• Complex Mortgages

    Some people think that being a mortgage broker is just about getting banks to compete with each other to get the best mortgage rate. This implies that all mortgage brokers are pretty much equal and that it just depends which lenders they have on their list and how low will they go.

    Truthfully, some mortgages are like that. Many times we have interviewed clients and up front in telling them that every bank would love to have their business.

    However, in many cases, mortgage brokers require some additional and need to look at all the moving pieces to determine the best route.

    For example, let’s say a couple comes to us for a mortgage. They own a rental with a mortgage that matures in 2 months. They have started major renovations on the home, they would like to refinance and borrow an additional $100K on the rental to complete the renovations.

    So is it just as simple as going and getting them the best refinance rate and saying thanks and goodbye? Nope! Here’s why:

    A refinance will likely require an appraisal, and the appraisal will disclose that the home is mid-renovation. If the renovations are too extensive, the bank may not want to get involved. So it’s important to find out the current state of the home. It’s always better to complete the mortgage financing THEN start the renovations.

    So the renovations need to be complete before the mortgage will be favourable, but they can’t complete the renovations until the get the mortgage. What do they do?

    Here is something they could consider: put a HELOC (home equity line of credit) on their primary residence that the bank likes because it is not mid reno. Use the line to complete the renos, then get a mortgage on the completed rental to pay off the line. Now you have the best of both worlds: you have a line of credit still available for a future investment that costs you nothing unless you use it, and you have a mortgage with an excellent rate because you refinanced a beautiful newly renovated home!

    So as you can see, this is one example that mortgage brokers do more than just shop for the best mortgage rates!! 😊

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