More difficult lending environment ?

[holymoly]

I was offered a pre-approved $15,000 business line of credit from Scotiabank, over the phone, at the beginning of October. I think it`s prime + 1.99. Whatever the rate, I was surprised to see them actively offering credit like that.

As for mortgage, I have an initial teaser rate until Jan/09 of prime minus 2.35%, which has been really handy while I`ve been fixing up the house and it`s been empty. I had assumed that when the regular rate (prime minus 0.25%) kicked in I would convert to a fixed term, but this thread is giving me second thoughts.

 

[Thomas Beyer]

QUOTE (holymoly @ Oct 26 2008, 09:12 PM)
As for mortgage, I have an initial teaser rate until Jan/09 of prime minus 2.35%, which has been really handy ...




a great rate .. when did you get it ? a few weeks to a few months ago ? Today that would be higher ..



long term a variable, prime based rate is ALWAYS lower than a fixed rate as a bank has to guess what rates will be 2,3 or 5 years out .. so they will always err on the conservative side with a fixed rate mortgage. On average, you will always pay more for a fixed rate (think of it as insurance)

 

[holymoly]

QUOTE (thomasbeyer2000 @ Oct 27 2008, 11:28 AM)
a great rate .. when did you get it ? a few weeks to a few months ago ? Today that would be higher ..


In June 2008, from FirstLine Mortgages through a broker. Lots has gone wonky with my first investment property purchase, but I feel fortunate on the mortgage front.

 

[RussellWestcott]

What a great discussion thread!Thanks for everyone`s input on this thread, with over 3,400 views this is definitely a HOTT and timely topic.... here is a treat for everyone.Based upon the responses and discussions on this thread I thought I would invite Canada`s #2 Mortgage Broker on a conference call to ask him some hard hitting questions. I recorded the entire conversation for the benefit of all the people on our discussion forum, and you can benefit from this discussion with Peter.

Peter Kinch is one of the busiest people I know and to get about 80 minutes of his time is very fortunate for everyone who listens to this audio interview:

We discussed some current events in happening in the Canadian Mortgage Landscape. For example here are a couple of the many questions that Peter and I covered:

• American banks filing for bankruptcy?
• What happens is a lender goes out of business?
• Elimination of the $0 down and 40 yr amortization?
• Global banks collectively lowering key lending rates?
• Bank of Canada additionally lowering Prime interest rates?
• Canadian Banks not following the Bank of Canada and not passing along the full rate reductions?Canadian Banks removing their discounts on Mortgages... then having Prime +% on variable products?With all the events going on in the Financing industry are mortgages more expensive?Is it more difficult to get financing right now? If so, what do we are Real Estate investors need to do to ensure we are continually having our deals approved?What actions do people need to take to ensure success in business and Real Estate Investing?Are Canadian Banks in better shape than their counterparts in other countries… if so why?What are some of the common mistakes that most people make when submitting their applications to your office?

Finally, Peter dusted off his crystal ball and will give you an interest rate prediction, plus a recommended strategy to follow to take advantage of the current mortgage market ... this alone will be worth your listening to the entire audio recording.

When the #2 Mortgage Broker in Canada has something to say... I always have a pen and paper ready to take many note, and I`m sure you will to.

Click the links below to listen to the audio interview:

-Track #1


-Track #2


Just Click on the Track # to instantly listen or download the audio file directly to your computer, so you can burn it onto a CD, or put it on your iPod or MP3 player. If the file does not download or open right away, right click on the link and click "Save Target As". Then save the file where you can find and open it easily. You’ll want to listen to it a few times and take notes, so you not only hear the information, but also take action using it

Enjoy, look forward to seeing you at the Upcoming Quickstart™!http://http://www.realestateinvestingincanada.com/viewcategory/1

 

[Nir]

Great interview!

Thank You very much Peter and Russell for the valuable financing information and update on the current situation.

Regards,
Neil

 

[willy]

Yes. Very interesting interview. Thank you.

Also a great excuse to put the headphones on and block out my wife and kids for an hour and a half. =)

w

 

[Thomas Beyer]

QUOTE (RussellWestcott @ Oct 29 2008, 03:56 PM) What a great discussion thread!

Thanks for everyone`s input on this thread, with over 3,400 views this is definitely a HOTT and timely topic....

is late November / December even worse now than September / October .. due to stock market drop and much much higher UNCERTAINTY in federal politics ?

Any new mortgage practices out there we should know about .. now as of mid December 2008 ?

 

[Nir]

well, isn`t the most important piece of information public knowledge - new SUPER low prime as of today! (3.5% - Oh Yeah!)

 

[GarthChapman]

See Mortgageman's post about ING now requiring CMHC insurance on Alberta properties when the LTV exceeds 75% (and not 80%). It seems they may be concerned about more value correction possible in Alberta...



http://myreinspace.com/rein_members_only/Members-Only_Discussion/81-8730-More_evidence_of_banks_deleveraging.html

 

[Jack]

QUOTE It seems they may be concerned about more value correction possible in Alberta...Seems inevitable, to me.

On that note - I spent almost two hours today with the CEO of a prominent public company in downtown Calgary. He was telling me that he was out to lunch with an investment banker the other day, who was telling him of a AA-rated (strong balance sheet, credit rating) company that wanted to raise $1B through the issuance of debt. Oh, they got it - and at "only" 11% interest! How do you think businesses will do if they`re strapped with those costs of capital? Does the word "GULP" have any meaning to you?

Things are changing. It`s going to be a very different looking world, these next few years. My advice - hold cash, control variable costs.

 

[GarthChapman]

QUOTE (Jack @ Dec 12 2008, 04:06 PM)
Things are changing. It's going to be a very different looking world, these next few years. My advice - hold cash, control variable costs.




indeed... certainly having excellent cash reserves and controlling all costs, variable and fixed, must be done to ensure success in this new environment. And more. There are many ways to reduce costs and to increase revenues.



Read here what we have been doing on these fronts:

How will you ensure your real estate business prospers going forward?

What are you doing to adjust your business to our brave new world?

http://myreinspace.com/public_forums/General_Discussion/61-8438-How_will_you_ensure_your_real_estate_business_prospers_going_forward.html

 

[tbarcier]

QUOTE (thomasbeyer2000 @ Oct 27 2008, 10:28 AM)
a great rate .. when did you get it ? a few weeks to a few months ago ? Today that would be higher ..






I was offered the same last month on a renewal.

 

[SamEfford]

I have had no problems getting new mortgages. I have 2 offers in right now and just closed 2 weeks ago on another. Ever since ACRES i have been on fire!

 

[Thomas Beyer]

Canadian Manufacturers & Exporters sent the Finance Minister a letter saying that his first priority in the budget must be ensuring sufficient credit. “If short-term liquidity challenges are not urgently addressed, other measures to stimulate economic growth and save jobs will be purely academic,” the letter said.

More thoughts on tightening credit here:

http://business.theglobeandmail.com/servle...y/Business/home

The strong will survive, many of the weak will fail and cause unemployment to rise significantly in the months ahead ..

As real estate investors we are somewhat insulated in that we have 2 things going for us:
a) prime rate is low and expected to drop another 0.5% in January 2009, and
b) there are CMHC insured mortgages available, both for multi-family and for residential

Thus cost and availability of capital is much better than for most other businesses !

 

[selewis]

QUOTE (TommyK @ Sep 17 2008, 12:58 AM) It is interesting you brought this up Thomas.

I have a personal "unsecured" LOC that I set up in 2006. The limit is $30K at prime + 2%.

I just recently received a letter from TD Bank that they are increasing the interest to prime + 3%!!

There`s definitely some tightening and increasing cost evaluated by the banks.

Has anyone received any letters from TD?

Tommy


I had a LOC with TD for prime plus 3%. I received the same letter from TD as well telling me it would go up to prime plus 3.5%. So here`s what I did. I called them. And I asked them if they could do anything different. Within two minutes she came back to me and said she could set it at prime plus 2.75%. I said great and hung up and that was that. Try calling and asking for a better deal.

 

[realfortin]

QUOTE (selewis @ Feb 21 2009, 11:19 AM) I had a LOC with TD for prime plus 3%. I received the same letter from TD as well telling me it would go up to prime plus 3.5%. So here`s what I did. I called them. And I asked them if they could do anything different. Within two minutes she came back to me and said she could set it at prime plus 2.75%. I said great and hung up and that was that. Try calling and asking for a better deal.
I have a HELOC and a LOC that are both at prime +1 (great these days). I got a letter a few months back saying they would increase it to prime+2. I called them and told them that I had the contract that said prime+1, and although prime may change, (and therefore how much I pay) but my rate above prime should stay the same. They agreed, and that they wanted to keep my business. In fact they increased the unsecured LOC.

Real

 

[jeffjas]

I think this is a great time to buy...interest rates are low and are going to go lower or stay the same at least for the forseeable future. I am looking at a 10 unit apt building right now and have approached my mortagage broker and credit union with the financials and they`ve quoted me 4% - 5% for
1 - 5 yr terms and both have no problems in going forward with financing the deal.

I have another HELOC with RBC which is @ 2.49% (going down at next Bank of Canada meeting) hopefully !I`ve never received a letter stated a change in the terms like some of you have stated.

I think lending is going to be tied with how much "skin" you have in the game. The more money you put up front the more willing the bankers will be to loan you the $$

 

[Thomas Beyer]

QUOTE (jeffjas @ Feb 22 2009, 08:22 PM) I am looking at a 10 unit apt building right now and have approached my mortagage broker and credit union with the financials and they`ve quoted me 4% - 5% for 1 - 5 yr terms and both have no problems in going forward with financing the deal.
that`s awesome ... what loan to value ? price/door ? where ? condition of property ? rent roll / month ?

 

[jeffjas]

QUOTE (thomasbeyer2000 @ Feb 22 2009, 11:31 PM) that`s awesome ... what loan to value ? price/door ? where ? condition of property ? rent roll / month ?


Its the type you always talk about Thomas... the kind that is just being maintatined to a basic level, out-dated living units and lower than market rents which all adds up to a nice upside.

Its a brick and cinderblock building and I`m going in at 25% down, at $57K per door which at present rates will provide a decent (not great) cash flow.

The plan is to renovate and increase rents by about 25% within the next 12 months. Its in Winnipeg which means its rent regulated but MB has a program that allows waivers on regulation if you spend a certain amount of $$ per unit.

Hoping the rates go down another 1/4 point at the next Bank of Canada meeting in early March !

 

[Thomas Beyer]

[quote user=jeffjas]Hoping the rates go down another 1/4 point at the next Bank of Canada meeting in early March !


well they did .. 2x now .. not much as the prime rate is at 3% now .. AND tighter CMHC rules !



rents WILL rise as will values her in AB .. in MB too ?