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Best Mortgage product for House Flip?

iverchnk

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Mar 16, 2012
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Hi,
I did a couple house flips in the GTA area, each time using my personal name to get a conventional open/variable mortage. Just wanted to ask the community if anyone know of a better mortgage product out there more beneficial for house flipping?
Considering purchasing under my corporation name if that is possible instead of being under my personal name, so not sure if that puts my mortgage now as a commercial mortgage?
Just starting my preliminary research before my next project.
Any insight would be helpful Thanks!
 

Thomas Beyer

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Please define YOUR meaning of the word "best" for us. Cheapest ? Fastest to get ? Highest loan amount ? Least hassles ? Least collateral security ?

Personal mortgages are always cheapest. Corporate loans likely lower LTV and more expensive. Consider a LOC secured by other assets ie cash to buy at prime or prime plus 0.5% with no discharge penalties.
 

iverchnk

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Thanks for the reply Thomas.
When I say "Best" I meant less hassle.
Had a really stressful experience with the last mortgage (with 1 of the 5 major banks in Canada)
Even though I was up front with my intentions that I was going to fully renovate and sell, they put me on a personal mortgage 25% down.
But by closing time, I had to put close to 45% down or else the bank wouldn't give me the mortgage.
Definitely do not want to go through that process again, going back and forth with the bank.
So I guess my purpose of posting the question was to see are there more "Flipper" friendly lenders out there that people have used?
Or do most house flippers use personal mortgages and just deal with the hassle as part of doing business?
 

Thomas Beyer

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Private lenders are willing to lend at 2-4% upfront plus 8-16% per year. That might work for you. Less hassles, quick, but expensive. There are many of those. Find them directly or through mortgage brokers.

Or get a secured LOC on other assets and buy in cash. That is what I do now. This is fast, cheap ( say prime to mid 3% range) and hassle free but it requires other assets with equity that can be cross-collaterized.

The third option of conventional lenders is cheap but full of hassles and lengthy timelines as you experienced.
 

iverchnk

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Ok,
I will look into Private Lenders. Don't have enough assets to go the secured LOC option at this moment.
Thanks for the insights Thomas!
 

rforgiel

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Sep 21, 2007
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Thomas gave you some good advise. Develop a good relationship with a private lender and they will make it easier and provide better terms with each successful project.
 

alaas1977

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Apr 24, 2011
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Hello

I definately second a Private money lender for a quick flip (if you don't have enough LOC room), just keep in mind if you plan to keep the property and pull out money/refi that it can take up to 2 months to clear title/discharge from the original seller (in Alberta anyways) and the banks will consider this a refi, so best to plan to hold it for several months at high interest. A Private lender can also lend you the cash for the after reno value also so that you use even less of your own money. The private lender will usually charge you an upfront fee of approx $2500 or more, then daily interest paid monthly.

Lisa
 

dplummer

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Yes private lenders is the way to go. Check with your lawyer . They always seem to have clients with money to invest. We buy houses damaged by fire, water, mould. Doug
 
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