially. If you purchase the home through an auction, you may receive the house at a lower price.
  • Homes in BC go through an Auction Process. At Court you’ll know what the official bid is. And know the base purchase price that you need to start.
  • If you are lucky enough to put the initial bid on the house, and no one shows up for the court auction, you’ll get the house for your initial bid.
  • This option can be beneficial if you’re a landlord with plans to buy and fix up cheaper properties and then rent them out.
  • If the property goes for a cheaper price, you can use the money you’ve saved for maintenance purposes or to making home improvements, thereby increasing its value and your home equity in the process. You may even be able to sell the property at a profit some day. Within Canada you can add renovation costs into your mortgage to fix up the property of any maintenance wants & needs.

The cons of buying a foreclosed home:

  • While foreclosed properties can be cheaper than the usual price, they are not rock-bottom prices, as you might have heard. Often, you would acquire the home at only a slightly cheaper price than it was initially.
  • Foreclosed properties can have a low initial bid. Once they go to auction, some people pay more then the market value.
  • The legal and financial procedures for buying a foreclosed home are stricter and more complicated than the average home sale.
  • Foreclosed homes are usually sold in a “what you see, is what you get” state, meaning you’ll have to cover all repairs/renovations by yourself. Meaning if owners still in house while being foreclosed, any damage made by the owner will come out of your pocket.
  • Any possessions left by the previous owner are your responsibility

Opportunity Arises to go from Renter to Homeowner – Chilliwack BC

As a Chilliwack mortgage broker, we tend to experience similar seasonal changes as our local real estate partners do, with some exceptions. Purchase season will often slow down around Christmas, picking back up in February and continue snowballing until it reaches it’s peak in the early summer weeks; however, this year appears to be drastically different than previous years. Rather than slowing down in mid July – mid August (often prime vacation time), the pace of home buying/selling doesn’t seem to be slowing down anytime soon. Therefore, us being Chilliwack mortgage brokers, we took it upon ourselves to do a little digging and come up with some sort of conclusion as to why this may be.

3     things became clear to us:

1)      Home values have decreased as much as 10% since 2018 and as of recent, this decrease in home value has reached as much as 19.49%.

2)      Interest rates have significantly dropped compared to last year as much as 0.90%

3)      The Bank of Canada recently lowered its stress test rate from 5.34% – 5.19%

To some, the change in Chilliwack’s real estate might not seem to be hugely different, to others this change can take someone from a full-time renter to a first-time homeowner.

Below is a comparison to show Chilliwacks new interest rates/housing costs, and how these changes have increased purchasing power for many Canadians.

August 2018

Mortgage amount = $500,000

Interest rate (5 year fixed) = 3.79%

Amortization = 30 years

Monthly mortgage payment = $2318.53

August 2019

Mortgage amount = $450,000

Interest rate (5 year fixed) = 2.89%

Amortization = 30 years

Monthly mortgage payment = $1866.48

That is a $452.05 difference in monthly mortgage payments!