Mike Cara
Find the Right Mortgage in Peterborough & the Kawarthas: Expert Broker for All Credit Situations
Choosing the right mortgage broker is crucial, and experience matters. Mike Cara, your Local Trusted Mortgage Broker serving Peterborough and the Kawarthas, brings over 30 years of finance expertise to help clients that most other brokers cannot help. We are a full-service mortgage business dedicated to arranging financing for all credit types, including credit scores from 400 to 900. Our comprehensive mortgage services include mortgage renewals, debt consolidation to improve your financial health, accessing equity through home loans, refinancing your existing mortgage, assisting first-time homebuyers, navigating mortgage needs during divorce or separation, specialized mortgage programs for self-employed individuals and Agri-farm businesses, construction financing, solutions for bad credit mortgages, private lending options, and alternative mortgage solutions. We strive to secure some of the lowest interest rates available in Ontario. Get personalized mortgage advice in your area.
Rest assured, I am a licensed and insured Mortgage Broker with Northwood Mortgage Ltd. Brokerage, a member of the Verico Mortgage Brokers Network, a reputable institution regulated by the Financial Services Regulatory Authority of Ontario (FSRA) under license number 10349. These affiliations reflect my commitment to the industry’s highest standards of professionalism and ethics, ensuring you receive the best possible outcome.
Need personalized mortgage advice in Peterborough and Central Ontario?
Your Mortgage Advocate,
Mike Cara, Mortgage Broker in Peterborough, Ontario
BLOG / NEWS Updates
Construction Mortgage Peterborough | New Home Financing
Construction Mortgages in Peterborough: How to Finance a New Home Build
Building your own home can be an exciting project, but financing new construction is very different from obtaining a mortgage to purchase an existing property.
With a conventional home purchase, the lender is financing a completed asset. The house exists, its market value can be established through an appraisal, and there is an established market of potential purchasers if the mortgage goes into default.
Construction financing is different.
During construction, the lender is financing an asset that is constantly changing. A property consisting of land and a partially completed house presents considerably more risk than a finished residential property.
That difference affects how much a lender will advance, when the money is released, the interest rate, lender fees, appraisal requirements, legal requirements and the overall structure of the mortgage.
If you are planning to build a home in Peterborough, the Kawarthas or Central Ontario, the financing should be planned before construction begins.
The Land Is the Starting Point
For private construction financing, there is one important requirement borrowers need to understand:
The building lot needs to be paid in full.
The equity in the land provides the foundation for the private lender's security and represents the borrower's initial equity in the construction project.
For example, if you own a building lot worth $200,000 with no mortgage registered against it, you already have $200,000 of equity supporting the construction project.
As the lender advances construction funds and the house takes shape, the lender's security becomes the combined value of the land and the improvements made to it.
If there is already a mortgage against the land, the private construction lender does not have the same security position. Existing financing reduces the available equity and leaves another lender ahead of the construction lender on title.
For the private construction financing I arrange, the land needs to be owned free and clear before the private construction mortgage is established.
Construction Financing Should Be Planned Before You Start Building
One of the most important steps in a construction project is establishing the financing strategy before construction begins.
That does not necessarily mean every dollar has to come from one source.
A construction financing strategy can include the equity in your building lot, personal funds, equity from another property, a home equity line of credit, conventional construction financing and private mortgage financing.
The important question is simple:
Where will the money required to complete the house come from?
Running out of money halfway through a construction project creates a very different lending problem from arranging the financing before construction begins.
A partially completed house is considerably more difficult to finance than a completed home. A new lender must evaluate the work already completed, the remaining construction budget, the current as-is value, the borrower's available equity and the lender's exit risk.
How Conventional Construction Mortgages Work
Banks and credit unions commonly structure construction financing using progress draws.
Instead of advancing the entire mortgage at closing, the lender releases money as construction reaches predetermined stages, such as foundation, framing, lock-up and substantial completion.
There is an important reason for this beyond simply confirming that construction is progressing: Ontario's Construction Act and the risk of construction liens.
Contractors, subcontractors and suppliers who have not been paid for work or materials can have lien rights against the property. Those lien claims can create statutory priority issues that directly affect the mortgage lender's security.
That is why a construction lender does not simply hand the borrower the entire mortgage and wait for the house to be completed.
Before subsequent construction draws are released, the lender's lawyer conducts the required title review to determine whether construction liens or other registrations have appeared against the property. The lender also requires evidence of construction progress and deals with the applicable statutory holdback requirements.
Each draw can therefore involve:
- A progress inspection or appraisal confirming the stage of construction and current value
- A title search for registered construction liens and other registrations
- Lawyer involvement before funds are released
- Applicable statutory construction holdbacks
- Confirmation that sufficient property value exists to support the lender's outstanding advances
- Additional legal, appraisal and administrative costs
This process protects the lender from continuing to advance money into a project where unpaid contractors, subcontractors or suppliers have created claims against the property.
It also explains why construction financing is fundamentally different from a conventional residential mortgage.
The lender is not simply underwriting the borrower once. It is continually underwriting the property, the construction progress, title and its security position as the project advances.
Why Lenders Care About the Current Value
Loan-to-value, or LTV, is particularly important with construction financing.
Suppose a partially completed house and land have a current as-is appraised value of $500,000.
A lender prepared to advance 65% of the current value would limit its exposure to approximately $325,000.
The completed property could ultimately be worth considerably more, but the lender still has to consider what its security is worth today and what would happen if construction stopped tomorrow.
This is one reason borrowers can encounter financing problems when an as-is appraisal comes in below expectations.
The project can remain financially viable, but the financing structure has to reflect the value of the property at its current stage of construction.
What Happens When the Appraisal Changes the Original Plan?
A lower-than-expected appraisal does not automatically mean the construction financing has failed.
Sometimes the structure simply needs to change.
For example, assume a private lender is prepared to commit $400,000 to complete a project, but the current as-is value does not support releasing the entire $400,000 immediately.
Rather than reducing the total financing commitment, the lender can structure the mortgage so that:
$300,000 is released initially, while another $100,000 is held for a subsequent construction advance.
The borrower still has $400,000 committed to the project.
The difference is when the final $100,000 is released.
This distinction is important.
A construction holdback does not necessarily mean the lender has reduced the mortgage commitment. It can simply control when a portion of the committed funds is released as construction progresses and the lender's security improves.
Why Not Simply Advance the Entire Mortgage?
Consider a property with a current as-is value of $505,000.
Immediately advancing $400,000 represents approximately 79% LTV against the property in its present condition.
Advancing $300,000 initially represents approximately 59% LTV.
That is an enormous difference from the lender's perspective.
The remaining $100,000 can be released as construction progresses and the value of the lender's security increases.
The borrower has certainty that the money has been committed, while the lender avoids immediately advancing almost 80% of the current value against an unfinished house.
This is a practical example of how private construction financing can be structured around the realities of a project rather than simply declining the application.
Why Partially Completed Homes Are Difficult to Finance
Mortgage lending ultimately comes down to risk.
A lender must ask a basic question:
If this mortgage goes into default, can we sell the property quickly and recover our money?
A completed residential home has a broad market. Families, investors and other conventional purchasers can buy it.
An unfinished house has a much smaller potential buyer pool.
A purchaser taking over a partially completed project has to determine what work remains, how much completion will cost, whether the existing work was completed properly and how long it will take to finish.
That substantially reduces marketability.
If the lender has to realize on its security, it could therefore be selling an unfinished construction project rather than a conventional home.
This explains why conventional lenders are reluctant to enter a construction project after substantial work has already been completed unless the borrower can provide additional security.
Private Construction Mortgages
Private lenders fill an important gap in the construction financing market.
They can consider transactions that do not fit conventional bank or credit union guidelines, including partially completed projects.
However, private lenders are still lenders. They are not financing construction simply because a bank declined the application.
They evaluate the land, current as-is value, construction budget, amount required to complete the project, loan-to-value, borrower and exit strategy.
The paid-for building lot is particularly important because it provides the initial equity supporting the mortgage.
Private construction financing is also not inexpensive money.
Interest rates are higher than conventional residential mortgage rates, and borrowers should expect lender fees, legal costs and, where applicable, mortgage brokerage fees.
Private construction financing in this market can be priced in the range of approximately 9% to 10%, with lender fees added to the transaction. Actual pricing depends on the property, loan-to-value, stage of construction, location, exit strategy and overall risk.
The relevant comparison is not between a private construction mortgage and an advertised five-year residential mortgage rate.
They are financing two completely different risks.
Private Lenders Look at the Exit Strategy
A strong construction financing application requires more than an appraisal.
The lender wants to know how the mortgage will ultimately be repaid.
The exit strategy can include completing the property and refinancing with a conventional lender, selling the completed home, or using other available assets or financing.
Experienced private construction lenders also understand what happens when a project does not go according to plan.
Many lenders active in this market have backgrounds in construction, development or real estate. That experience allows them to assess construction risk differently from a conventional residential mortgage lender.
They understand construction costs, completion risk and the marketability of an unfinished property.
That expertise matters if the project goes into default. The lender is not dealing with a finished house that can simply be listed for sale. It is dealing with an unfinished construction project that can require additional money and expertise to complete before the lender can recover its investment.
The Cheapest Financing Is Not Always the Best Financing
Borrowers naturally focus on interest rates, but construction financing requires a broader analysis.
The first question should be:
Will the financing provide enough money to complete the project?
A lower interest rate has little value if the lender will not advance enough money, requires a construction milestone the borrower cannot reach without additional capital, or will not finance the project at its current stage.
Certainty of capital can be more important than a small difference in interest rate.
This is particularly true once construction has started.
Running out of money with a house 40%, 50% or 70% complete can leave a borrower with very limited financing options.
Know the Cost Before You Start
If private financing forms part of your construction strategy, understand the cost before construction begins.
That means discussing:
- Interest rate
- Lender fee
- Brokerage fee
- Legal costs
- Appraisal costs
- Progress-draw or inspection costs
- Holdback requirements
- Prepayment terms
Private financing should not become a financial surprise halfway through construction.
The financing structure can change if the property's value or construction progress differs from the original assumptions, but the anticipated cost of private capital should be understood at the beginning.
Construction Financing in Peterborough and the Kawarthas
Construction projects throughout Peterborough, the Kawarthas and Central Ontario present their own financing considerations.
Properties can include rural acreage, wells and septic systems, custom homes, owner-built projects and properties that do not fit standard urban residential lending guidelines.
There is no single construction mortgage that works for every project.
The financing has to be structured around the borrower, the land, the current stage of construction, the completed value, the amount required to finish the project and the exit strategy.
That is why construction financing requires planning before construction begins.
And when circumstances change during construction, the answer is not necessarily to abandon the financing strategy.
Sometimes the solution is simply to restructure how and when the money is advanced.
Need Construction Financing in Peterborough?
If you are planning to build a home in Peterborough, the Kawarthas or Central Ontario, speak with me before construction begins.
For private construction financing, the starting point is a building lot that is already paid in full. From there, we can assess the construction budget, available equity, projected completed value and financing required to complete the project.
If construction is already underway, the financing becomes more complex, but there can still be private lending options depending on the current value, remaining construction costs and available security.
With more than 30 years of experience in finance, I structure mortgage solutions around the transaction rather than trying to force every construction project into the same lending box.
Your Mortgage Advocate,
Mike Cara
Mortgage Broker in Peterborough
Reverse Mortgages in Canada vs. the U.S.: Why the Difference Matters
Reverse Mortgages in Canada vs. the U.S.: Why the Difference Matters
Reverse mortgages have developed a reputation that makes some Canadian homeowners uncomfortable before they even understand how the product works.
One reason may be surprisingly simple: many of the reverse-mortgage stories Canadians have heard come from the United States.
American television, news reports and online articles cross the border every day. Over time, stories involving American reverse mortgages can become part of the Canadian perception of the product.
But Canadian homeowners shouldn't make a retirement-financing decision based on an American reverse-mortgage story.
Canadian and U.S. reverse mortgages are not the same product.
For homeowners in Peterborough and the Kawarthas who have accumulated substantial equity in their homes, understanding the difference is an important first step.
Canadian Protections Include No Negative Equity
One of the biggest concerns homeowners have about reverse mortgages is straightforward:
“Could I eventually owe more than my house is worth?”
Canadian reverse-mortgage products include no negative equity protection, subject to the homeowner meeting the obligations of the mortgage.
That protection directly addresses one of the fears many homeowners have about using a reverse mortgage.
There are still costs.
Interest accumulates and compounds. The mortgage balance increases over time, and borrowing against the home reduces the equity that would otherwise remain available.
A reverse mortgage isn't free money.
But understanding those costs is very different from assuming that a homeowner can simply end up owing an unlimited amount beyond the value of the property.
You Continue to Own Your Home
Another common misconception is that getting a reverse mortgage means giving ownership of the house to the bank.
It doesn't.
The homeowner retains ownership of the property.
The lender registers a mortgage against the home as security for the money borrowed, just as lenders do with other mortgages.
The homeowner remains responsible for obligations including property taxes, insurance, maintaining the property and complying with the mortgage terms.
You Don't Make Regular Mortgage Payments
This is one of the fundamental differences between a reverse mortgage and a conventional mortgage.
You don't make regular mortgage payments.
Instead, interest is added to the outstanding mortgage balance.
That can be particularly important for retired homeowners whose primary concern isn't their net worth, but their monthly cash flow.
Consider a homeowner who owns a valuable Peterborough property but is still making mortgage, line-of-credit or other debt payments every month.
The homeowner may have considerable wealth tied up in the house while having relatively little disposable income.
Using home equity to eliminate monthly debt payments can change that cash-flow picture considerably.
But the cost of doing so still needs to be compared with the alternatives.
Eligible at 55 Doesn't Mean You Should Get One at 55
Canadian reverse mortgages are available beginning at age 55.
But eligibility and financial strategy are two different things.
In Mike Cara's experience, around age 70 or 71 can be a particularly useful time for homeowners to evaluate whether a reverse mortgage belongs in their retirement strategy.
By that stage of retirement, homeowners often have a much clearer understanding of their actual income, expenses and lifestyle.
They know whether their retirement income is sufficient.
They know whether they intend to remain in their home.
They know whether debt payments are putting pressure on monthly cash flow.
And they have a better understanding of how much of their home equity they want to preserve versus how much they might want to use during their lifetime.
The objective isn't to borrow simply because the money is available.
The objective is to determine whether accessing home equity solves a financial problem.
How Is the United States Different?
The dominant American reverse-mortgage product is the Home Equity Conversion Mortgage (HECM).
The HECM operates through a U.S. federal program insured by the Federal Housing Administration and is available beginning at age 62.
The American program has its own qualification requirements, mortgage-insurance structure, counselling requirements, costs and regulations.
Canada does not simply duplicate the American HECM system.
That makes it dangerous to take an American reverse-mortgage story and assume the same circumstances apply to a Canadian homeowner.
The name may be the same.
The mortgage system isn't.
Is a Reverse Mortgage a Good Idea?
That isn't the right question.
A better question is:
“Compared with my other options, what would a reverse mortgage accomplish?”
A homeowner considering accessing equity should also examine alternatives such as a conventional refinance, home equity line of credit or another home-equity lending strategy.
A conventional mortgage can have a lower interest rate, but it requires qualification and regular mortgage payments.
A reverse mortgage eliminates those regular mortgage payments, but the interest accumulates and the balance grows.
Neither fact alone determines which strategy is better.
The homeowner's income, age, debts, available equity, retirement objectives and plans for the property all matter.
Peterborough Homeowners May Be Sitting on Significant Home Equity
For many longtime homeowners in Peterborough and the Kawarthas, their house represents one of the largest assets they have accumulated.
The problem is that home equity isn't cash flow.
A homeowner can own substantial real estate equity while struggling with monthly expenses.
That doesn't automatically mean a reverse mortgage is the solution.
It means the equity deserves consideration as part of the homeowner's overall retirement-financing strategy.
Sometimes the right answer is a reverse mortgage.
Sometimes conventional refinancing makes more sense.
Sometimes the homeowner shouldn't borrow against the property at all.
The key is comparing the options before deciding.
Don't Make a Canadian Retirement Decision Based on an American Story
Reverse mortgages deserve careful consideration.
The balance grows.
Interest compounds.
Using home equity today affects the equity remaining tomorrow.
Those facts should be clearly understood.
But fear based on something that happened under a different mortgage system in another country isn't a substitute for understanding the Canadian product.
Canadian protections include no negative equity. You retain ownership of your home. You don't make regular mortgage payments. Evaluate the mortgage alongside your other options.
Before deciding whether a reverse mortgage is right or wrong for you, understand what it would actually accomplish in your retirement plan.
As a Certified Canadian Reverse Mortgage Consultant and Peterborough mortgage broker, Mike Cara helps homeowners compare reverse mortgages with conventional refinancing and other home-equity strategies.
The objective isn't simply to obtain a mortgage.
It's to determine which financing strategy makes sense.
Your Mortgage Advocate,
Mike Cara
Mortgage Broker in Peterborough, Ontario
Mortgage Renewal Coming Up? Don’t Automatically Sign the Bank’s Offer
Mortgage Renewal Coming Up? Don’t Automatically Sign the Bank’s Offer
If your mortgage is coming up for renewal, your current lender will probably make the process very easy.
You may receive a letter or email offering you a new interest rate and mortgage term. Sign here, click there, and your mortgage is renewed.
Simple.
But before you sign, there is an important question to ask:
Is this still the right mortgage for you?
For homeowners in Peterborough and the Kawarthas, a mortgage renewal can be much more than choosing another interest rate. It can be an opportunity to review your entire financial picture and determine whether your mortgage can be structured differently to better meet your needs today.
Your Bank’s Renewal Offer Is an Offer
One of the most common mistakes homeowners make is assuming that because their existing lender sent them a renewal offer, it must be competitive.
That isn't necessarily the case.
Your existing lender already has your mortgage. They know that accepting their renewal is usually the easiest option for you.
But convenience and value are not always the same thing.
Before renewing, it makes sense to compare the proposed rate and mortgage terms with other available options.
And don't look at the interest rate alone.
Consider the entire mortgage, including:
- Monthly payment
- Amortization
- Prepayment privileges
- Early payout penalties
- Portability
- Fixed versus variable options
- Flexibility if your circumstances change
The mortgage with the lowest advertised rate isn't necessarily the mortgage that will cost you the least.
Can You Lower Your Monthly Payments at Renewal?
Potentially.
This is where I believe homeowners should look beyond simply asking, “What's the best mortgage rate?”
A better question may be:
“How can I improve my overall monthly cash flow?”
Your mortgage isn't your only household expense.
You may also be making payments on credit cards, lines of credit, vehicle loans or other debts.
Suppose you save $75 a month by obtaining a better mortgage rate. That's certainly worthwhile.
But what if restructuring your mortgage could eliminate several hundred dollars of higher-interest debt payments every month?
That deserves a conversation.
Mortgage Renewal Can Be an Opportunity to Consolidate Debt
Homeowners with sufficient equity may be able to refinance their mortgage and consolidate higher-interest debt.
That could include:
- Credit cards
- Lines of credit
- Personal loans
- Renovation debt
- Other eligible obligations
The objective isn't simply to make the mortgage bigger.
The objective is to determine whether restructuring the debt can improve your overall financial position and monthly cash flow.
There are important trade-offs.
Moving short-term unsecured debt into a mortgage can extend the length of time required to repay that debt, and the debt becomes secured against your home.
That's why debt consolidation should be approached as a strategy, not simply as a way to obtain a lower payment.
Your Financial Situation May Have Changed
Think about how much can happen during a five-year mortgage term.
Your income may have changed.
You may have become self-employed.
Your family may have grown.
You may have accumulated debt.
Your credit may have improved—or experienced some challenges.
You may be approaching retirement.
You may be planning renovations, helping children financially, going through a separation or simply trying to reduce household expenses.
Why automatically renew the mortgage you arranged five years ago when your financial circumstances today may be completely different?
Your mortgage should fit your life today—not the life you had five years ago.
What If Your Credit Isn't Perfect?
A difficult credit history doesn't necessarily mean your existing lender is your only option.
Canada's mortgage market includes different types of lenders with different qualification criteria.
Depending on the application, options may include traditional banks and credit unions, monoline lenders, alternative lenders and, in appropriate circumstances, private lenders.
The important thing is understanding the complete application before approaching a lender.
Income, credit, equity, property, debt-service ratios and the reason behind any credit problems can all matter.
This is also why the first lender matters.
Submitting an application to the wrong lender can waste valuable time.
We use our proprietary software, together with lender knowledge and experience, to help identify lenders whose guidelines are more likely to match the borrower's circumstances.
Self-Employed? Don't Assume You Have to Stay With Your Bank
Self-employed borrowers can have additional considerations at renewal.
Traditional income documentation doesn't always tell the complete story of a business owner's financial position.
Different lenders have different methods of evaluating self-employed income. Depending on the lender and program, they may consider tax returns, Notices of Assessment, corporate financial statements, business bank statements or alternative income-verification methods.
Being self-employed doesn't automatically mean you can't shop your mortgage.
It means the application needs to be presented properly.
Should You Choose a Fixed or Variable Mortgage?
There is no single answer that is right for everyone.
A fixed mortgage generally provides greater certainty because the interest rate is established for the term.
A variable mortgage responds to changes in the lender's prime rate.
The decision should depend on your financial circumstances, tolerance for payment or rate changes, future plans and the actual mortgage products available when you renew.
Trying to perfectly predict future interest rates is not a mortgage strategy.
Choosing a mortgage you can comfortably live with is.
Start Before Your Renewal Date
Don't wait until the week your mortgage matures.
Starting the conversation several months ahead gives you time to review your situation, compare lenders and address potential qualification issues.
It also gives you something extremely valuable:
options.
If your existing lender ultimately provides the best mortgage for your circumstances, staying with them may make perfect sense.
But that decision should come after comparing the alternatives—not simply because a renewal form arrived in your inbox.
Before You Sign, Ask One More Question
Your mortgage is likely one of the largest financial obligations you have.
When renewal time arrives, don't simply ask:
“What rate are they offering me?”
Ask:
“Is there anything we can improve?”
Maybe you can obtain a better rate.
Maybe you can lower your monthly payments.
Maybe you can consolidate expensive debt.
Maybe you can pay your mortgage off faster.
Or perhaps your existing mortgage really is the best option.
The important thing is knowing before you sign.
If your mortgage is coming up for renewal in Peterborough, the Kawarthas or Central Ontario, I would be happy to review the numbers with you and discuss the options available.
Your Mortgage Advocate,
Mike Cara
Mortgage Broker in Peterborough
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