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Top Broker Questions about Pillar, Answered!

Blog-Date-1Mar 18, 2020

At Pillar, we work with mortgage brokers across Ontario to provide solution-based lending to borrowers who don’t fit the typical bank profile. This often involves helping brokers secure residential mortgages for construction deals, self-employed borrowers, debt consolidation and other atypical situations.  Since we’re not a typical mortgage lender, we receive lots of questions from brokers about how we operate and what we offer. Here we answer the questions we hear most often.

Our most common questions

1. What are your rates?

Like any mortgage business, our interest rates are influenced by the market. Today, our rates are generally in the 8–11% range for an average Pillar deal, although they can go higher or lower.

Whatever the situation, our rates are always subject to a full underwriting process. Deals are assessed and negotiated on a case by case basis with rates determined based on risk.

2. What are your fees?

Currently, our legal fees are the lowest in the industry at a flat rate of $395.50.

Other private mortgage lenders often charge legal fees as a percentage of the loan amount, where our flat rate can save borrowers thousands of dollars on a single deal. We also charge a lender fee equal to 2% of the loan amount which is deducted from the amount paid out to the borrower. From this, we receive 1% and pay the broker 1% as a commission.

We also require an appraisal for every deal, so borrowers should be prepared to pay for this. However, this is simply part of the cost of obtaining a mortgage.

3. Do you qualify for TDS/GDS? In other words, is Pillar an equity lender?

We do not do equity lending. At Pillar, we require borrowers to be below 50% for both the total debt service (TDS) and gross debt service (GDS) ratios.

We calculate TDS/GDS based on a borrower’s qualifying deal at the contract rate and a maximum amortization of 40 years. So if the deal is at 11%, the borrower needs to qualify at 11%.

4. Do you allow for stated income?

Yes, we accept stated income for our mortgages as long as the income is supported by bank statements or other documentation, such as tax returns.

When assessing stated income, we look at the income that a borrower has grossed rather than their declared income. This applies specifically to self-employed borrowers or commission-based borrowers, such as realtors.

5. Do you allow a second mortgage behind your first mortgage?

We allow  second mortgages up to a maximum combined loan to value (LTV) ratio of 90%.

In addition, the second mortgage must be included in the TDS/GDS calculations with the borrower remaining below the 50% cap.

6. Do you do commercial lending?

No.

7. Do you offer standalone second mortgages?

No, we lend only on residential mortgages in the first position.

8. For construction deals, do you lend on the cost to build or on the future value of the completed home?

We lend on the future value of the property, and our mortgages are based on an appraised value. An appraiser determines the future value based on a review of the borrower’s cost to build, their architectural drawings and market factors.

9. How do you determine the LTV for the first construction draw on the land?

We require an appraisal to determine the as-is value of the land, including any structures on the land. We then provide an advance on closing that is approximately 50–70% of this appraised value.

10. How can we submit mortgage applications to Pillar?

Brokers can submit applications to us through either Filogix or Velocity. Both systems allow for efficient application submission and processing, enabling us to respond quickly when brokers submit a deal.

You can submit a mortgage inquiry with our underwriters today.

Here to help

At Pillar, we are committed to professionalism, transparency and helping our clients end up in a better financial position. To honour this commitment, there are certain things that we always do – or don’t do – when helping brokers secure mortgages for their clients.

If you have more questions about how we operate, contact our business development team today.

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