Please note: * The presentation materials are for illustrative purposes only - contact Volition Properties and/or Vine Group representatives for a formal review or use * The materials are intended for personal use, and permission is required to use or further distribute information contained in the slides and/or recording

2. HUGO DOS REIS DAVID GONCALVES
Founding Partner & Mortgage Broker |
David@vinegroup.ca
Partner & Mortgage Broker |
hugo@vinegroup.ca
Founding VINE Group, David has expanded the company in
Ontario, British Columbia, and Alberta. Leading a team of high
performing, experienced mortgage professionals, David
continues to be a mentor to many of his team members and a
leader within the industry. He has always referred to the
mortgage industry as a people business, guiding them and
providing advice rather than a business solely sales focused.
With 12+ years of experience in the financial sector, Hugo has
provided financial planning education presentations to
thousands of investors through seminars and workshops, has
authored numerous articles, contributed insights to several
news outlets and hosted a financial news segment for the
multi-unit rental sector. His signature client-focused
approach, value-added advice, and background in financial
planning is what has helped Hugo with his success year over
year.
ABOUT US

3. WH O WE ARE

4. National offices

5. 1. Choosing a Financing Partner (Bank vs. Broker)
2. Canadian Lending Environment
3. DNA of a Mortgage Application
4. Strategic Mortgage Financing - BLUEPRINT
5. Mortgage Trends
AGENDA

6. Strategic Investors adjust with changes in the
market

7. Choosing a Financing
Partner
Bank vs. Broker?

8. • Financing is the MOST IMPORTANT part of
the real estate process
• Most bank representatives are NOT familiar
with rental financing
BANK vs. BROKER

9. • Pre-approval vs. Pre-positioning
• Long-term relationships
• Mortgage Options
BANK vs. BROKER

10. Canadian
Lending Environment

11. 2 major financing categories:
Residential 1 - 4 Units
Commercial 5+ Units
CANADIAN LENDING ENVIRONMENT

12. Residential
Borrower
Building
Commercial
Building
Borrower
CANADIAN LENDING ENVIRONMENT

13. • “A” lenders
o Big Banks
o Monoline Lenders
o Credit Unions
• Alternative Lenders (B Lenders)
• Private Lenders
CANADIAN LENDING ENVIRONMENT

14. Big Banks
• Scotia, TD, RBC, CIBC, BMO & National Bank
• Familiarity or brand
• Typically use their own funds, so it’s easier for exceptions
when needed
• Competitive pricing
CANADIAN LENDING ENVIRONMENT

15. Monoline Lenders
• Non-bank lenders
• First National, MCAP, XMC, RMG, etc.
• Can only access via 3rd party providers (Brokers)
• Better pricing (lower overhead)
• Unique solutions
• Use investors for financing (pension funds, etc.)
CANADIAN LENDING ENVIRONMENT

16. Credit Unions
• Desjardins, Duca, Meridian etc.
• Service local communities very well
• Able to get exceptions (have their own funds)
• Provincially regulated – different rules
• OSFI (Office Of The Superintendent Of Financial Institutions) –
Federal (Stress Test)
CANADIAN LENDING ENVIRONMENT

17. Alternative Lenders (B Lenders)
• Equitable Bank, Home Trust, Optimum
• Being used more often in today’s environment as it’s now harder to
qualify
• Common sense lending
• Rates typically 1% - 1.50%+ higher
• Fees are 1% on average
• Accept lower credit scores
• Larger portfolios
• Self-employed friendly
CANADIAN LENDING ENVIRONMENT

18. Private Lenders
• Lending on asset
• Up to 80% LTV (sometimes 90-100% with cross collateral)
• Rates 8%+ with fees estimated at 3%+
• Interest only payments
• Low documents requirements
• Construction financing/flips
CANADIAN LENDING ENVIRONMENT

19. • Most lenders now charge rental property rate
premiums
• Some lenders will not consider purchases in
Holdco/corporate ownership
CANADIAN LENDING ENVIRONMENT

20. DNA of a
Mortgage Application

21. Income
• Salary employed (T4’s, paystubs)
• BFS/Commission Employed (Last two year T1’s + NOA’s)
• Part-Time
• Investments/Rental Income
DNA of a mortg ag e application

22. Ratios – GDS/TDS
• TDS (Total Debt Servicing)
✓ All expenses divided by all income
✓ Ideally 40-42%
• GDS (Gross Debt Servicing)
✓ Subject property expenses divided by all income
✓ Ideally 35-39%
DNA of a mortg ag e application

23. DNA of a Mortgage Application
INCOME EXPENSES
GDS
MAX 35%
(income/expenses)
Verifiable Income
+
50%-75% of rental income
✓ Mortgage stress test
payment
✓ Taxes
✓ Condo fees
✓ Heat
TDS
MAX 42%
(income/expenses)
Verifiable Income
+
50%-75% of rental income
✓ All other debts payments
✓ Credit cards
✓ LOC’s
✓ Other mtgs
✓ Car loans
✓ Subject property expenses

24. Example
• Client earns $100,000 or $8,333.33/month
• Has car loan of $500/month
• Needs $300,000 mortgage: Payments of $1,565/month
• Subject Property Taxes + Utilities: $400/month
• Total Subject Expenses: $1,965/month
• Total Expenses: $2,465/month
• GDS: 23.50%
• TDS: 29.58%
• Max mortgage is around $525K
DNA of a mortg ag e application

25. *For illustration purposes only
Mortgage Amount 2021 Income Needed
$250,000 $55,000
$400,000 $80,000
$500,000 $95,000
$750,000 $135,000
$1,000,000 $175,000
DNA of a mortg ag e application

26. Down Payment
• Minimum 20% down payment (25% sometimes) for rentals
• Minimum 5% for primary residences
• Most lenders will not accepts gifts for rentals
• Need 90 day source history
• Consolidate if possible prior to close (easy statements)
DNA of a mortg ag e application

27. Credit
• Credit scores range from 300-900
• Reported by Equifax and Trans Union
• A Credit score above 680 is ideal
DNA of a mortg ag e application

28. Best Practices to Improve Credit
✓ Keep credit roughly 60% below the limit
✓ Don’t miss a payment
✓ Have at least TWO credit facilities over 2 years, don’t close
older accounts that are active
DNA of a mortg ag e application

29. Asset Type
• Where is the property located?
• Is it in an area of less than 50,000 people?
• What is the condition of the property?
• Are they legalized units or self-contained?
DNA of a mortg ag e application

30. Net Worth
• Lenders have a net worth requirement for rentals
• General rule of thumb is 10% for EACH rental
property owned (in addition to the down payment)
DNA of a mortg ag e application

31. BLUEPRINT
Being Strategic With
Your Financing

32. Now more than ever,
financing requires proper and
strategic
PLANNING

33. PLAY IT LIKE a CHESS GAME

34. 1 - 4 Properties
• Most lenders have a “Global Limit” of 4 rentals
• Preferred pricing and solutions
• HELOC’s for rentals
• Split mortgages
BLUEPRINT - STRATEGIC FINANCING

35. 5 -10 Properties
• Reduced lender options
• Full portfolio should have DCR of 1.10+
• Some big banks (branch relationship)
• Credit unions
• Consider a REFINANCE before you buy the 5th property
BLUEPRINT - STRATEGIC FINANCING

36. 10+ Properties
• Very small lender pool
• 30-year amortizations + rate premiums
• Credit unions (NO global limit)
• DCR requirements
• Alternative lenders
BLUEPRINT - STRATEGIC FINANCING

37. 15+ Properties
• Turn your portfolio into a business
• Commercial blanket across your portfolio
• Up to 75% LTV
• Up to 25 year amortizations (30 years on exception)
• Commercial rates + fees
• DCR ideally 1.25+
BLUEPRINT - STRATEGIC FINANCING

38. Multi-unit/Commercial
• 5+ units
• Asset focused
• LTV as high as 85%
• Amortizations between 25-40 years
• No issue with # of properties
BLUEPRINT - STRATEGIC FINANCING

39. Mortgage
trends

40. IS HISTORY
REPEATING ITSELF?

42. “ STRESS TEST”

43. 1920 1940 1960 1980 2000 2020
GEN Z
MILLENNIALS
GEN X
BOOMERS
TRADITIONALISTS
1946-1964
1996-
1965-1980
1980-1995
1925-1945
WH O ARE MILLENNIALS?

44. 6%
24%
20%
23% 24%
Traditionalists Boomers Gen X Millennial Gen Z
Millennials are about to surpass Boomers in population
size Population by Generation (% of total)
WH Y YOU CAN’T IGNORE
MILLENNIALS & GEN Z

45. It’s estimated that by 2025,
75% of the global workforce
will be Millennials.

46. 65%
Rent or live
with family
94%
Intend to
buy a home
37%
Own their
home
67%
Haven’t started
saving yet
58%
Worry about rising
interest rates
MILLENNIALS and housing

49. Downtown Toronto office vacancy rate hits highest level since global financial crisis
RACHELLE YOUNGLAI
PUBLISHED JANUARY 13, 2021
UPDATED 1 DAY AGO

51. 51

52. Let’s Start With an Inventory
WH ERE ARE YOU NOW?

54. Making Your Mortgage Application a
SUCCESS

55. • Rules are now HARDER, so you must be ORGANIZED!
• Create a MORTGAGE BINDER (or Cloud storage)
✓ Recent mortgage statements, tax bills, leases for all
properties, etc.
✓ Updated T1 generals + NOA’s (last two years)
✓ Updated savings/investment statements
• Updated Paystubs + Letter of Employment
MORTGAGE APPLICATION SUCCESS
TIPS

56. THANK YOU!
www.vinegroup.ca