Office Holiday Closures
Happy New Year 2021
Happy New Year!
Building Ministry Series
There are often times where a little change can make a lot of difference. Check out these articles for some insight on small building projects that can make a large difference to your church building. Also, learn what capital costs you can expense.
An effective sign is a great way to attract newcomers to your church. Learn how you can add value with an article titled:
Identifying Capital Expenditures
Learn how to determine if a specific cost is classified as an operating expense or a capital cost in this article titled:
Improving Building Accessibility
Older buildings are often not up to code. Learn what sort of minor renovations can make it easier for people of reduced mobility to utilize your facility in this article titled:
Glossary of Terms
Not clear on a term or the meaning of a word? Check out our glossary of loan terms below for further clarification:
The number of years it will take to repay a mortgage in full. This is usually longer then the term of the loan. CCDC mortgages commonly have a five year term with an amortization period of up to 20 years. Under exceptional circumstances an amortization period of 25 years may be considered.
This is an assessment of the value of the property that will be securing the mortgage loan. An appraisal may be required as part of the mortgage lending process and this value might be more, or less, than the purchase price of the property.
Approved Annual Income
A loan applicant’s approved annual income is calculated by the loan consultant but generally consists of all non-designated donations plus some allowable other income.
Where CCDC holds a mortgage on a church building property, we require that the congregation insure the building and that CCDC be listed as “First Loss Payable.”
A capital project is any project that helps maintain or improve an infrastructure asset. It can be new construction, expansion, renovation, major maintenance or replacement of an existing facility. Project costs can include the cost of land, engineering, architecture and contracting services or major equipment.
Church lending rate (or interest rate)
This rate is established annually by CCDC and applies to all loans offered by CCDC. We undertake to provide interest rates that are below that which would be available to churches at a commercial lending institution. The church lending rate is applied to all churches so if this rate goes down during the term of your existing mortgage, your interest charges will be reduced accordingly. If the church lending rate goes up, new mortgages will be written at the new rate while existing mortgages will continue to pay the rate specified rate in their agreement.
This is the date that the sale of a property becomes final and the purchaser takes possession. In the case of renovation or refinancing mortgages, this is the date that funds are to be advanced.
This is the amount of money that the purchased has to put into the purchase of a property. The amount of down payment that CCDC requires is determined by the project and can range from nothing for some renovation and refinancing projects up to 20% for a new building purchase.
Equity is a measurement of the difference between the price for which a property could be sold and the total debts owing on the property. In the case of refinancing or renovation CCDC will look at a congregations’ equity situation, but the primary determination of borrowing power is based on Debt Service Ratios.
Fixed Rate Mortgage
This is a mortgage in which the interest rate and payment amount do not change over a specified term. At CCDC, all of our mortgages are fixed rate and the term is usually fiver years.
Interest Adjustment Date
This is the date on which the term of the mortgage starts and is usually the first or fifteenth day of the month. An interest only payment on mortgage funds that have been advanced prior to interest adjustment date will be due on the interest adjustment date. The first regular monthly payment of principal and interest will be due one month after the interest adjustment date.
Interest Rate (or Church Lending Rate)
This rate is established annually by CCDC and applies to all loans offered by CCDC. We undertake to provide interest rates that are below that which would be available to churches at a commercial lending institution. The church lending rate is applied to all churches, so if this rate goes down during the term of your existing mortgage, your interest charges will be reduced accordingly. If the church lending rate goes up, new mortgages will be written at the new rate while existing mortgages will continue to pay the rate specified in their agreement.
This is insurance coverage that provides protection to the lender in the event of a default by the borrower. In a few circumstances CCDC may require that the borrower provide mortgage insurance coverage.
This is the last day of the term of the mortgage. On that date the mortgage must be renewed or the balance paid in full. A renewal may include an adjustment to the conditions of a mortgage including the interest rate.
Offer to Purchase
This is a formal legal agreement between a buyer and seller that details the specifics of a purchase agreement. This is usually drawn up by a realtor and can include a number of conditions. CCDC suggests that purchasers always include a “subject to financing” condition in their offer until they have receiver a Letter of Commitment from CCDC regarding financing. Other conditions, such as subject to an environmental assessment, proof of zoning, etc., may be required by CCDC and these should be discussed with a consultant prior to placing an offer.
Open (and Closed) Mortgages
A closed mortgage agreement does not provide for payout before the maturity date or it may allow for partial or full repayment with a penalty. All mortgages of CCDC are open with extra payments or complete repayment being welcomed at any time without penalty.
Prepayment charge or penalty
This is a fee that lenders sometime charge borrowers if they want to pay off all or part of their mortgage more quickly then specified in the mortgage agreement. CCDC does not charge any penalty on prepayments.
This is the process of arranging a new mortgage to replace an existing one. The old mortgage is paid off and discharged, to be replaced by a mortgage from the new lender.
This is the process of extending a mortgage agreement with the same lender for an additional term. The conditions, interest rate, amortization, length of term, etc., may be adjusted at the time of a mortgage renewal.
This is the time over which the conditions of a mortgage, interest, payment amount, etc., are set. Most CCDC loans have 5-year terms. At the end of the term the borrower must renew their mortgage with possible changes to the conditions or they pay the balance owing in full.