Homeowner Debt Restructuring

Weathering the Financial Storm: Finding Your Way Forward

(For Real Estate Owners)

Nearly five years ago, COVID-19 struck like an unexpected storm, disrupting lives and livelihoods and leaving a trail of financial instability and stress. For many, the fallout persists today, amplified by poorly managed interest rate policies and escalating economic pressures. As a result, people are being inundated with online ads, email solicitations, and telemarketing calls from companies and individuals promising fast financial solutions. These aggressive marketing tactics collectively form a wide net designed (in many cases) to exploit moments of vulnerability. To make matters worse, the frequency of fraud and scams is surging, making it difficult for people to distinguish between legitimate opportunities and malicious schemes.

For many, the journey to financial recovery feels overwhelming and discouraging. Trust has become scarce, leaving people needing help figuring out where to turn or how to start rebuilding or restructuring. Traditionally, banks were the go-to resource for financial challenges. However, they have a reduced appetite for risk today and have become increasingly difficult to work with. This shift has driven significant growth in the subprime and private lending industry as more people seek alternatives. However, navigating these options on your own comes with substantial risks. A single misstep can lead to unexpected costs at best or finding yourself in an even worse position later that is difficult to exit from.

As a result, days, weeks, and months slip by for many individuals, with mounting stress as their financial situations deteriorate further. The longer these challenges persist, the more complex and difficult the path to resolution becomes. This relentless cycle leaves many feeling stuck and uncertain, making it increasingly difficult to find the confidence to move forward.

Experienced, Trustworthy Financial Guidance

The opportunity to engage in meaningful conversations with someone genuinely committed to helping within a calm, pressure-free environment can be a great way to navigate financial challenges and concerns. In such a setting, individuals can uncover what they may not know, ask questions, absorb important information, and ultimately make informed, confident decisions tailored to their unique circumstances.

As mortgage brokers, our roles extend beyond simply finding the best rates or helping those with bruised credit. We specialize in understanding the intricate connections between mortgage financing, unsecured debt, and tax arrears, and the nuances of how credit bureaus work. Our expertise enables us to discern what is and isn’t possible, and we strive to build a wide array of tools and relationships to support as many people as possible. Often, the most effective solutions involve debt reallocation, which requires meticulous planning and specialized knowledge. While financing purchase transactions is undoubtedly part of our work, a significant portion of what we do each year involves debt and credit restructuring, providing individuals with a path to regain control of their financial futures.

Loss of employment income, underperforming or failed businesses, health challenges, relationship breakdowns, investment property losses, unexpected project setbacks, tax arrears, monthly cash flow issues, accumulated debt, renovations, or investment opportunities are some of the most common reasons people seek to restructure their finances.

The takeaway here is that financial restructuring must be approached the right way. Making decisions with only partial information, limited options, or feeling like you are under pressure to do decide leads to choices that result in regret later.

Wrong Moves Can Make Things Worse

It’s natural to gravitate toward solutions that promise quick and easy relief when under financial pressure. These solutions can be seen as “patches” that defer financial problems, leaving you to face them again in 3, 6, 9, or 12 months, often in a worsened state.

Approaches to Dealing with Cashflow Issues that Frequently Backfire:

· Formal credit counselling, bankruptcy, or consumer proposals

· High-interest, unsecured loans

· Payroll advances

· Private mortgage financing

· Carrying high amounts of unsecured debt /making only minimum payments

We first aim to explore better, more sustainable alternatives, ensuring that decisions align with long-term financial well-being.

Our Process:

At the core of our approach is genuine care and a commitment to building long-term working relationships with each client. This philosophy allows us to go beyond quick fixes and provide clear, actionable strategies tailored to your unique financial circumstances. By taking the time to consider every detail carefully, we ensure that the solutions we recommend are effective and aligned with your long-term financial goals.

Assess the Full Picture

We take the time to understand your financial situation, including all assets, liabilities, income, expenses, goals and objectives. A thorough analysis ensures that every detail is noticed.

Simplify Complex Choices

We can then break down things into clear, manageable options. We will always explain the pros and cons of each potential option so that you can confidently make informed decisions.

Offer Effective Solutions

Our goal is to provide strategies that address both your immediate financial needs and set the foundation for long-term success. By helping you avoid common pitfalls and missed opportunities, we work to fast-track your recovery, rebuild your financial health, and enhance your overall stability for the future.

You’re Not Alone

If you’re feeling the weight of financial uncertainty, know that you are not alone and don’t have to face it alone. Avoiding the conversation only prolongs the challenges, while addressing them head-on is the first step. With the right people, proper guidance, and a personalized, well-thought-out plan, we can help you take that first step toward reducing stress and regaining control of your financial future.

Reverse Mortgages – One of the Most Misunderstood Products

Robert and Sally purchased a home 25 years ago, have since paid off their mortgage, and benefited from the appreciation on the property.

Today, the house is valued at $1,200,000, so they contacted their mortgage broker and set up a tax-free Reverse Mortgage. The Reverse Mortgage allowed them to gift 200K to their son Daniel without them having to make any monthly mortgage payments. Daniel was able to use that 200K to put a downpayment on a new home and qualify for his own conventional mortgage.

Robert and Sally essentially provided an early inheritance without affecting their own finances in any way.

Contact us anytime for more information.

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Risks Associated with Waiting to Apply For a Pre-Approval (April 2023)

We completely understand the desire to wait until you feel your financial situation is as strong as possible before moving forward in the application process. As long as you are in the ballpark, though, with being able to qualify for the financing you expect to need; and knowing that you should be there shortly, moving forward today is the way to go.

It's helpful to remember, though, that there is a severe shortage of housing inventory in Canada, which is likely to stay the same for a while. This means a person selling their property will likely have several interested buyers already pre-approved and ready to move forward. If you decide only to start the pre-approval process once you find a property you want, you are likely to miss out.

Yes, interest rates are currently higher than we have been used to, seeing no question, but prices are much lower. A good strategy for many at the moment is to purchase a property while prices are low and take a short-term mortgage of 1 to 3 years. When the rates come down, we can then look at refinancing the mortgage so that you can take advantage of the lower rates. While Real estate prices may drop a bit further if you wait, most people believe that we are almost at rock bottom now, and prices are unlikely to fall much more.

Given how the mortgage and real estate industry works, you never want to have to arrange a mortgage when you're under the pressure of a deadline.

• If interest rates continue to increase, and you decide to start the pre-approval process at a later date, you can easily be stuck paying the higher rates, whereas, with pre-approval, your interest rate is secured. If you are pre-approved and the rates come down, you can get a lower rate.

• If you are "Pre-Approved" and don't actually end up doing a transaction, that is perfectly fine. Being Pre-approved never means that you need to complete a transaction.

• Many experts expect to see real estate prices increasing soon as they are tied to interest rates which are expected to come back down at some point this year. If you wait until rates come down to move forward with the process, the market could abruptly return to a seller's market, which means that you may be dealing with higher prices, bidding wars on properties, and vendors unwilling to allow you to have the protection of a financing condition and home inspection in your offer to purchase. This is what the market looked like between 2020 and 2022, and it was very difficult and frustrating for buyers.

Lastly, the government just announced this month (Jan 2023) that they are looking at weighs to once again tighten up on mortgage lending guidelines making it more difficult for lenders and borrowers. For people that are "just" able to qualify today but that could be left out in the cold tomorrow, it's one more reason not to delay. We will provide more information on this as soon as it becomes available.