Acceptable Sources of Income When Qualifying For A Mortgage in Ontario:

Are you looking to buy a home soon and have questions as to what different sources of income you can use when applying for a mortgage? There’s a lot of different income sources we are able to use as mortgage brokers to help qualify you for a mortgage when you are purchasing in Ontario. Here are some examples:

If you’re interested in knowing your options Click the Link below to schedule a free virtual phone mortgage consultation with Mortgage Broker Amandalyn

Amandalyn Findlay Mortgage Agent #M16000725.
Powered by Sherwood Mortgage Group #12176. –

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What is an Ontario Cash Back Mortgage?

When you purchase a home, you may find that you need some extra cash. You might want to renovate, purchase furniture, or simply have a cash buffer during the first few months of homeownership. Fortunately, some Canadian lenders offer mortgages that give you a cash back rebate when you take out your mortgage.

With a cash back mortgage, your lender advances you a cash lump sum when your mortgage closes. The most common sum you receive is 5% of your mortgage amount but it’s possible to get between 1% and 7% depending on the lender you choose.

Two Main points for you today about Ontario Cash Back Mortgages:

1. Having difficulty increasing your Purchase Price to get the home you really want because of you debt load? Why not let me use up to 5% of your mortgage amount to put towards paying down/off your debts and lower your debt ratios?! The result? Qualifying ratios go down, purchase price goes up! Now go back to your Realtor and tell them your New House budget ☺️.
Don’t need to pay off debts? Good for you!

2. How about up to 5% of your mortgage back in cash day of your closing that you can put towards closing costs, appliances, new furniture.. Whatever YOU want!

When Does an Ontario Cash Back Mortgage Make Sense?

The cash rebate you receive when you get a cash back mortgage is tax-free and you can use it for any purpose. Some of the most common uses are:

• To pay for closing costs, such as legal fees and land transfer tax.
• To supplement cash flow during the first few months of home ownership.
• To pay for renovations or furniture purchases.
• To invest, or put into savings.
• To pay down high interest debt.

Listen, if you have an objection, I have a solution.
Message me and let me help you take advantage of this Real Estate market now! Stop waiting.
Let’s Talk Options!

Amandalyn Findlay | Mortgage Agent Lic# M16000725
Powered by Sherwood Mortgage Group Lic# 12176

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A common question I get from most clients when discussing getting a variable rate mortgage is “If interest rates go up does that mean my monthly payment goes up to?”   Short answer, No.

Let’s Discuss: Variable rate mortgages are based on Prime, not necessarily lenders raising their fixed rates. Even if prime increases within your term, most lenders will keep the monthly payment the same but adjust how much interest goes towards principle instead of re-calculating your monthly payment altogether. Which usually results in your payment staying the same but the amount going to principal may fluctuate.

Right now is a great time to take advantage of the low variable rates. Another advantage is that you usually are only required to pay three months interest penalty if you end up breaking your mortgage before your term (ie: sell your home or refinance before your term is up) Unlike a fixed rate, depending on when you break your term, it could result in an absorbent amount of dollars in penalty fees. Contact me to learn more about how this mortgage option may be the best for you.

Click Here to book a Free mortgage consultation. • Phone: 647-272-2232
Let’s Talk Options AmandalynFindlay.ca | Mortgage Broker #M16000725
Powered by Sherwood Mortgage Group #12176
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Realtor Sean Findlay | Century21 Website: www.FindlayRealEstate.ca Office: 905-450-8300

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Everything you need to know about Vendor Take Back Mortgage

7 Things You Will Learn Once You Read This Article:

1. What is Vendor Take-Back Mortgage
2. How is Vendor Take-Back Mortgage beneficial for buyer and seller?
3. Why consider a Vendor Take-Back Mortgagee
4. Benefits of a Vendor Take-Back Mortgage
5. Vendor Take-Back Mortgage seller considerations
6. Vendor Take-Back Mortgage buyer considerations
7. Advantages of Vendor Take-Back Mortgage to property investors

What is a Vendor Take Back Mortgage?

The vendor take back mortgage enables the seller of the property to become the lender for the buyer. The vendor take-back mortgage provides an option when traditional mortgage setups are not an option, or when the seller wishes to offer an incentive to a buyer. Although this might not sound like an ideal solution, there are some circumstances when both buyers and sellers might consider taking advantage of the vendor take-back mortgage.

The buyer is still required to make regular payments to the seller as they would with any other lender. The interest rate is set by the seller and agreed on by the buyer. However, it is generally at a higher interest rate than one would receive with a more traditional mortgage.

The amount of money provided to the buyer varies from enough to cover closing costs or transfer tax to more substantial amounts to cover the down payment or a portion of the mortgage.

How does it benefit the buyer and seller?

Vendor take back mortgages have made their way back into the residential lending scene due to changes in the market and more stress put on buyers. It’s harder to acquire a mortgage because it’s harder to save for a down payment.

In order to get access to mortgages, buyers are looking for different ways to get their down payments. Both sellers and real estate agents have learned more about vendor take back mortgages and are able to present them to buyers as a viable option to help them buy their dream homes. In turn, it also helps sellers get their houses off the market.

The vendor take back mortgage is not the ideal lending situation for the average transaction. Instead, it’s used in specific situations where there are either market challenges for the seller or credit challenges for the buyer.

1. In a buyer’s market, high inventory means lots of competition, putting a seller at a disadvantage. As a way to entice buyers to consider their property over the hundreds of other options available, a seller can offer to provide funding to a buyer who might not otherwise have access to the funds required to make an offer.
2. It can get the seller’s home off the market while helping the buyer make a purchase that their finances might not have allowed when going the more traditional route.
3. In the case of poor credit, a buyer who is interested in the home can benefit if the seller is willing to assist them financially. That is a win-win situation. For the seller, it isn’t about the interest only. They also get the house off their hands while the buyer gets to purchase a home that their current credit would have prevented.

In both scenarios, the seller also has the added benefit of increased cash flow from the interest.

Benefits of the Vendor Take Back Mortgage

The vendor take back mortgage offers three main benefits to the seller:

1. You can sell your home faster.
2. You can generate extra income from the interest.
3. You can reduce the amount of taxes on capital gains.

For the buyer, the vendor take-back mortgage provides an additional type of financing option when you’re facing down payment or credit challenges.

Seller Considerations

As good as it sounds, the vendor take back mortgage does come with some warnings to sellers.

1. First, keep in mind that this type of mortgage is basically like a second mortgage.
2. You could be faced with a buyer who is not willing or able to make their mortgage payments. When this happens, the payments can fall back on you for the balance of the sales price.
3. It costs money to work with an experienced lawyer who can draw up an agreement to protect you against loan defaults. That is a must since if the buyer defaults, the loan is at risk and so are your finances. As well, it’s a costly process to file for foreclosure.

Buyer Considerations

Depending on the vendor take back mortgage setup, you’re going to have two loans to pay back. Often, buyers are tempted by the vendor take back mortgage to help provide the down payment to secure a mortgage from a bank. In the case of a conventional mortgage, you pay the down payment, and the bank pays the balance. You then make mortgage payments for the balance.

In the case of a vendor take back mortgage, you might be given a portion or all of your down payment by the seller, you then pay the bank, and they transfer the funds to pay the balance of the purchase. You now have to begin paying back the seller for the down payment and the bank their mortgage payments.

You have to calculate these monthly payments based on the agreed-upon payment schedule and interest to make sure that when combined, you can afford the payment required.

Advantages to Property Investors

This a tool used primarily for investors and commercial properties.

• • Sellers who own properties outright can face some hefty capital gains taxes when they sell. A vendor take-back mortgage can help defer capital gains from the purchase price, resulting in impressive tax benefits for the seller.

• Sellers also benefit by generating monthly income from the mortgage payments.

As with the house purchase example, for investors with poor credit, the vendor take back mortgage provides:

• A short-term financing solution until something better comes along from a mortgage lender.
• The buyer can work on building their credit by paying back the vendor.
• Buyer can also build up equity in the property and use that to obtain a better setup with a more appealing mortgage rate.

In conclusion, a vendor take back mortgage is not something the common home buyer or even seller probably has heard about. It is something that pops up a lot more in the real estate investment world, but in the right circumstances, it can prove beneficial to both buyers and sellers.

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