Did you know there’s no fees associated with using a mortgage broker such as Plan Build Finance Inc.? We are compensated by the lender directly and still provide the best interest rates available on the ever changing market. Combined with a high level of knowledge and personalized service a Mortgage Broker has been a choice of Canadians for many years.
We provide a full service mortgage and financing package suitable for new home buyers, existing home owners and investors across Canada. We cater to our clients specific needs including new-to-canada, trades workers, self-employed, small business, investors and bruised credit, we understand that every client’s financial situation is unique. Our hands-on service approach allows us to listen to our clients specific needs and create a financing package catered to the client.
We work with A-lenders such as big banks, mono-line lenders and credit unions. We also work with B lenders and private lenders. Working with a wide array of lenders allows us to provide the best rate and the best product for our clients specific goals. We specialize in providing sustainable growth to both personal finance and real-estate investment portfolios through strategic financial planning. This detailed process starts by understanding our clients current situation and future goals. We review the different mortgage products available and suitable lenders to curate a specific mortgage that’s best for our clients. Some things to consider are an exit strategy, interest rate, term, fixed or variable, future acquisitions, access to equity, property improvements and development. Selecting the correct mortgage product is a critical step to ensuring structured and sustainable wealth growth associated with your property.
We lend to
- Small business
- New-to-Canada
- Self Employed
- Part-time and Hourly workers
- Trades people
- Commission only earners
- Investors
- New home buyers
- Existing homeowners
We lend on
- Single Family homes
- Condominiums
- Land
- Agricultural and farm properties
- Vacation properties
- Debt consolidation
- Multi-family buildings
- Accessory and additional dwelling units
- Duplexes, triplexes and fourplexes
Our products
Three primary mortgage types
High ratio insured mortgages 1
- Best interest rate of all mortgage products
- Amortization 25 - 30 years maximum
- Credit score over 680
- Down payment below 20%
- Maximum purchase price of $1,500,000
- Insured through CMHC, SAGEN & Canada Guaranty
- Insurer premiums apply
- Owner-occupied rentals - OK
Insurable Mortgages
- Typically the second best rates
- Similar to high-ratio but with no insurer fees and a down payment of over 20%
- Down payment over 20%
- Amortization 25 - 30 years maximum
- Credit score over 680
- Maximum purchase price of $1,500,000
- Owner-occupied rentals - OK
Conventional Uninsurable mortgages
- Highest interest rate of the three primary mortgage types
- Down payment over 20%
- Rental properties
- Extended debt service ratios
- Home value over $1,500,000
- 30 year amortization
Factors to consider on a primary mortgages
- Fees associated to register and setup the mortgage including appraisal cost
- Fees associated to breaking the mortgages i.e. Interest rate differential or three months interest payment. Including how the interest rate differential is calculated.
- Accessibility of the lender such as online only or physical branch
- Additional products offered by the lender such as credit cards, investment solutions, and other mortgage products
- Fixed rate or variable rate
Fixed vs. Variable
Fixed Rate Mortgage is fixed for the term of the mortgage and provides a high level of security over the term of the mortgage. Fixed rates are typically influenced by Canadian Bond rates vs. variable rates which are influenced by the Bank of Canada’s overnight rate. Fixed rate mortgages provide the buyer with a fixed payment for the entire term of the mortgage and is a great way of controlling your monthly expenditures and sticking to a household budget. Fixed rate mortgages can come at a premium to break the mortgage before the term is up, this is typically calculated through either a three month interest penalty or an interest rate differential calculation based on the lended or posted rate on your mortgage commitment, plus additional fees.
Variable rate mortgage is not fixed for the term of the mortgage and goes up and down in accordance with the lender’s prime rate which is influenced by the Bank of Canada’s overnight rate. A variable rate mortgage provides buyers with potential savings should interest rates decrease over the term and potential for increased payments should interest rates increase over the term. The monthly mortgage payment is not FIXED it is VARIABLE. Cancelling a variable rate mortgage is typically a flat fee of three months interest and therefore provides an increased flexibility as it does not have the potential to be subject to the interest rate differential fee calculation. A variable rate mortgage may be locked into a fixed rate mortgage at any time based on a term equal to the remaining years left in the variable rate mortgage term and at the current offered rate for that specific term.
Deciding which is best for you a fixed or variable rate mortgage is often determined based on personal circumstance. Buyers on a strict budget may prefer the security of a fixed rate mortgage and a guaranteed monthly payment. Buyers contemplating a future move or financial changes may prefer the flexibility of a variable rate mortgage and lower cost to break the mortgage.
Mortgage Term
A Mortgage Term is the length of time for which your mortgage contract is in effect, specifying when you’ll need to renew it unless you’ve paid off the loan in full. Canada’s most popular mortgage terms are three and five year terms. However, terms range anywhere from one year to ten years and selecting the correct term is dependent upon each buyer’s specific lifestyle and financial outlook.
Amortization
A mortgage amortization period is the total length of time it takes to pay back the cost of the home. A longer amortization period results in a higher amount of interest paid over the course of the loan and vice-versa. The amortization period also impacts the amount of the monthly mortgage payment. The longer the amortization period the lower the monthly payment and the shorter the amortization period the higher the monthly payment. Typically amortization periods are between 25 and 30 years but in certain scenarios such as commercial financing can increase as high as 50 years. Buyers can choose to refinance their home throughout the course of the mortgage to increase or decrease the amortization period which has a direct effect of the monthly payment and amount of principal and interest paid each month.
Home Equity
Home Equity is the difference between the market value of your home, determined by an appraisal and the outstanding amount owing on the mortgage. This equity represents the homeowners ownership of the home. Your home’s equity is a valuable resource and can be used to fund investments, renovations, 2nd homes, vacation properties and any other requirement the buyer may have. Not all lenders provide access to your home’s equity and this should be discussed between the buyer and lender prior to signing the mortgage. Accessing the equity in your home is typically far cheaper than other methods of financing and therefore when used responsibly can be a great tool. Home equity is secured against your home and therefore provides a relatively low risk loan option for your lender. Rates are typically related to the prime rate and subsequently are far cheaper than personal lines of credit and credit cards.
There are three main options for accessing your home’s equity. Typically lenders will allow the borrower to borrow up to 80% Loan to Value against their home. The value of the home is determined by an appraisal typically ordered by the lender. For example if you owe $300,000 on your mortgage and your home is appraised at $600,000 you could be eligible to borrow up to $180,000.
$600,000 X 80% = $480,000
$480,000 - $300,000 = $180,000
Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit acts similarly to a credit card and you are not charged for funds until you spend the funds. Therefore you could open a $180,000 HELOC and you would not be charged any interest on the amount until a portion of the HELOC has been spent. HELOC’s are typically fully open loans which means all or a portion can be paid back at any time and the available balance resets, similarly to your credit card. The advantage of a HELOC is its low cost and flexibility. HELOCs remain active as long as the mortgage remains open. Transferring a mortgage to a new lender may result in an appraisal being required to maintain the HELOC with the new lender. The borrower may choose to make interest only minimum payments on a HELOC. A HELOC does not require you to break your initial mortgage and therefore the fees to establish a HELOC are minimal.
2nd Mortgages
A second mortgage is another way to access your home’s equity. It works differently than a HELOC in that the funds become available immediately and the borrower incurs interest and principal charges from the date of the loan. A 2nd mortgage may be more cost effective than a HELOC as it is typically offered at current rates offered by the lender for fixed and variable rate mortgages. A 2nd mortgage is a great tool when a lump sum amount of money is required such as a down payment on a 2nd home or rental property. It can also be used to paydown debt at a higher interest rate. A 2nd mortgage does not require you to break your initial mortgage and therefore the fees to establish a 2nd mortgage are minimal. Typically 2nd mortgages are offered by the lender holding the primary mortgage in 1st position, however there are lenders that will lend in 2nd position against another 1st position lender.
Refinance & Debt Consolidation
The third method of accessing your home’s equity is through a refinance. Not all lenders offer HELOCs and 2nd mortgages and therefore depending on your circumstances a Refinance may be the only option available to access your home’s equity. To start a refinance the borrower would be subject to a three month interest or Interest Rate Differential (IRD) fee calculation. Many lenders now have calculators on their website to calculate the cost to break a mortgage. A refinance can be a great tool for a number of circumstances including obtaining a lower interest rate, debt consolidation and access to your home’s equity. If interest rates have dropped since the start of the borrowers mortgage term it can be very advantage to seek a refinance and reduce your overall monthly payments despite paying a fee to break your current mortgage term.
Commercial Lending
Commercial lending follows an entirely different set of principals in comparison to residential lending. Plan Build Finance Inc. is actively working to establish information and tools necessary to make informed decisions on commercial lending similar to our residential mortgage information. Commercial multi-family lending takes effect on properties of 5 units or more.
Plan Build Finance Inc. specializes in reviewing our clients specific needs and leveraging the mortgage products available to achieve our clients goals.
Footnotes
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These mortgages are often what is advertised when googling mortgage rates. ↩