Equity Based Mortgages

[Glenn Thompson]

Hello BP Community,

Does anyone have any experience in obtaining Equity Based Mortgages in Canada for the purpose of flipping properties?

Thanks for your time!

#edmonton #calgary #alberta #canada #equity #mortgage #equitybased #flip #financing

[Roy N.]

Originally posted by @Glenn Thompson:

Many of the mortgage brokers I've talked to referred to a type of mortgage called equity based.  I hadn't heard the term before, they described it as putting a larger amount for a down payment but without having to show proof of income.  

My understanding is the lenders do deals at 65:35 or better for them ratios without worrying as much about proof of income because the borrower has more skin in the game so they are unlikely to default on their debt.

I've yet to find these types of mortgages though without getting into hard money lending territory.

Glenn:

In a {simplified} nutshell that is how commercial lending works - the mortgage is secured by the equity and performance of the business and not by the income and personal assets of the principals  [In practice, the lenders - especially the Big-5 - would like the principals to offer a personal guarantee in addition to the security of the business].