The Canadian Renovation
Funding Program

Free Loan Advisory Service

The Funding Program has recently introduced a free Loan Advisory Service offered exclusively to registered clients of The Renovation Co-op.

Upon the client’s request, a Program Specialist will identify and recommend a specific, Co-op-Approved Mortgage Broker or other Financial Service Provider who regularly specializes in the type of loan product that best fulfills the client’s requirements.

This targeted “pinpointing” of a broker’s unique experience greatly increases the client’s chances of quickly obtaining the most appropriate type of loan that fits his or her needs, and not the other way around.

Co-op-Approved Brokers

All Co-op Approved Mortgage Brokers are highly-skilled, career-minded professionals, whose customer loyalty and personal dedication will always be directed toward their client, and not the lender.

And, as each of our recommended brokers are self-employed business owners, when it comes to long-term relationship-building it is you (the client) who actually becomes the broker’s “employer.” And the only way for the broker to retain that long-term “employment” with you, is to always act in your best interest…and not that of a bank’s or other institution’s.

Nonstop Training…

As new mortgage loan products continue to become more complicated, mortgage brokers must always maintain a vigilant, watchful eye over the industry, always seeking opportunities and/or information that may further help their clients obtain the best mortgage rates, terms and loan conditions.

In fact, most Renovation Co-op-Approved Mortgage Brokers have the highest attendance record in the industry when it comes to participating in financial forums and special loan product briefings.

For many typical, “less-engaged mortgage specialists, this effort has become too hard a challenge.

However, The Renovation Funding Program recommends only serious, career-minded mortgage specialists who are already highly motivated to grow and excel within their own professional levels of financial expertise.

Note: As a registered client, you will always have permanent access to this free advisory service, and you will never be obligated to purchase any services offered through The Renovation Co-op.

However, if you purchase a loan (for any purpose), a credit of $2,500 will be deposited into your Renovation Credit Account.

When you initially register into The Renovation Co-op (Client Registration is free), a Renovation Credit Account is automatically created for you, with a starting balance of $0.

Note: See also: Subsidy & Rebate Programs

Examples:

Mortgage Loans

When you purchase any type of mortgage product (eg. Refinancing, Debt Consolidation, Construction Loan, Line of Credit, etc.) through a Co-op Approved Mortgage Broker, a credit of up to $2,500 will be added to your Renovation Credit Account.

Real Estate Transactions

When you buy or sell your home through a Co-op-Approved Realtor, you will receive a Renovation Credit of up to $3,500.

Note: All Renovation Credit Accounts are
fully Transferable:

Upon the sale of your home, you may transfer the full balance of your Renovation Credit Account to the next owner, or you may keep the account to use toward future renovation projects at your next property.

The ability to transfer your Renovation Credit Account to a potential buyer of your home provides an attractive, additional feature that may help close the sale.

For further information see Subsidy & Rebate Programs.

Accounting & Bookkeeping Services

When you hire a Co-op-Approved Accountant or Bookkeeper, a credit of up to $1,500 will be deposited into your Renovation Credit Account

Features of the Renovation Credit System:

* Cumulative Balances:

All credits that are added to your Renovation Credit Account Balance are cumulative and will remain within the account until such funds are eventually applied toward renovation purchases (as per Co-op policy).

* Available for all Projects

Renovation Credit can be applied towards any type of General Contracting or Architectural Project when purchased through a Co-op Member-Contractor or Architect/Designer.

* Transferable Balances:

As mentioned above, you may opt to transfer the balance of your Renovation Credit Account to the next owner, or give it away as a gift to a friend or relative. You will receive a Certificate of Transfer with the person’s name on it (as displayed above).

Sample Estimate:

In the example above, the allowable amount of renovation credit that can be used towards the is 3% of the Final Sale Price.

The standard amount of Renovation Credit that can be used towards any type of project is 2% of the Final Sale Price.

However, The Co-op occasionally provides special Incentive Programs, where a higher percentage of the Final Sale Price can be applied to specific projects such as Kitchens, Bathrooms, Basement Apartments, etc. (as long as there are adequate funds in the client’s Renovation Credit Account).

The 3 Main Categories
of Mortgage Loans:

The five major Canadian institutions (referred to as “The Big Five”) are known as Schedule “A” Lenders. These chartered banks sell Mortgage loans to customers who have A+ to B+ credit ratings, low debt service ratios, and whose total family income meets or exceeds a specific set of guidelines.

For mortgage re-financing purposes, the homeowner’s equity must also fall within a specified, minimum percentage of the home’s appraised value.

Historically, the largest percentage of first-time home buyers have purchased their mortgages through one of the “big five” banks.

“Alt- B” Mortgage Lenders are medium-to-large-scale mortgage institutions that serve those clients who may fall short of meeting one or more specific lending qualifications required by major banks.

These Mortgage lending institutions charge slightly higher interest rates than banks, but normally offer more flexibility within their mortgage lending criteria, approving a wider ranges of self-employed clients and individuals with hard-to-prove income.

“Alt-B” Lenders include Trust Companies, Credit Unions and many variations of private and publicly-traded mortgage firms that are available both locally and across Canada.

As the housing market continues its meteoric rise across the region, fierce competition between each of the five major Canadian banks has never been greater. However, the banks’ loan approval qualifications have also increased.

And while the major Canadian banks have been forced to develop a wider, more inclusive selection of mortgage loan products to better accommodate the changing socio-economic demographics across the nation, they are still limited by their historic intolerance of low-to-moderate risk.

“Alt-B” Lenders fill many of the gaps between major banks and private lenders.

Private Mortgage Loans have become a strategic option for many homeowners who need specific funds for renovations, debt consolidation (where the immediate refinancing of an existing mortgage may be impractical due to high pre-payment penalties, etc.), or where the client’s credit may be an issue.

The Private Mortgage Industry has grown in leaps and bounds across Canada, offering numerous types of more sophisticated lenders ranging from private individuals and small companies (who mainly invest in private 2nd mortgages between $20,000- $50,000), to larger-scale investment firms that offer both private residential and commercial mortgage financing for amounts between $100,000 to over $20 Million.

Private Construction Loans:

These are equity-based loans that are approved by the lender, and  based upon the future value of the home (the home’s approximate, appraised value following the completion of the construction).

Construction financing has always been a high-risk investment for lenders, and remains highly-specialized. Such lending not only requires an experienced mortgage broker with years of construction-related financing, but whose network of private investors include individuals and/or companies who specifically offer such lending.

Private Residential Construction Loans (mainly used for projects such as 2nd-Storey Additions, Rear Extensions, Laneway Houses and Custom Homes) can also be risky for contractors:

Payments to the contractor are disbursed at various stages (“progressive” or “staged payments”) that signify the completion of specific benchmarks reached throughout the entire project. For example: $xxx paid on completion of foundation work, or $xxx paid on completion of framing & drywall, etc.).

Such progressive payments are made upon a series of completed inspections conducted by the lender’s appraiser or other representative, and the timing and coordination of such inspections and payments to the contractor depends entirely upon how well the lender is set up to deal with such issues, which can have a direct impact on the contractor’s cash flow throughout the project.

Of course, this all depends upon the client having hired a more specialized Mortgage Broker, whose network of lenders are already set up to deal with such administrative issues.

If you need a private construction loan…make sure you hire a broker who regularly arranges construction loans!

And although the five major banks, along with many Alt-A Lenders have always included construction loans within their own portfolios of advertised mortgage services, they have remained very “clumsy and disorganized” when it comes to administrating such loans (and they know it!).

In addition, most contractor payment terms and schedules associated with construction loans offered through the banks are often too restrictive and/or impractical for the residential construction industry.

That said, there are dozens of mortgage brokerage firms that claim to provide numerous types of construction loans but again, if the broker is ill-equipped to deal with construction-related lending, both the client and the contractor may find themselves running into serious trouble throughout the course of a major renovation project.