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Do you have a home with a primary mortgage that you have been paying off for some time and are looking for a way to access a significant sum of money to cover some upcoming expenses? If so, a home equity loan, also commonly referred to as a second mortgage, could be the perfect solution.

This type of loan allows you to access the equity built up in your home over time. If approved, you could receive a lump sum of cash that you could use for anything you want, such as home renovations, medical expenses, and debt consolidation. With a home equity loan, you can borrow up to 80% of the appraised value of your home, minus any outstanding debt you have.

As with a primary mortgage, if you want a home equity loan, you must apply and qualify for it. Once you receive the loan, you will need to repay this amount with either a fixed or a variable rate of interest over a set term. It will be your responsibility to simultaneously make regular payments on both your first and second mortgages.

What are the steps of a home equity loan application process?

If you have a decent amount of equity in your home, you can access a serious chunk of cash with a home equity loan. Before you receive that money, however, you must first go through a loan application process that is similar to the initial mortgage loan application you went through when you first purchased your home.

This process consists of various steps and involves your home equity loan broker doing an investigation into you and your finances to determine your eligibility for the loan and to figure out the size of the loan you qualify for. The following are some of the most common steps of the home equity loan application process:

1. Identity and proof of ownership verification

When applying for a home equity loan, one of the first steps involves verifying your identity and proving ownership of your house. In Canada, you must be 18 years old to receive a loan. You must also have citizenship or permanent residency in the country, which can be verified by providing a valid form of ID, such as your driver’s license or passport.

Since a home equity loan necessitates that you own a home, you will have to prove this by providing evidence such as the property title and/or utility bills with your name and the address of the property on them.

2. Property insurance verification

Another matter that most lenders will want to examine before approving you for a home equity loan is whether your property has sufficient property insurance. If your lender requests such verification, you can simply provide them with a copy of your home insurance policy.

Verifying that you have such insurance and that your policy is extensive enough gives lenders more peace of mind in knowing their investment will be protected if your home is damaged or destroyed.

3. Mortgage payment history verification

One more thing that your mortgage lender will likely want to verify before moving forward with your application process is that you have paid at least 25% of the property off. This is typically necessary to qualify for such a loan. You can prove that you have done this by allowing your lender to review statements of your mortgage balance.

4. A home appraisal

Once the factors mentioned above have been verified, one of the most important steps of the home equity loan application is getting your home appraised. Since it is necessary for the lender to know the current value of your home to determine the amount of money you are eligible to receive via a home equity loan, this step is a must.

In most cases, a home appraisal will involve an official home appraiser visiting your property for an hour or two to thoroughly inspect both the interior and exterior, measure the square footage, and evaluate the home’s various features before comparing your house to homes of a similar size and style that have recently sold in the area.

5. Income and employment verification

Another critical step in your application process deals with income and employment verification. In order to verify your current income and employment status, the lender will likely request recent copies of your bank statements, pay stubs, and tax returns. If there are multiple names on the deed of your home, the home equity loan broker will require such documentation from all parties.

6. A credit check

One more step that is usually part of a home equity loan application process is a credit check. Your credit score and credit history will provide a good indication of how likely you are to pay back the money they lend as agreed.

Therefore, when you apply for a home equity loan, the lender will pull your credit report and check if you have a history of making late payments or defaulting on loans. Generally, your credit score will need to be at least 620 in order for most lenders to consider approving your application.

How Canadalend Can Ease Your Home Equity Loan Application Process

The steps outlined above are followed by most traditional lenders when it comes to home equity loan applications. However, if you are looking for a home equity loan broker to help make this process quick and painless, Canadalend can help.

Unlike most major banks, we do not have a long list of different factors when considering our clients’ eligibility for a home equity loan. We do not focus on aspects such as citizenship, credit history, or even income level. The only factors that matter to us are your home’s value and your outstanding loans.

Since we do not fuss over all the details that most other lenders do, we keep the home equity loan application and approval process easy and streamlined. This way, you can unlock the equity in your home and access the funds you need much faster.

Our licensed mortgage professionals will gladly take the time to go over every aspect of the home equity loan process with you to ensure your understanding each step of the way.

In addition to working closely with you to make sure the loan is tailored to your specific situation in terms of the amortization period, interest type, and repayment plan, we will also keep things transparent by ensuring you are fully aware of any potential costs or penalties you can incur based on your loan’s terms and conditions.

For more information about why we are the best home equity loan broker in Ontario, or to learn more about how a home equity loan application works with us, call Canadalend at 1-844-586-0713 or contact us here.

When it comes to purchasing a house, unless you have enough saved up to buy the property outright, you are going to need to take out a mortgage loan to cover the difference between the amount you have available to put down and the total cost of the home.

Whether you are looking to purchase property for the first time or have gone through this process before, you may be surprised to learn that various types of lenders are available to secure this kind of loan.

When most people consider mortgage loans, they tend to think of prime or subprime lenders, such as big banks and credit unions. However, while such lenders offer better interest rates, they usually have more stringent requirements for loan approvals. These relate to matters such as your credit score and employment.

If you have the money for a down payment, but you cannot qualify for a loan from a prime or subprime lender because of their qualifying factors, it is also possible to get your mortgage through a private lender.

Private lenders can be individuals, syndicates, or corporations. They set their own terms and conditions, since they are not regulated in the same way that financial institutions are.

Securing a mortgage through a private lender is generally a short-term solution, as the mortgages that private lenders issue come with much higher interest rates and shorter terms, ranging from 3 months to 2 years.

The Advantages of a Private Mortgage Lender

Although the higher interest rates of a mortgage loan through a private lender may not be ideal, there are a number of different ways that you can benefit from going the private mortgage loan route.

This type of mortgage loan is especially well-suited for people in certain circumstances, and can prove to be advantageous for various reasons.

1. Easier approval criteria

When it comes to loan qualifying requirements, private lenders in Ontario are significantly more flexible and less strict than traditional lenders. They are much more lenient with regard to factors such as your credit score, income verification, and financial history.

If you are self-employed, have inconsistent income, or have a blemished credit record, this flexibility can be particularly beneficial to you. In general, private lenders mostly just want to see that you have sufficient equity, enough cash for payments, and a good exit strategy in place.

With a smaller list of requirements, it is easier to get your mortgage loan approved. As long as you have proof of the few things that your private lender wants to see, getting approved should not be an issue.

2. A speedy approval process

Another benefit of dealing with a private mortgage lender is the speed of the approval process. This is substantially faster than it would be if you were going through a traditional lender, like a bank.

Private lenders can approve and fund loans at a much faster pace. This is especially advantageous in competitive real estate markets where timing is crucial, as rapidly securing financing could make the difference between winning or losing a bid on a property.

Private lenders in Ontario provide quicker decision-making and faster access to funds because they operate with streamlined procedures and fewer bureaucratic hurdles. This faster approval process can be particularly valuable to borrowers who need to act swiftly, such as those who are looking to capitalize on investment opportunities.

3. A higher degree of loan term flexibility and personalization

Another advantage of choosing a private mortgage lender is gaining access to a higher degree of flexibility and personalization for your loan terms. When dealing with a private lender, you have more room to negotiate terms that align with your specific needs, such as the loan amount, repayment schedule, and interest rates.

This personalization can even extend to the structure of the loan itself, as private lenders in Ontario are often willing to tailor their offerings to accommodate unique financial circumstances or investment strategies.

For instance, a private lender may be willing to set you up with an interest-only loan, bridge loan, or other specialized financing options you would not typically get from most traditional lenders. When you have unconventional financing needs, this level of customization and flexibility can be especially advantageous.

4. A viable temporary solution

Finally, getting a loan from a private lender can be a perfectly viable temporary financing option when you have limited other options available. Whether you are facing temporary financial challenges or need short-term financing to bridge a gap until you can secure a conventional loan, private mortgages can be an ideal solution.

With a short-term loan from a private lender, you can access the necessary capital to purchase the property you want to refinance with a traditional lender once your financial situation stabilizes or improves. This prevents you from having to put off your real estate or financial goals.

Plus, taking out a loan from a private lender and paying it off in time could help improve your financial history and credit score. Showing a positive track record of paying off your debt, even if it is for just 12 months, could make the difference in getting loan approval from a prime or subprime lender once your private loan term ends.

How Canadalend Can Help You Secure a Mortgage

If you want to purchase property, but are worried about all the obstacles of applying for a loan through a traditional lender, and you want to find private lenders in Ontario to take advantage of the private loan benefits mentioned above, Canadalend can help!

We network with a large assortment of private investors and lenders who can help you secure private mortgage financing. Our team of finance experts would be happy to set you up with the best possible option on the market to ease your financial stress and bring you closer to buying the home you want.

When you work with us to secure a private mortgage loan, one of our lending specialists will help you set up an appointment for a free personal consultation. This will allow us to better advise and guide you based on your unique needs and financial situation.

For more information about how we can set you up with private lenders in Ontario, or to learn about the range of our other mortgage solutions, call Canadalend at 1-844-586-0713 or contact us here.

Due to fluctuations in the housing market, the value of your home is likely always changing. Depending on how long ago you purchased it, the price you paid may be drastically different from what it is worth now.

To best determine the present value of your home while taking a wide number of factors into consideration, it is necessary to have a home appraisal performed. This is an unbiased estimate of the property’s value conducted by a licensed or certified appraiser.

In order to form this estimate, the appraiser must visit your property and go through several important steps as they formulate their evaluation.

In most cases, one of the first things that the appraiser will do is inspect the property to determine its condition, size, layout, and any unique features. During this inspection, they will compile a collection of photographs, measurements, and notes.

Next, it is necessary for the appraiser to do some thorough research into comparable properties (comps) in the area that have either recently sold or are currently on the market, focusing specifically on properties of a similar size, age, location, and condition.

The appraiser can then use a combination of the data they gathered during their inspection and the information they gleaned from their market analysis to determine an estimated value of the property.

Is a home appraisal necessary to secure a home equity loan?

If you are interested in tapping into the equity that you have amassed in your home as you have paid off your primary mortgage over time, applying for a home equity loan is the best way to do that.

A home equity loan can free up a significant amount of cash, which you can leverage for various reasons, such as consolidating debt, paying for home renovations, or funding a university/college education.

In order to secure such a loan, though, there are certain hurdles that you must first overcome, such as a home appraisal. Similarly to when you first purchased your home, it is standard for a home equity loan process to involve an appraisal of the property’s value.

After all, the amount your home is worth is a major factor in determining the size of the loan you are eligible for.

For a lender to assess the maximum amount they can loan you, they must multiply your home’s current value by 80%, as this is the combined maximum allowance for a mortgage loan that you can obtain according to Canadian laws. Then, they will subtract this figure from the owing amount you have remaining on your primary mortgage.

Are there alternative ways to determine the value of your home when applying for a home equity loan?

Most traditional lenders will require that you have a professional appraisal done to determine the market value of your home so they can ensure that the loan amount matches up with your property’s worth and their risk tolerance.

That being said, if you choose a less traditional lender when applying for a home equity loan, they may be willing to accept an alternative means of determining your home’s value without a complete appraisal process. However, such alternatives may come with limitations or conditions that are crucial to understand.

The following are some of the potential alternative ways of assessing your home’s value that a lender could accept:

1. An automated valuation model

Certain lenders may use an automated valuation model (AVM) to estimate your property's value, which uses data algorithms and an analysis of public records to generate this conclusion.

Although AVMs are much faster than traditional home appraisals (and less expensive), they may not be as accurate. Thus, the estimate generated by this type of model could end up being much lower or higher than your home’s actual value, which could lead to various issues with your home equity lending process.

2. A desktop appraisal

Another method that a lender may accept is a desktop appraisal. This process still requires that you hire a professional appraiser. However, the main difference is that they do not actually visit your property to conduct a physical inspection. Rather, as a part of this process, the appraiser will use photographs, data, and other information to remotely assess the value of your property.

Although this option is faster and cheaper than a full traditional appraisal, desktop appraisals are also susceptible to evaluation errors since they are nowhere near as comprehensive and could miss out on some of the nuances of your property.

3. Loan-to-value ratio

Instead of a full appraisal, some lenders may be okay with relying on a determination of the loan-to-value ratio instead. This is the ratio of a loan to the value of the asset purchased. To determine that value, various means can be used, such as tax assessments or recent purchase prices.

Yet again, while this method may simplify the process of determining your home’s value, it leaves a lot of room for important factors to be left out and should thus be used cautiously.

How Canadalend Can Help You Secure a Home Equity Loan

Whether you would like to consolidate debt, purchase a new home, start a home renovation project, or put your kids through school, gaining access to the significant chunk of money that a home equity loan can amount to can certainly help you meet your goals. Fortunately, Canadalend can assist you along the way.

Our team of licensed mortgage professionals understands that the process of applying for such a loan can often be rather overwhelming, which is why we are here to help you every step of the way.

We would be happy to answer your questions or concerns about the process, and could offer you some advice that is tailored to your personal financial situation and goals. We offer a range of financial solutions that are sure to suit your needs and will work with you to ensure you get the best rate for your home equity loan.

We are dedicated to top-quality customer service, which is why we even offer free personal consultations. If you want to secure a home equity loan without having to face all the challenges of this process on your own, our services are the answer.

For more information on how we can help you secure a home equity loan, or to learn about the requirements we have for home equity loans, call Canadalend at 1-844-586-0713 or contact us here.

Did you know that, in Canada, it is possible to get a loan that is leveraged against a property that already has a pre-existing mortgage loan?

This loan, known as a second mortgage, can typically be taken out by any homeowner as long as certain criteria are met. Since this type of loan also involves using your house as collateral, when you receive it, you technically hold two mortgages on the same property at the same time. 

The main benefit of getting a second mortgage is gaining access to the equity you have established so far in your home in the form of either cash or credit, which you can use for various purposes, such as consolidating your credit or paying for home renovations. 

Generally, a second mortgage involves receiving a one-time lump-sum payment at the beginning of the loan period, and then paying this loan off in increments over a set period.

Alternatively, if you choose a home equity line of credit (HELOC) instead, which is another way to access your home equity, you would receive a revolving loan. The lender would agree to the loan up to a certain amount during an agreed-upon period, but this amount could be replenished as you pay it off (just like a credit card).

How can you get a second mortgage?

If you are interested in getting a second mortgage, you must go through an application process with an official lender just as you would for a primary mortgage. However, the qualifying process is a little different for this type of loan. 

While it is typically an option to go through this process and apply for the loan with the same lender as your initial mortgage, it is also possible to seek out a different lender if you can find a better interest rate elsewhere.

When you apply for a second mortgage, the lender will look into various factors before making a decision about their approval of this loan. These factors include your credit score, which typically should be above 620, or your debt-to-income ratio, which should be less than 43%.

It is also up to the lender to decide the size of the loan that you are eligible for, which they will typically base on your home’s current value and the amount of equity you have in your home. Since the value of your home must first be determined, you must apply to have your home appraised.

Once this has been done, and your lender has collected all the information they need pertaining to your finances, your debt history, and your home, their underwriter takes a few weeks to review your application before you receive a response.

The Main Rules for Getting a Second Mortgage in Canada 

Although the process of applying and getting approved for a second mortgage is relatively straightforward, there are a few cardinal rules pertaining to this particular kind of loan process that are important to be aware of. 

These rules dictate important factors, such as how much money you can get and how you must proceed as you pay the loan off.

1. How much you can borrow

One of the most important rules to understand as you partake in a second mortgage loan process is that there are limitations to how much you can borrow. 

Canadian laws stipulate that lending against real property can only be done to a maximum of 80% of that property’s value. This includes the amount you have borrowed already with your primary mortgage.

Therefore, the allowance for your second mortgage largely depends on the size of your first mortgage. For instance, if your home is valued at $500,000 and you still owe $200,000 on your first mortgage, you could figure out the amount you are allowed to borrow with a second mortgage using the following equations:

• $500,000 (house value) x 80% (mortgage limit) = $400,000 (maximum debt limit)
• $400,000 (maximum debt limit) - $200,000 (existing debt) = $200,000 (second mortgage limit)

Since another Canadian law stipulates that non-amortizing mortgages are limited to a maximum of 65% of the property’s value, if you are going the HELOC route, the HELOC portion of your overall mortgage debt cannot exceed 65% of your home’s value.

2. The terms of repayment

Much like a primary mortgage, when you receive a second mortgage loan, part of the agreement is that you must pay back this loan within an agreed-upon repayment period. Although the length of the period settled on may vary from lender to lender, it is common for the term to be somewhere between 5 and 25 years. 

In addition to complying with this repayment, it is also important that you learn and comply with the terms of the loan, which can also vary depending on who your lender is. For instance, certain lenders stipulate that you must pay a penalty fee if you repay your loan before the end of the term.

3. What happens in the event of a default

If you default on a loan secured against your home, such as a second mortgage, there is an order of priority that exists in terms of how these loans are repaid.

If a foreclosure occurs when you default, the loan that is top priority must be paid in full before any others. Since your primary mortgage was taken out first, it would be a top priority in this situation. After your primary mortgage is paid out in full, the remaining amount can be used to pay off the second mortgage, and so on.

How Canadalend Can Help You Secure a Second Mortgage in Canada

If you need some serious cash and have amassed equity in your home, Canadalend would be happy to help you secure a second mortgage so that you can take advantage of the many benefits of this loan.

By aiding you with such a loan process, we can help you do many things, such as lowering your bill payments, decreasing the amount of interest you pay on your debt, and locking in a fixed rate.

Whether you are interested in consolidating your debt, growing your investments, going back to school, renovating your home, or retiring, taking out a second mortgage can help with all of these things. We can ensure you get a loan that is well-suited to your particular needs.

Fortunately, we do not approach second mortgage approvals using the same method as big banks. Rather than meticulously focusing on all kinds of qualifying factors, such as your citizenship, income level, and credit history, we strictly concentrate on the value of your home and your outstanding loans. 

In doing so, we make the application process as easy as can be, which paves the way for streamlined results and ensures you get the money you need when you need it. 

For more information on the benefits of getting a second mortgage through us or to learn about our loan approval process, call Canadalend at 1-844-586-0713 or contact us here.