Mortgage options for flipping houses in Saskatoon can vary, and understanding these options is key to ensuring a successful and lucrative flip. Flipping houses in Saskatoon can be an exciting and potentially profitable venture. However, funding your house flipping project is a critical consideration. In this blog post, we will explore mortgage options available to house flippers in Saskatoon. What is house flipping? Check this blog here.

Scott Trainor, mortgage broker, standing on a street in Saskatoon

1. Traditional Mortgages:

A traditional mortgage, also known as a conventional mortgage, is a commonly used option for house flipping in Saskatoon. While traditional mortgages are designed for long-term homeownership, they can still be viable for house flippers if used strategically. However, this option comes with some caveats:

• Down Payment: Traditional mortgages typically require a substantial down payment, often around 20% of the property’s purchase price. For house flippers, this can tie up a significant amount of capital, reducing your potential profits.
• Loan Term: Traditional mortgages usually have terms of 15 to 30 years. This long-term commitment may not align with the short-term nature of house flipping projects.
• Interest Costs: The interest accrued over the life of a traditional mortgage can eat into your profits if you don’t sell the property quickly.

2. Short-Term Loans or Bridge Loans:

Short-term loans, including bridge loans, are tailored to the needs of house flippers. They are designed to provide financing for the purchase and renovation of a property with a clear exit strategy, such as selling the property for a profit. Determining the correct length of term is very important for your profit. These loans have several advantages:

• Quick Approval: Short-term loans can often be approved more quickly than traditional mortgages, which is crucial for seizing good flipping opportunities.
• Flexible Terms: You can negotiate terms that fit your project timeline, often with interest-only payments during the renovation phase.
• Higher Loan-to-Value Ratios: Short-term loans may allow you to borrow a higher percentage of the property’s purchase price, reducing the amount of capital you need to invest.

3. Private Lenders:

Private lenders, also known as hard money lenders, can be another option for financing house flips in Saskatoon. Private lenders are typically more concerned with the property’s potential profitability than the borrower’s credit score. These loans come with the following benefits:

• Fast Access to Funds: Private lenders can provide funding quickly, which is crucial for house flipping.
• Flexible Credit Requirements: Private lenders may be more lenient regarding your credit history.
• Interest-Only Payments: Some private lenders offer interest-only payments, reducing your carrying costs.

4. Home Equity Line of Credit (HELOC):

If you own a property or have significant equity in your primary residence, you might consider using a Home Equity Line of Credit (HELOC) to fund your house flipping projects. A HELOC allows you to tap into the equity of your existing property to finance the flip. However, this approach carries some risk:

• High-Interest Costs: HELOCs often have higher interest rates than traditional mortgages, and failure to repay can put your primary residence at risk.
• Market Volatility: Relying on your home’s equity means your primary residence is tied to the success of your house flipping ventures.

Conclusion

Mortgage options for house flipping in Saskatoon offer a range of choices to suit your unique needs and circumstances. Careful consideration of your financial situation, project timeline, and risk tolerance is essential when selecting the right mortgage option for your flipping venture. Whether you opt for traditional mortgages, short-term loans, private lenders, or a HELOC, proper planning, thorough market research, and expert advice can help you make the most of your house flipping endeavors in Saskatoon. Remember to consult with a financial advisor or mortgage specialist to determine the best financing solution for your specific house flipping project.