Creative financing is term which is over used in real estate. In the end, its knowing how to structure the deal prior to financing which is key. When you mention creative financing to a banker or mortgage broker, the antenna immediately come up and you have put yourself in a position which looks suspicious before you even show anyone the deal.
The financier assumes you will be trying to purchase property with no money down…and they hate that!
Creative deal assembly can require meticulous negotiation with the seller…in the end you are trying to create a win win deal for both sides.
Of course, it is crucial that you work with a mortgage broker who understands these creative financing strategies and can help structure deals properly in order for you to have the best chance at your deal being approved.
The Way Your Mortgage Broker Structures Your Deal is Crucial
Whether you are an investor or end buyer either refinancing, purchasing for yourself or adding an investment property to your portfolio, the way your mortgage broker structures your deal is crucial for it’s approval or decline. With new mortgage rules continuing to tighten, it is even more difficult for investors as well as end buyers to qualify for property.
Not long ago ago, lenders were throwing money at borrowers and the approvals for deals sky rocketed. Of course the economy and property appreciation was chugging along nicely. With the meltdown of the real estate market in the US as a result of poor lending practices, the ‘ powers that be’ in Canada, namely our Finance Minister, quickly needed to rein in the lending criteria for Canadian lenders. This has resulted in continuous constraints in Canadian lending policies and qualifications for borrowers.
Some strategies investors typically use to create little to no money down deals are VTBs, abatements, assignments, JVs, cash backs, promissory notes, and offers to purchase to name a few. It is paramount to the success of your deal to be working with a mortgage broker who not only understands how these types of deals work, but can structure these deals properly.
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