Bak Chowdhury Alternative Mortgage Specialist

Helping Canadian entrepreneurs and investors access smart capital

Residential | Commercial | Multi Unit | Mixed Use

The Right Decision

Buying a house is quite overwhelming. It's supposed to be exciting but that excitement runs out this window the moment the mortgage aspect gets involved. How do you know if you're making the right decision? Is there even a right decision? Let's take a dive in to some key information which may help you make the best decision.

Banks & Monoline Lenders

Banks & monoline lenders are your ideal mortgage lenders. Ideal in the sense that it's the most cookie cutter option out there. They have the lowest risk appetite. If you have a nice and easy financial profile, these are your go to lenders.You may ask what is a monoline? A monoline lender is like a bank but they offer only one product, which is a mortgage. Many monolines are subdivisions of major banks, but having only one product reduces their overhead cost which may provide you with competitive rates and lower penalties to break the mortgage if needed.

B Lenders

B Lenders are alternative lenders in the mortgage space. B lenders allow clients to take a bit more risk on mortgage affordability. Internally we call them extended ratios programs. When banks are giving you a tough time, b lenders are available to support you.

Private Lenders

Private lenders are equity based lenders. Private lending is a temporary solution, there should always be an exit strategy. Whether it is a purchase or if you need take out money from an existing property without breaking your mortgage, they can assist in a timely manner. Keep in mind they are quite expensive but they can save you in a difficult situation.

Fixed vs Variable vs Adjustable

This topic can get messy so lets keep it simple.Fixed rates are fixed for the term of your mortgage. The rate is based off the Canadian 5 Year Government Bond Yield.Variable rates are based off the Bank of Canada prime rate. When the prime rate changes, so does your rate. Your payments stay the same, but the difference of principle and interest get adjusted accordingly.Adjustable rates are variable rates BUT your payments do change when the prime rates get adjusted.The right rate type is based on your lifestyle.

Insured vs Uninsured

Insured

An insured mortgage is when you are putting less than 20% down. It's called insured because mortgage insurers (CMHC, Sagen, Canada Guarantee) insure the lender incase you default on your mortgage.Keep in mind, if you do get an insured mortgage, there is a premium which gets tacked on your mortgage. This premium is based on how much you are putting down. You may also choose to pay the premium up front in desired.ALSO, the premium is subject to tax, not too many people get told about that fact.

Uninsured??

Uninsured just means you are putting 20% or more down.Insured rates are better than uninsured rates, funny how that works.

Income Verification

You know how much you make but have you ever wondered how a lender may look at your income? Let's take a quick dive below.

Salary

Set salary, no overtime, no bonus, no commission. You get the same pay every pay cycle. In this scenario lenders use a pay stub and job letter to verify your income.

Fluctuating

You get a bonus? commission? overtime hours? Lenders take your 2 year average at this point. It what helps them mitigate the risk.

What if I am self employed?

Lenders take a microscope to the self employed folks like myself. You would think a broker in the industry would probably be able to get a mortgage easily? Oh I wish. We are considered high risk along with many industries, especially trades.Banks and monoline lenders look at your 2 year average of T1s. If you have many expenses to write off, they will use line 15000 on the T1 to calculate your income.B lenders on the other hand, they don't mind that you have expenses. They can verify your business income through 12 month bank statements. They understand how the business game works, they understand not everyone wants to pay taxes on their hard earned money. Maybe b lending should be named business lending?

We all need some advice

We really do. We can only go so far by ourselves. I will provide you all the facts and information you need to make a judgement call. I will show you the pro's and con's of all your options and of course I will let you know if you are taking too much of a risk.

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Thank You

When the time comes, give me a call or text. My cell number is 613-447-1920.
You may even book a time if that works best for you. Thank you for visiting!

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