Private mortgage lending can be a very lucrative investing tool for the average person to add to their portfolio. In BC private money lending on real estate is pretty basic. In general the average investment will go up to 75% LTV or Loan to Value. Higher LTV’s do happen up to 80% but for these examples we will use 75%.
In law, inter alia is a Latin term used in legal proceedings, which means “among other things.” In the financial world, an inter alia is a mortgage secured by more than one property. A single mortgage document is executed and registered against each property that is used as security.
A Foreclosure is a legal action that a lender can take if a person or company who borrows money using a mortgage stops making payments on the mortgage or violates any terms of the mortgage like “example” outstanding property tax or fire insurance policy that elapses etc.
Usually, when people file a consumer proposal, it is to assist them with debt consolidation by restructuring it all into one manageable payment. Once they’ve done this, homeowners usually see significant cash flow relief but still have this monthly bill looming over them.
If you are living in British Columbia and are looking for debt load relief by paying out your consumer proposal early, then keep reading!
Why Is Loan To Value Important To Mortgage Lenders
Loan to value is important to mortgage lender because it help them to determine risk. The higher the degree of risk for the lender usually indicates a higher rate of interest and costs applied to the loan.
Past client who owns a bare land strata in Coquitlam BC needed some extra money to help with living expenses. Client is a senior has limited income but has a common law wife still working and his house was valued at $950,000. Client had a 1st mortgage of $377,000 with a B-Lender but did not have enough income to support a larger 1st mortgage. Added to this there were several years before his 1st mortgage was coming up for renewal and a large penalty if he paid out.
Second Mortgages are a fast and easy way to obtain money using a home equity loan to do things like: debt consolidation, home renovations, create fast business capital if your self employed, pay outstanding bills like taxes or liens. These are great for reducing payments, paying out debts or increasing cash flow but what else should you consider?
If you are self employed chances are at one time or another you have been late or missed paying your taxes.
CRA has strong powers enabling them to collect missed taxes. CRA can withhold child tax credits, GST credit take money from bank accounts or pay cheques as well you will be charged interest on the taxes you have outstanding.
Client needed funds to do some debt consolidation and home renovations with the intent to sell in just over a year. Clients credit was great but the income was very low and not enough to sustain conventional debt service requirements with a bank. They now have the funds they need to renovate their home and consolidate debt as well as assist them with payments over the term of the mortgage.
Client came to Jeff Di Lorenzo of The Mortgage Group Vancouver with a home under foreclosure located in Central BC. This client had many judgments on title plus property taxes outstanding. Client also owned a parcel of land that was previously listed for sale. It turned out that the parcel of land also had property taxes owing for over three years and the crown seized the property without the clients realizing.
