man smiling with buildings in background

Weighing Options: An Overview on Commercial Mortgages

When people are asked about mortgages, they’ll usually think of the various loaning options for purchasing a home. While most conventional mortgages serve this purpose, there are other financing products in the market for other purposes. For example, commercial mortgages are necessary for business owners to set up their on-site establishments. While it’s integral for business use, you could technically go over workarounds to use it for a residential property.

What Makes Commercial Mortgages Different?

While commercial mortgages are similar to any other mortgage loan, one of its requirements is having commercial real estate as collateral for your lender. Additionally, the borrower must be a business entity in some form, either as a corporation, enterprise, or limited company.

What Properties Can You Buy with a Commercial Mortgage?

Commercial mortgages are financing options that allow a person to purchase a wide range of properties for commercial purposes, from hotels to construction sites. However, there are other methods to interpret its function in the real estate market. For example, you can use its workarounds to consolidate your debts into one asset. In addition, there are ways for it to be considered for financing a residential property. This stipulation needs to observe certain guidelines, like an appropriate allotment of square lots for commercial use.

What Are Commercial Mortgages Like?

The terms on commercial mortgages can vary, depending on your lender. Besides the difference in fixed and adjustable rates, there’s also the issue of interest-only loans. These lending options let you make smaller monthly payments in a limited time if you can increase the property’s market value.

Generally, your lender will look for your credibility as a business owner when looking at your application. While there are overlaps with residential mortgages, the criteria and thresholds for most benchmarks are generally higher. This affects the rates, minimum down payment, and even your credit score requirement. Listed below are three variables you need to consider.

  1. Debt Service Coverage Ratio: This ensures that your loan payments don’t go beyond your capability of having actual cash on hand. Business owners typically add an investment of their own to balance the scale, allowing them to qualify for these benchmarks.
  2. Credit Score: Besides your debt service coverage ratio, you should pay closer attention to your credit history. Unlike typical home loans that can receive lower credit scores, commercial mortgages demand a minimum score of 700 or more. While some lenders can accept borrowers with riskier credit history, this often leads to numerous downsides on your final contract.
  3. Business Circumstances: Since lenders will be financing a business, they’ll need to assess the profitability of your enterprise. This will require you to provide financial projections and a proposed business plan to maintain liquid capital. Most lenders will demand a net worth of at least one hundred thousand dollars as the bare minimum for sustaining your business.

Additionally, borrowers need to wait longer to get approval for these financing options. Some applications can take anywhere from two months to well over a year before getting back a response.

Conclusion

Being more well-acquainted with the different loaning options available will expand your perspective on mortgages. Since applying for a mortgage is a long-term commitment, it’s beneficial to shop for the best options in the market. Thankfully, you don’t have to manually sift through the offers and companies your local lenders have to offer.

If you’re looking for a professional mortgage agent in Ottawa, you’re in the right place. At Ottawa Mortgage Services, we empower Canadians to invest in the right future through strategic financial decisions. Contact us now for a free consultation!

mortgage

How to Use Your Mortgage to Consolidate High-Interest Debt

There are many financial products that are available to help you reach financial freedom and stability. During difficult financial times, you may have used these loan products to ease your financial burden. However, when the time comes to pay off these debts, it may seem like forever when you try and pay off your loans’ interests, let alone the principal amount itself. 

At this point, you may be thinking that these high-interest loan products may have permanently damaged your chances of reaching financial stability. However, as you pay off your loans, you shouldn’t get too discouraged. The good news is that there is a way to better manage your debts and get on top of your financial situation. This blog post will shed some light on what this secret weapon is.

How to Use Your Mortgage to Consolidate High-Interest Debt

You may be wondering how this can be done, it involves looking into the current equity of your home. You will be able to consolidate your debt by refinancing your home loan. If your home has built up a certain amount of equity, you may be able to have your existing home loan refinanced into a debt consolidation mortgage. 

Consolidating Debt into Mortgage

Using the equity, you are able to get yourself in a better financial position. Ideally, the idea of taking out this type of refinanced mortgage is to use it to slowly pay off your high-interest loans and consolidate them into one loan payment that will have a lower interest rate.

The first step is to find a lender that provides home equity loans, or that can give you a home equity line of credit. The equity of your home will act as the security for the loan. By consolidating all your debts into one convenient payment, you will be able to gain control over your financial situation and pay your debts sooner rather than later. 

What If You Don’t Have an Existing Mortgage Yet?

This question may have popped into your mind if you are considering consolidating your debt and taking out a fresh new mortgage. The good news is that this option is not only available for people who have existing mortgages. First-time applicants for mortgages may also be able to take advantage of the benefits of this type of mortgage.

For you to be able to qualify, your loan-to-value or LTV needs to be under a certain amount. LTV refers to the size of your loan in comparison to your home’s value. Should your lender decide that your LTV has an acceptable range, they may let you roll in your other existing debts into the new mortgage for the purchase of a new home.

Conclusion

If you have read this far, you will now be aware of how using your equity on your mortgage can be wielded as a tool to help you gain financial security in the long run. If it is done right, you may be able to see an enormous amount of savings and see all your debts properly paid off when you’re through. 

If you are ready to get a better deal on your interest rate and gain financial security in the process, come to Ottawa Mortgage Services! We believe that all Canadians should have the right to invest in their future. We strive to provide convenient and transparent financial services to help you reach your goals. Contact now for a free consultation and assessment to find the financial structure best for you.

signing documents

Mortgage Mistakes Self-Employed People Should Avoid

Securing mortgage approval has been a common problem among self-employed individuals. It is common knowledge that lenders prefer long-term employment records to ensure consistent payments, over variable self-employed income. But it is not always impossible. 

In Canada, the growing number of self-employed individuals is forcing lenders to adapt. They are continuously trying to find a way to meet their potential clients’ needs.

If you are a self-employed person considering a mortgage to finance your home purchase, you need to prove how financially stable and capable you are. It all starts with ensuring that you have financial strength. If a self-employed person can prove that they have a good income and pay all their bills on time, they have a high chance of successful mortgage approval. 

Here are some mistakes you should avoid:

Mistake 1: Not Reporting All Your Income

Lenders rely primarily on your reported income when making their assessment. Your income will define how much money you can spend and borrow. If you only report a fraction of what you earn, lenders might assume that this is your full financial capacity. Therefore, whether you make cash, goods, or traded services, it would be best to report them all to your tax income report to show your actual worth. 

Mistake 2: Overstating Earnings

Although reporting your income is recommended, overstating income also has its consequences. Usually, some claim additional income to improve their potential mortgage approval. However, before making claims like this, make sure that you have legal documents to support them. At the same time, these documents should pass the lender’s review. 

Should your application get approved and your stated income does not match your actual income, it might be challenging for you to pay off your monthly mortgage. Not being able to pay your monthly mortgage could result in penalties or foreclosure.

Mistake 3: Concealing Debts

If you hide your debts, the lender would not have a clear picture of how much money you have. The debt to income ratio is an essential element in determining how much you can borrow. Anyone can still apply for a mortgage despite having debt, but lenders need to see how well you manage them. Borrowers who have debt usually find it challenging to pay off subsequent loans, and you need to prove your lenders wrong instead of hiding it from them. 

Mistake 4: Avoiding Having Credit Cards or Loans

Why get credit cards if you do not want to have debts? Unfortunately, some people see credit cards and loans as traps instead of a potential asset that can prove your creditworthiness. Having a loan or credit card bill to pay every month and paying them on time shows how well you manage your finances and pay your bills. Having a credit card or another manageable loan could be a helpful tool for you to secure your mortgage. 

Conclusion

If you plan to get a mortgage loan soon and are self-employed, make sure you avoid committing the mistakes listed above. Focus on what lenders prefer: a person who has good credit and income. If you can prove those and your capacity to pay back your mortgage, you can have a good chance of getting approval for the loan you want. 

Also ensure you find a mortgage agent who can help you find the best offer that fits your unique situation. Ottawa Mortgage Services is an Ottawa-based mortgage agent that can help you find lenders that let self-employed Canadians with good records qualify for the lowest mortgage rates. Contact us to learn how we can help. 

meeting

First Things to Ask Your Mortgage Agent: How to Find the Right One

Buying a house is never simple. It involves many steps before you can call a property your own. More importantly, it involves a considerable amount of money. Fortunately, mortgage agents can help aspiring homeowners afford their dream homes. 

These agents can assist their clients in finding the best financing for the property they are eyeing. Their main concern is your purchase’s financial details. Therefore, they can help you get the best mortgage to purchase your dream home.  

Before trusting any mortgage agent, you need to know a few crucial details first. Such details will help you assess if the mortgage agent is right for you.

1: Their Advantage Over Others

There are many mortgage agents everywhere, and you can work with any of them if you wish. That is why your mortgage agent should be able to convince you to stick to their service. Look for an agent who is honest and excellent at their job. Ask them what makes their service better than others. Find that x-factor that draws you in—whatever it may be. 

2: Mortgage Pre-Approval

The home purchase budget is one of the most difficult things to finalize during the home search journey, but it is a vital detail that could affect the home buying process. Try to get a mortgage pre-approval ahead to avoid the back and forth question about how much you are willing to shell out vs. how much the lender could loan you. 

Your mortgage agent can help you secure this information. Knowing how much you are working with can help save your time and limit your options. 

3: The Best Lender Options

Every homebuyer’s financial situation is different, and the mortgage agent’s role is to identify which lender is best for your case. They are knowledgeable in this field, so they should already have the top-of-mind lenders to recommend. Usually, agents decide based on these factors:

  • Who among the lenders could provide you with the least amount of risk?
  • Who among the lenders could work well with the client’s financial situation?
  • Who offers the best terms and conditions?

Choosing which lender to tap is one of the biggest decisions you would make in this journey, and your agent should help you make that choice. 

4: The Approval Process

Your mortgage agent should also be able to guide you through the process of the mortgage application, waiting time, and approval. Before you even go through all the steps, you need to understand what they are for, the things you need to prepare, and the information that could make the process smoother. 

Conclusion

Mortgage agents can help you manage the overwhelming preparation and steps of looking for the best mortgage lender. To make sure you find the right one, you also need to have a suitable mortgage agent. Asking the information listed above could help you make the right decision among your many choices. 

If you are a first-time home buyer in Ottawa looking for a mortgage agent to work with you, consider us at Ottawa Mortgage Services. We make sure our clients understand the mortgage process and get only the best product that suits their needs. Feel free to reach us if you have any questions. 

housing estate

How to Know If A Multifamily Home is Right For You – Part 1

The urban landscape is taking over, and as cosmopolitan spaces dominate your quaint, single-family neighbourhoods, multi-family real estate is now the hottest commodity in today’s housing market. 

Living in a duplex may seem like a far cry from the white, picket-fenced house people imagine when thinking of the traditional home, but it’s the new fantasy for modern homeowners due to its extensive benefits. 

But what exactly is Multi-Family Housing? 

Unlike single-family properties, multi-family housing refers to buildings like a duplex, townhome, or apartment complex, all of which are residential spaces with more than one unit. Each unit comes with its own essential utilities, though a multi-family house is typically characterized by having up to four units or fewer. Anything more than that number will constitute a commercial property. 

Who Buys Multi-Family Housing? 

Since multi-family homes allow different families to live on the same property with separate and completely independent spaces, it’s often the best choice for multigenerational families. It’s also a great investment property with high demand, making it appealing to novice or seasoned real estate investors who want to diversify their portfolios. 

Not to mention the additional rental income you can add to your earnings makes multi-family housing one of the most reliable “hacks” investors can use to build a lucrative career in real estate.

What are the Benefits of Investing In a Multi-Family Housing?

Advantages of a Multi-Family Home 

  • Steady Cash Flow – you can earn a steady income on the side from your tenants, making it a stable side hustle that can offset your mortgage payments for the multi-family housing and your own!
  • More Pool of Tenants – with more units under your wing, you have more options to rent and fill the space, all while having an independent unit for your family.
  • Greater Control Over Property Value – seeing as multi-family homes only deal with four or fewer units, it’s easier to stay on top of the repairs and maintenance checks. Living in one unit also gives you more control over the necessary renovations, upgrades, and property value.
  • More Tax Benefits – running multi-family housing means you can write off most of the expenses for repairs and even your mortgage’s interest payments as a business expense.
  • Increase Your Investment Portfolio – seeing as you’ll be managing multiple units, multi-family housing can do wonders for creating a dynamic and expansive investment portfolio. 

The Bottom Line: Knowing What to Expect Before Settling Down In a Multi-Family Home

It’s becoming the go-to choice among younger generations since multi-family homes are a bang for the buck choice in the real estate sphere, though it comes with its own pros and cons. The list above explores the unique advantages of owning multi-family housing and what makes it a lucrative yet safe choice compared to other real estate investments. 

How Can We Help You?

Finding and buying a home can be tricky, especially when you put your finances into the picture. Fortunately, with the help of Ottawa Mortgage Services, buying your home for the first time won’t be such a pain. 

Our expert mortgage agent in Ottawa Mortgage Services helps first-time homebuyers discover the different possibilities of home buying, obtaining pre-approval letters, providing assistance for refinancing, offering debt consolidation, and more. Looking for a mortgage? Apply online today!