Enza Venuto, the principal broker at Centum Streetwise Mortgage, outlines the usual traps investors fall into in seeking financing.
Video transcript below:
Enza Venuto, Principle Broker, CENTUM Streetwise Mortgages
Enza Venuto: Okay, as a mortgage broker we get calls from investors from day to day asking us, “what did we do wrong, we submitted for financing and financing fell through.” “How can you help us?” And definitely we are here today to talk to you about certain strategies and tips that you can use to help improve your financing system.
Okay, it’s important as an investor to understand the product offering that your lender has. Does your lender lend to you based on certain properties that they have and that is very very important because the product offering can be offered to a lender that has earned income versus a lender that is self employed. So understanding that offering is crucial in your approving your application.
It’s quite important as an investor, what type of properties are you looking to purchase. Are you purchasing multi use homes, residential, non-residential, commercial, having the right approach to the income method is very important. If it’s residential, some lenders will lend upto a 100%, on income lenders will lend 50%, some lenders will lend 80%. By talking to an advisor, the advisor will help you and key in on certain lenders that can give you a 100% versus certain lenders that can do 50% or 80%.
Right now with lenders, there is a big tightness in rental property structures. Some lenders will only allow one or properties for you to buy or to utilise through their lending balancing sheet. Some lenders will to anywhere between 5 to 10 properties. Again working with your advisor is very crucial because your advisor will be able to tell you what’s your minimum, what’s your maximum and how it can work to your benefit in the long run.
It’s very important that you know which way you want to structure your financing. Is it under a personal name or under a corporation? If we are lending based on a personal name, the lenders love that because it’s your personal name and there is no, it’s your personal guarantee. Under a corporation a lot of lenders are concerned about the corporation, how many people involved, the gathering of the information. So it all depends on the type of property you are planning to buy. It’s important that you get the proper advice in how to structure it versus the corporation or versus the personal.
It’s very important, don’t underestimate your lender and as a lender we don’t underestimate our investors. We love to educate our clients. Part of our process is to educate the client on guidelines, information that’s out there. As an investor, you are definitely sitting in a position where you need a lot of help. By working with the lenders or the brokers, it is [hard with your] opportunity to not fail when you are putting in an offer on another property. Remember your success is the success of a lender, the lender will help you in any way possible.