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Mortgage Broker News | 13 Aug 2009, 12:00 AM Agree 0
When Rick Robertson, president of Mortgage Mentor, was researching his new software module - a tool to help brokers navigate lender policies for financing rental properties - he realized there was a broad misunderstanding of two types of loans.
  • Lou Karmiris | 14 Aug 2009, 06:10 AM Agree 0
    for qualification: when banks will approve the interim loan in the ratios will they include all obligation including existing mortgages ?
  • Sally Hazel | 14 Aug 2009, 07:28 AM Agree 0
    Hi Rick,do you know of any lender's currently offering the interim type loans?
  • pamgaunt@mortgagecentre.com | 14 Aug 2009, 07:49 AM Agree 0
    I would like to know this feedback also - do you know of lenders providing interim loans?
  • Erin R. | 15 Aug 2009, 01:06 AM Agree 0
    I've heard of a company called Deposits B4 closing Inc that offer this sort of loan - haven't done any work with them yet but have been told some lenders accept it.
  • Erma Rabbie | 15 Aug 2009, 03:51 AM Agree 0
    What happens if the property secured by the interim loan does not sell?? Sounds like a slippery slope!
  • Deena Corallini | 18 Aug 2009, 03:18 AM Agree 0
    the client pays a heck of alot of interest penalties..ouch!
  • Rick | 18 Aug 2009, 11:13 AM Agree 0
    Hi Lou,

    Yes, the file will need to meet the lender's debt servicing guidelines and that normally mean inculding all the financial obligations that the borrower(s) have at the time the file closes.
  • Rick - Mortgage Mentor | 18 Aug 2009, 11:21 AM Agree 0
    HI Sally, good question - pretty must the suject matter of a whole new article but here goes. Most lenders will consider this type of file providing the package is planned correctly. (the lender's bottom line concern is 'Will we get paid back?')

    Logic tells us that if the client has 2 homes, then one of them could be considered a rental. One of the main challenges in placing this type of file is deciding which property will be the rental. The reason is that we often need a "Rental Offset" in order to make the debt servicing fall within the lenders guidelines. (see response to Lou)
    Examples:
    - some enders only allow an offset on the "subject" property
    - some only on the applicant's residence
    - some only on insured loans
    Getting the optimum mix is the key to having these files stamped "APPROVED"
  • Rick - Mortgage Mentor | 18 Aug 2009, 11:25 AM Agree 0
    Firstly, there would have to be something seriously wrong with the property or the price for it not to sell. If that's the situation, then the vendor should reconsider the whole process.

    If the client if serious about moving forward regardless - then they should consider a mindset that their present home may be a rental for an extended period and adjust their finances and lifestyle accordingly.
  • Rick - Mortgage Mentor | 18 Aug 2009, 11:29 AM Agree 0
    There doesn't necessarily have to be unnecessary large penalties. The clients should check with their present lender fisrt to ask if they can Port their present mortgage to another property if the present one sells. With that being the case, arrange an Open mortgage on the purchase that can be paid out penalty free when the Port occurs.

    BTW - Bridges often have higher costs than a good Interim finance plan.
  • Adil | 19 Aug 2009, 05:51 PM Agree 0
    Sally, I'm pretty sure RBC will has a good package for doing these types of interim loans, I did one not too long ago and it worked out great for the client.
  • Catherine K. | 11 Sep 2009, 04:45 AM Agree 0
    Wouldn't the difference between interim and bridge financing be the same as open and closed bridge financing?
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