My Corner
Getting a Mortgage from a Private Lender
Thinking About Getting a Mortgage from a Private Lender? Here’s What You Need to Consider!
Getting a mortgage from a private lender can be a great option if you’re looking for more flexibility or don’t meet traditional bank requirements. But there are some important things to keep in mind before jumping in!
Key Considerations:
Interest Rates: Private lenders often charge higher interest rates than traditional banks. Make sure you’re clear on what rate you’re agreeing to and how it will impact your payments.
Loan Terms: Private mortgages tend to have shorter terms, usually between 1-3 years. Have a solid exit strategy in place for when the term ends—whether it’s refinancing or selling.
Fees and Costs: Ask about additional fees like appraisal costs, legal fees, or lender fees. These can add up quickly and affect your total cost.
Collateral and Risk: Private lenders are more focused on the asset (your property) than your personal credit score. But this also means they may require more collateral or impose strict conditions if you fall behind.
Flexibility: Unlike banks, private lenders can offer customized solutions. This is ideal for investors or those with unique financial situations, but be sure you fully understand the terms!
Relationship and Reputation: Make sure your lender has a solid reputation. Check reviews, ask for references, and ensure their lending practices are fair and transparent.
Pro Tip: Always read the fine print and have a legal expert review your contract before signing anything. A little caution now can save you big headaches later!
Private lending can be a powerful tool in your real estate investing journey—just make sure you’re prepared and informed!
SOURCE: ROMMEL PRAVIA
Some Useful Info. For Mortgage Seekers
What is the difference between a level 1 and a level 2 mortgage agent?
A Level 1 mortgage agent can help you get a mortgage from a traditional lender, for example, a bank or a credit union.
Some consumers may not be approved for a mortgage by a bank or credit union and need to turn to different lenders, such as alternative or private lenders. If this is your situation, you must work with a level 2 mortgage agent or a mortgage broker. A Level 2 mortgage agent or a mortgage broker can help you get a mortgage from all mortgage lenders, including alternative and private lenders.
A syndicated mortgage is when two or more people invest in a single mortgage against one property. Developers use these mortgage loans to get funding for large-scale real estate development projects. Syndicated mortgage investments can be extremely risky for investors, given that the project is often considered high-risk by traditional lenders, such as banks.
Can you help me get my money back?
FSRA has no jurisdiction or authority to recover any funds on your behalf. If you’re suspicious about a fee, penalty or another charge you paid, seek out independent legal counsel or contact the Law Society of Ontario (LSO) for legal advice.
What are my rights after I sign a mortgage contract?
A mortgage agreement is a legally binding contract. Once signed, you are responsible to fulfil your obligations. The best way to protect yourself is to read the document before signing and ask questions. Before signing, a licensed mortgage -broker/agent must disclose any material risks of the mortgage agreement in writing and in plain language. Be sure to read all documentation and ask questions before signing
Must I pay a fee in advance?
Mortgage brokerages may charge an up-front fee or retainer for loans above $400,000 for services to be rendered or expenses to be incurred. This fee should not be paid in cash and must be paid directly to the mortgage brokerage, not the agent or broker.
SOURCE: FSRA
RESIDENTIAL PROPERTIES LTT CALCULATION
Residential Properties
A provincial land transfer tax applies to all properties in Ontario, including Toronto.
A separate Toronto land transfer tax applies to Toronto properties only (An easy-to-use calculator and other options for determining the tax are provided below).
First time home buyers of new AND re-sale homes will receive a rebate of the Toronto land transfer tax of up to $4,475 (equivalent to the Toronto land transfer tax payable on a $400,000 property).
NOTE (Provincial Land Transfer Tax): First time home buyers may be eligible for a rebate of the provincial land transfer tax (PLTT) up to $4,000.
To calculate the total LTT payable for Residential properties, choose one of the following:
ADD THE FOLLOWING TOGETHER:
PROVINCIAL LAND TRANSFER TAX
(Applies to all Ontario properties, including Toronto)
0.5% on the first $55,000
plus 1.0% of the amount from $55,001 to $250,000
plus 1.5% of the amount in excess of $250,001 to $400,000
plus 2.0% of the amount in excess of $400,000
plus 2.5% of the amount in excess of $2,000,000
TORONTO LAND TRANSFER TAX
(Applies to Toronto properties only)
0.5% on the first $55,000
plus 1.0% of the amount from $55,001 to $250,000
plus 1.5% of the amount in excess of $250,001 to $400,000
plus 2.0% of the amount in excess of $400,000
plus 2.5% of the amount in excess of $2,000,000
Source: TRREB
What is an assignment?
An assignment is essentially a sale of a contract or right to acquire property. An assignment is a transaction whereby the original purchaser (the "Assignor") of a property sells, and thereby transfers, their interest and obligations under the original contract to a new purchaser (the "Assignee"). The Assignee will generally assume all of the Assignor's duties and obligations under the original Agreement of Purchase and Sale. These rights and obligations are stated in the original Agreement of Purchase and Sale and include terms such as interest payments, taxes and maintenance fees during interim occupancy. Upon completion, the Assignee is granted the title to the real property and will incur all final closing costs.
a) Assignor: An Assignor is the original buyer of the unit from the Builder/Developer.
b) Assignee: An Assignee is the buyer of the Agreement of Purchase and Sale from the Assignor.
Under normal circumstances, any Agreement of Purchase and Sale can be assigned providing that agreement doesn't prohibit assignments.
An assignment is legally permitted unless otherwise expressly prohibited in writing in the original Agreement of Purchase and Sale. An assignment fee may be charged by the developer and is normally a cost borne by the Assignor (the original purchaser).
Suspect Sought in Rental Fraud Investigation,
Toronto area,
The Toronto Police Service is requesting the public’s assistance locating a suspect in a fraud investigation.
It is reported that:
between June 2023 and August 2023, a woman advertised apartments for rent in Toronto on various websites
victims would provide deposits for an apartment
victims would then be contacted advising that the apartment was no longer available
the victims then discovered the woman was not authorized to show or rent the apartments
Lariza Resendez Lopes, 26, of Toronto is wanted for:
Fraud Under $5000
Possession of Property Obtained by Crime Under $5000
She has been operating under the company names "TorontoRental.org" and "LRLManagement".
An image has been released.
Multiple victims have been defrauded and police believe there may be more victims.
Anyone who knows the whereabouts of the suspect, has been victimized by the suspect, or has any information, is asked to contact police at 416-808-5200, Crime Stoppers anonymously at 416-222-TIPS (8477), or at www.222tips.com.
Police are asking the public to consider the following when searching for apartment rentals:
research the property in person
double check the address to ensure it isn’t being listed elsewhere
never pay with cash, wire transfer or hard-to-trace equivalents, such as MoneyGram or bitcoin
be aware of "too good to be true" rent rates
do not give a rent or security deposit before signing a lease
speak to building property management and concierge/security
SOURCE: TORONTO POLICE SERVICE
UNIT: 52 DIVISION
Case #: 2023-9043842
Your Deposit Is Protected
When working with a registered real estate agent or brokerage, consumer deposit insurance helps protect your deposit in a real estate transaction.
The coverage is available at no cost to you. All brokers and salespersons are required by law to participate in an insurance program that includes consumer deposit insurance.
The coverage responds to events such as brokerage theft, fraud, insolvency, or misappropriation of funds, subject to the terms and conditions of the policy. While the vast majority of consumer deposits end up being used exactly as intended, problems do arise from time to time. Those occasional problems are the reason for this insurance.
What are the limits available?
The consumer deposit coverage provides up to a maximum of $200,000 per claim and up to a maximum of $4 million for all claims related to a single event (for example, insolvency of a brokerage). For events that exceed the maximum of $4 million, claims are paid out on a pro-rated basis, meaning all claimants share in the total limit of $4 million. However, the insurance policy contains clauses, which may limit the amount payable if there is a loss. There is no deductible under this coverage.
Does this coverage respond to a dispute over who the deposit should be paid to?
No. In cases of a failed transaction where the parties simply cannot agree on the disbursement of a deposit held in a real estate statutory trust account this coverage does not respond. In the case of a dispute over ownership of a deposit, a brokerage can only disburse the deposit in accordance with the terms of a mutual consent and or release form signed by both the buyer and seller or by following instructions in a court order.
Your lawyer will be able to advise you on the steps to take if there is a dispute about who is entitled to a deposit.
When should I make a Consumer Deposit claim?
If you are aware of a situation where you believe that a real estate agent or brokerage may be engaged in an insolvency, theft, fraud, or misappropriation of funds, which may put your transaction in jeopardy, please report this situation to the RECO Insurance Department immediately at 416-207-4800 or insurance@reco.on.ca.
Information related to making a claim is provided below. Before making a claim, you may want to contact RECO’s Insurance Department for more information.
Complete the Consumer Deposit Notice of Claim Form, attach all relevant documentation and forward it to:
Attention: Insurance Department
Real Estate Council of Ontario
3300 Bloor Street West, West Tower, Suite 1400
Toronto, ON Canada M8X 2X2
Phone: 416-207-4800
Toll-free: 1-866-245-6910
Fax: 416-207-9020
Email: insurance@reco.on.ca
What’s not covered?
Claims arising as a result of a registered real estate agent acting as an executor, administrator, trustee, guardian, conservator, or in any other fiduciary capacity other than as a real estate agent (real estate broker or salesperson) are not covered under the policy.
source: RECO