Mortgage Loan Costs

The principal and interest charges are only part of the payments that borrowers make. The closing costs vary and include fees such as re-conveyance, title policy, processing, and others. The loan origination fee, for example, varies depending on the state or province of residence and can be as high as 2 percent of the total amount. It is also called processing, administrative, and underwriting fee.

Lenders charge inspection, application, escrow, and other fees. An appraisal is necessary to determine the value of the property, which varies in buyer’s and seller’s markets. Different factors play a role in appraisals, including overpricing, too many short sales and foreclosures in the area, and fewer home buyers on the market.

Finance companies include different charges in the closing costs, including statement and release fees and discount points. Points are basically prepaid interest charges that help reduce the rate of interest. Discount points are known as loan discount, premium fees, and origination fees and are offered to borrowers who apply for certain types of loans. Applicants who seek funds for home improvement projects, remodeling, improvements, and construction works qualify for discount points. Those who want to buy a vacation or second home are unlikely candidates, especially if they plan to charge a rent. Beneficiary demands are associated with the status of the loan, and borrowers who apply for a second mortgage or home equity loan are asked to submit a statement. There are associated fees to pay, including late fees, recording and statement fees, and other charges, if applicable. The demand is usually valid for a period of one month. The document contains details such as phone number and address of the financial institution, the outstanding balance, etc.

There are different ways to calculate the closing costs by adding the property taxes and charges associated with the loan. Borrowers can use online calculators for this purpose or to check whether they can save on other charges. Charges to include are endorsement and re-conveyance fees, title insurance, and others. The user can add other fees as well, including title document prep fees, transfer taxes, and government recording charges. Some lenders also pull the borrower’s credit report and add the associated charges. These fees are considered miscellaneous, and many borrowers think that the interest rate is the most important factor. The interest rate varies but as a rule, credit unions offer more favorable rates. Generally, there are three types of mortgages – variable rate, fixed rate, and hybrid loans. There are different types of interest rates, including capped, fixed, and discounted. Some borrowers opt for a discounted interest rate while others for cash back deals and fixed rates. Ask whether the mortgage comes with insurance because banks keep extending and updating the range of products they offer. Online calculators help determine the closing costs as well as the right type of mortgage product.

Bank Accounds for Kids

Bank customers can choose from different types of checking, savings, and special accounts. Some banks offer all types while others have only checking and savings accounts on offer. Savings accounts are offered to individual customers and are good for adults, children, and teenagers. There are minimum requirements such as residence and to be of the age of majority. For an individual account, customers should fill in an application form and present an ID such as a passport or driver’s license. Financial institutions are also interested in the source of funds, whether in the form of superannuation payments, government benefits, rental or investment income, savings, salary, etc. Some banks ask about the types of expected activities, for example, money transfers, clearing checks, check credits, withdrawals and deposits, and others. If applying for a joint account, both applicants should fill in the application form. Holders are allowed to deposit and withdraw money up to a certain limit. The main drawback is the low interest rate compared to certificates of deposit and money market accounts. Only checking accounts have a lower interest rate than savings ones. Some customers opt for a basic checking account that allows them to make monthly payments towards loan and mortgage balances. There are many benefits to opening a basic account, and one is that holders enjoy low-cost money transfers and check cashing. There are different types of products, and one example is Swiss bank accounts. The drawback is that this product earns no or little interest, i.e. it is not an option for people who are looking for safe ways to invest.

Banks also offer money market accounts that come with a fixed interest rate and minimum balance requirements. Customers can make a limited number of withdrawals. The range of minimum deposit also varies of $5,000 - $10,000. Banks advertise competitive interest rates, but there are transaction limits. Time deposits or CDs are another option for customers who agree to keep their savings in an account until maturity. The term varies from 1 month to 10 years, and a longer term means a higher interest rate.  There are also health savings accounts that allow deposits but have contribution limits. In addition to checking and savings accounts, there are investment instruments such as commodities, cash, bonds, mutual funds, and others. Some investment instruments are risky (Forex trading) while others are safe to use.

A cash reserve or overdraft protection account is a solution for those who want to play safe. There are many beneficial features such as telephone and online banking and an unlimited number of transfers between different accounts. Customers enjoy high interest rates on deposits of $10,000 and more. One of the main benefits is that there are no monthly service fees. Finally, there are individual retirement accounts that allow holders to earmark funds and earn pre-tax income. Holders can place assets such as funds, bonds, stocks, and other assets. The contribution limit may be higher for holders over the age of 50. 

Reference:

YourLoan.ca

TD Bank

 

Business Loans to Canadian Companies

Financing is important for most businesses, and different financial institutions offer working capital and start-up loans. The type of loan to apply for depends on the purpose, industry, amount required, and other factors. Financial institutions ask for documents such as bank and financial statements, income tax returns and personal information, including education, criminal record, address, etc. Applicants may have to supply documents such as commercial leases, copies of contracts, as well as business licenses. Documentation of loan purpose is also required, including dealer, supplier, and estimates. Other paperwork to present includes cash flow statements, profit and loss statements, and balance sheets. Some banks also ask borrowers to present information about their other creditors, repayment schedule, and other details.

In addition to these types of financing, businesses can apply for lines of credit, equipment and commercial loans, professional and business acquisition loans, residential equity lines, and others. The government also offers small business loans to growing and new businesses to encourage companies to expand and thus increase employment levels. The downsides of business loans are the strict lending criteria and long application process.

Banks, credit unions, and finance companies offer different types of business-related financing. Businesses can apply for various types of loans, including start-up loans, lines of credit, and start-up loans. Financing is offered to businesses that plan to expand their operations to new markets.

Small business loans are offered to businesses that need financing for expansion, the purchase of real estate and vehicles, and other purposes. Borrowers are required to supply information such as bank and personal statements as to prove their ability to make timely repayments. There are other types of financing that are offered to small businesses, including transition and emerging business loans. In some cases, banks require that business owners offer personal or business assets. This is a type of short-term financing that usually goes with a low variable interest rate. In general, emerging business loans are offered to companies that have signed institutional and public contracts. Borrowers enjoy flexible terms, but applicants that have declared bankruptcy within the last year do not qualify. Another option for businesses is to apply for a transition loan which is an alternative form of financing. 

Business transition financing is offered to facilitate the sale of companies to other businesses, employees, or the management. This is a long-term type of financing, and the amount borrowed is based on assets such as equipment and machinery, buildings, land and real estate, shares, etc. Another option is to use the funds to minimize personal risk and increase cash flows. Applicants who have an adjustable or fixed rate mortgage usually qualify, but those with mortgage loans that adjust do not. Companies can choose from different types of financing such as equipment, government, and other loans Another option is to apply for a subordinated loan which is payable only after other debts have been fully repaid. There are limitations on the type of projects to be financed through operating lines, and one example is inventory.

 References:

http://www.canadabanks.net/

http://www.bmo.com/home

Documents Required to Refinance Your Mortagge

Mortgage refinancing makes sense when interest rates fall down, but some people choose this option for the purpose of debt consolidation. The type of mortgage, i.e. whether it is fixed or variable rate, determines whether refinancing is a good option.

In any case, banks have lending criteria and require that borrowers present certain documents.
Borrowers should present some type of ID such as a passport, driver’s license, or another document that shows their permanent address and identity as well as citizenship and age. Banks ask about the primary residence of the applicant and whether it is a house, condominium, or townhouse. Borrowers should supply information such as the sales price of the property, whether it is triplex, duplex, or single home, and other details. Banks are also interested in the borrower’s income level and additional sources of income. Salaried employees are required to produce recent pay stubs that show their monthly earnings (1 month of verifiable income with the borrower’s name and employer showing on the pay stubs). Those in commission-based sales and self-employed individuals should supply information such as accountant’s references, proof of income, and others. 

Financial institutions also require that applicants supply tax, investment, and bank documents such as monthly statements. Borrowers who refinance their mortgage loan should present information about their current expenses, including child support, loan and credit card expenses, rent, etc. Borrowers are asked to supply promissory notes, along with bank statements and the value of different asset accounts. Borrowers should present a description of their property along with the mortgage statement. The latter includes information such as current monthly payment, principal balance, and other charges. The type of information included in the statement varies based on the mortgage loan, i.e. whether it is an interest-only or repayment mortgage. Banks are interested in the borrower’s payment history, early repayment, interest rate history, and other details.

Financial institutions ask for documents such as discharge and bankruptcy letters and copies of court orders for child support, judgments, etc. In addition, financial institutions may request the applicant’s hazard insurance, along with the phone number and name of the insurer or agent. Some banks also request signed and dated tax transcripts and a copy of the divorce decree, if applicable.

Obviously, financial institutions are interested in the borrower’s payment history and credit record. While banks are interested in the borrower’s income level, they also ask borrowers to list expenses such as car insurance, phone, and public utilities. There are also equity and closing cost requirements, and the latter typically include loan application fees and title insurance. The costs also include private mortgage insurance and pest and home inspection.

Refinancing is a suitable option for persons who seek to modify the repayment schedule and reduce their payment amount. Some borrowers resort to debt consolidation because they have multiple, high-interest debts. Consolidation is one option, but it requires financial discipline. Applicants have different options such as reverse and option ARM mortgages. There are fixed-rate and jumbo options as well.

Choosing Between Junk or High-Yield Bonds

Bonds are issued by private and public entities that need long- and short-term financing. Bonds come in a large variety, with different terms, interest rates, and issuers.

Junk or high-yield bonds offer a high rate of return but are considered a risky investment instrument. High-yield bonds have a low credit rating and are assessed based on different factors such as industry or sector, financial holdings, and others. According to some finance experts, junk bonds are a valuable instrument because they supply capital to start-ups and struggling companies. There are other types of bonds such as book entry, build America, convertible, and others. Some people invest in zero-coupon bonds to supplement their income. War bonds are another variety and are issued by national governments that seek to fund wars. Government agencies, financial institutions, and corporations also issue foreign currency bonds that are denominated in other currencies. Other investment products include perpetual and covered bonds and asset-backed securities. Perpetual bonds are different from other instruments in that they have no maturity. While perpetual bonds offer a steady stream of revenue, treasury bonds are the safest investment instrument. There are also mortgage-backed and asset-backed securities as well as collateralized debt and mortgage obligations .

Investors can choose from different types of products such as bearer, lottery, municipal, and treasury bonds. They are a safe investment instrument offered by local governments. Some bonds are insured while others are not, but all of them are tax-free. Municipal bonds come with a lower interest rate than certificates of deposits and treasury bills. This is a type of long-term security that comes with a floating or fixed interest rate. Zero coupon bonds are one option for prudent investors. Bonds are a preferred investment instrument of those who are looking for steady flow of retirement income. Individuals with short-term savings goals usually choose other, riskier investments. Issues that are insured are practically risk-free. Bonds are in the form of low-interest loans that come with transaction fees of 0.5 to 3 percent. The main problem is that municipal bonds offer lower returns than stocks.

Sovereign states also offer products in foreign currencies. Foreign currency bonds have nicknames such as Samurai and Yankee. Bonds can be divided into fixed rate and floating rate instruments. Products differ when it comes to yield-to-call, credit quality, and other parameters. Issuers offer products with different market price, principal, put and call dates, etc. Those who seek to invest their money over a short period usually opt for fixed rate bonds with a term of 1 year.

References: 

Canada Banks

Bloomberg

Bank Services in Canada

Different financial establishments serve clients in Canada, including banks, brokerages, insurance companies, credit unions, and others. Depending on the type of establishment, they offer investment advice, special and savings accounts, mortgage loans, and other products.

Finance companies in Canada offer new and used car, student, demand, and other types of loans. There are two main categories of loans – unsecured and secured (the latter require some valuable item such as vehicle or jewelry as collateral). Banks offer car, construction, term, bridge, and other loans that require some type of collateral. Financial institutions have strict lending criteria when it comes to unsecured loans because collateral is not required. The term is usually shorter than that of secured loans. Different financial products are available to borrowers, including student and personal loans. There are different reasons why people borrow money – some plan to purchase a vehicle while others make investments. Various institutions offer home equity loans, secured lines of credit, and mortgages. Different borrowing solutions are available, including fixed-term, conventional, pre-approved, adjustable, and other types. A balloon mortgage is a short-term borrowing solution with a lump sum payment at the end of the term. The monthly payments are lower, but the lump sum payment is sizable. The choice of a mortgage product, much like other borrowing solutions, depends on the amount required, collateral, down payment, and other factors. Borrowers can choose from a selection of loans such as 5/1 and 5/5 adjustable rate mortgages and bridge financing. Mortgages that are interest-only have a term of 5 to 10 years and come with a higher interest rate. Banks often advertise a floating interest rate, along with no or little down payment. Affordable monthly payments and the shorter repayment term are two reasons why people choose an interest-only mortgage.

Financial institutions in Canada offer different checking and savings accounts. Customers can choose from different products such as regular and online savings accounts and CDs. Different financial establishments offer CDs, including thrift institutions and banks. Banks offer money market accounts that feature competitive interest rates and check writing privileges. Savings accounts also offer returns but lower than other products. Investment banks offer services to companies and investors and underwrite securities. Bank officials offer professional advice to private investors and companies and help them with reorganizations, stock placement, and other issues. Investment banks offer specialized services such as debt opinions, tax advice, dispute consulting, and many others. Many banks offer services and products to their business clients, including lines of credit, business and construction loans, and others. Financial establishments offer equipment financing, professional loans, business lines of credit, and other products. Finance companies offer guarantees and business-only loans.

Reference:
CIBC.com - Line of credit
CanadaBanks.net - Personal Line of Credit
Operating Line of Credit - RBC