PITFALLS Of A Home Mortgage

The vast majority of homebuyers use some sort of mortgage, in order to be able to afford, buying their home. Since one’s house, is their single, biggest financial asset, wouldn’t it make sense, to clearly identify, issues which might impact the borrower, and be ready, willing and able to proceed, in the best possible manner. With this in mind, this article will briefly attempt to examine and discuss, using the mnemonic approach, some of the potential PITFALLS of any specific mortgage, and, hopefully, assisting these individuals, in being, as well prepared, as possible.1. Points: When comparing various, available mortgages, naturally, one hopes to pay the lowest, possible interest rate, he qualifies for, and is available! However, one of the most misunderstood items, is something, known as, paying, points. In mortgage lingo, a point translates to something pre – paid, to lower the overall, monthly rate, to be paid. One point equals 1% of the amount of the mortgage principal. For example, on a $500,000 mortgage, one point would amount to pre – paying $5,000, upfront!


2. Interest rate: Consider the stated interest rate. Is it a fixed amount, for the life of the loan, or variable (which means, will change, after certain periods, and adjust)? Monthly mortgage payments consist of a portion for principal repayment, another for interest, and another part, for escrow (which equals real estate tax, insurance, etc)3. Term: How long is the term, of the loan? Most fixed mortgages have either 30 or 40 – year, terms (although 30 years, is prevalent), while 15 – year mortgages, generally carry a lower interest rate (but higher monthly payments). If a variable mortgage is used, identify, the initial term of the guaranteed rate, as well as how often the rate changes, after the first period. Also, discover and know, how this adjustment might be based/ determined!4. Fixed (versus variable): Know the advantages of a fixed, versus a variable loan, and vice versa! There is often a lower rate, for variable loans, but fixed ones are guaranteed, at a specific rate, for the life. Which is best for you, is often determined, by how long, you plan, to remain in the house!5. Aims: Do you plan to live in this house, for an extended period, or is your aim, to move – on, in a relatively shorter period of time? Knowing your aims, helps you best decide, what type of loan, you should seek!6. Length: Mortgage terms vary in length. While some are 30, or even 40 years, in recent times, many have used 15 – year loans, in order to pay, far less, total payments, over – time! Variable – term mortgages, often, vary in length, with most either being, known as 7/ something, or 10/ something! The second number refers to, how often, after the initial period, the rate changes, etc.


7. Liquidity: These days, there are very few pre – payment penalties. Some loans might be transferable, and if so, this might help, in marketing the house, in the future!8. Serve your needs: There is no such thing, as one – size, fits – all, when it comes to determining the best mortgage, to serve your personal needs and circumstances!If you understand, fully, the PITFALLS, of securing the best financing, for your home, you will be, best prepared, to be a happier, homeowner! Will you be as ready, as you might possibly, be?

Who’s Financing Inventory and Using Purchase Order Finance (P O Finance)? Your Competitors!

It’s time. We’re talking about purchase order finance in Canada, how P O finance works, and how financing inventory and contracts under those purchase orders really works in Canada. And yes, as we said, its time… to get creative with your financing challenges, and we’ll demonstrate how.

And as a starter, being second never really counts, so Canadian business needs to be aware that your competitors are utilizing creative financing and inventory options for the growth and sales and profits, so why shouldn’t your firm?

Canadian business owners and financial managers know that you can have all the new orders and contracts in the world, but if you can’t finance them properly then you’re generally fighting a losing battle to your competitors.

The reason purchase order financing is rising in popularity generally stems from the fact that traditional financing via Canadian banks for inventory and purchase orders is exceptionally, in our opinion, difficult to finance. Where the banks say no is where purchase order financing begins!

It’s important for us to clarify to clients that P O finance is a general concept that might in fact include the financing of the order or contract, the inventory that might be required to fulfill the contract, and the receivable that is generated out of that sale. So it’s clearly an all encompassing strategy.

The additional beauty of P O finance is simply that it gets creative, unlike many traditional types of financing that are routine and formulaic.

It’s all about sitting down with your P O financing partner and discussing how unique your particular needs are. Typically when we sit down with clients this type of financing revolves around the requirements of the supplier, as well as your firm’s customer, and how both of these requirements can be met with timelines and financial guidelines that make sense for all parties.

The key elements of a successful P O finance transaction are a solid non cancelable order, a qualified customer from a credit worth perspective, and specific identification around who pays who and when. It’s as simple as that.

So how does all this work, asks our clients.Lets keep it simple so we can clearly demonstrate the power of this type of financing. Your firm receives an order. The P O financing firm pays your supplier via a cash or letter of credit – with your firm then receiving the goods and fulfilling the order and contract. The P O finance firm takes title to the rights in the purchase order, the inventory they have purchased on your behalf, and the receivable that is generated out of the sale. It’s as simple as that. When you customer pays per the terms of your contract with them the transaction is closed and the purchase order finance firm is paid in full, less their financing charge which is typically in the 2.5-3% per month range in Canada.

In certain cases financing inventory can be arranged purely on a separate basis, but as we have noted, the total sale cycle often relies on the order, the inventory and the receivable being collateralized to make this financing work.

Speak to a credible, trusted and experienced Canadian business financing advisor as to how this type of financing can benefit your firm.