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The challenges of having a mortgage extend far beyond just obtaining one in the first place. Monthly mortgage payments are non-negotiable and missing them can quickly put you in arrears. This means you owe money you simply should have paid out already. Tax arrears are similar in that you owe money to the government. However, both situations translate to putting yourself in significant financial trouble.

Mortgage Arrears

With a mortgage, your Ontario lender can take legal action to reclaim their money, pursuing what is called ‘power of sale’. This means you would be evicted from your home and they would sell it in order to get their money. From start to finish, that process could take an approximate period of three months.

Although you would receive any additional profits from the sale, you would incur the applicable power of sale fees and still be left without a home. You may stop the power of sale before it is carried out, but this requires help from a financial expert.

Tax Arrears

With taxes, the Canada Revenue Agency has the right to redirect your tax refunds or tax credit to pay off your debt. They may alternatively take action to garnish your wages, or even seize your property if needed—including your home, which they can sell at auction. You also incur the significant interest rates associated with tax arrears, making it even more unattractive to find yourself in this position.

Avoiding Arrears

Neglecting such significant payments as taxes or mortgage can result in other serious financial issues. When it comes to obtaining any loans, you may be forced to go through only a private lender. However, you may simply be forced to sell your property and pursue major debt solutions.

Obviously, it is best to make payments on your mortgage and taxes as quickly and efficiently as possible. If you find yourself struggling to keep up with these, however, it may be necessary to seek professional assistance from a financial expert. Tax or mortgage arrears are serious and can lead to additional hardship.

Beginning the hunt for a new home can be both stressful and overwhelming. Do you look first and then seek a pre-approval, hoping the dream home you stumbled upon will wait for you? Do you try to find a lender first and then explore open houses and enticing listings, not sure of how much you need to spend before you apply for a loan?

In any case, when it comes to finding the right mortgage, it can be helpful to speak with a professional mortgage broker. For starters, they are privy to information from a variety of lenders and will conduct research based on the information their clients provide to find their best match for a loan. It is their job to explore the market so mortgagees don’t have to.

Obtaining a Mortgage

Their role is to be the eyes and ears when it comes to obtaining a mortgage, investigating options on behalf of their clients, then compiling and presenting them—perhaps with recommendations on which one to pursue. This is especially important for new homebuyers, but a useful tool for anyone who needs to secure a mortgage.

How are they Paid?

Mortgage brokers are usually paid by the lenders or they charge their own broker fee. Further, mortgage brokers offer expert insight into the industry to help people save money. They stay abreast of the real estate market, regularly exploring trends and offerings. Consider them a wealth of knowledge about real estate and mortgages for you to tap into.

The Matchmaker you Need

Simply put, mortgage brokers connect their clients to mortgage lenders who can fulfill their individual needs at the lowest rate possible. They are an effective strategy to find the most suitable mortgage lender. Essentially, mortgage brokers play matchmaker for people seeking the best rates and long-term loans.

When searching for a home, there are a lot of complex and unforeseen circumstances to look out for. Enlisting the help of a dedicated professional to offer assistance can help ease some of that inevitable stress.

Contact us for more information about our approach to lending and to learn more about the benefits of working with our experienced team.

Why It’s Difficult for Startups to Qualify for a Business Loan

Small businesses are the backbone of the Canadian economy. According to the latest government statistics, 97.9% of employer businesses are small businesses. Despite being the country’s economic engine, the vast majority of startup businesses in Canada find it difficult to secure financing. In fact, the smaller a startup is, the tougher it’s going to be to get a business loan from a traditional lender.

Why is it so difficult for startups to get a business loan? For starters, there’s a lot of paperwork. If you’re looking for a small business loan, the banks will want to see personal financial statements, personal background/history, one-year projection of income, loan application, personal income tax returns for the past three years, a business license, and business plans. It will also take the bank a long time to go through the paperwork, sometimes months. This laborious process is a hurdle and deterrent for many small business startups.

In addition to the loan process, banks could turn down a business loan because of a low credit score, little or no collateral, inconsistent income, and even a history of being late with payments.

This might explain why only a small percentage of small business startups actually have business loans.

A Home Equity Loan for Startup Businesses

If startup businesses aren’t getting their business loans from the bank where are they getting the money? For those who own property, the easiest and quickest way to secure financing for your startup is to refinance your property with a home equity loan.

A home equity loan, often called a second mortgage, is an additional loan taken out on a property you already have a mortgage on. Like a first mortgage, you make monthly payments on the home equity loan.

With a home equity loan, you receive a one-time, lump sum payment. You are charged interest on the total amount as soon as you receive the money, and the home equity loan gets paid off over a predetermined period of time.

Home Equity Loan vs. Business Loan

There are a few reasons why startups should consider a home equity loans over a business loan.

Easily to Get

The fact of the matter is, business loans are difficult to get. There’s the mountain of paperwork, business projections, etc. Home equity loans, because they are secured against the property you already have a mortgage on, are easy to secure. Where traditional lenders want you to fill out a massive pile of paperwork, alternative home equity loan lenders aren’t interested in your business plan or long-term projections, instead, they look at your assets and resources.

Low Interest Rate

Moreover, the interest rates charged on home equity loans are usually much lower than those of business loans.

Flexibility

Home equity loans provide startups with a lot more flexibility. Money provided for a business loan from a traditional lender, like a bank or trust company, can come with a large number of conditions, including what the money can be used for. The money you secure with a home equity loan can be used for anything.

FAQ about Startup Business Financing

Do banks give loans to start a business?

Traditional lenders all provide business loans for startups. They just aren’t easy to get. There’s paperwork to fill out, financial statements, projections etc. You also need a high credit score, steady income stream, and collateral.

Some banks will also only provide a business loan to startups that have been in business for at least a year and generate monthly revenue of $20,000+. The interest rate on business loans can also be very high and there are restrictions on what you can use the money from the business loan on.

Startups are, by the very definition, in the early stages of operation, and most small business owners do not have the time or money to jump through all of the hoops that banks make them do.

Can I get a business loan without collateral?

Banks and other traditional lenders insist that startups have collateral. Over the last number of years, big banks have become risk averse and implemented a number of strict lending policies. If the collateral isn’t enough, the bank will turn your business loan application down.

Alternative lenders on the other hand use the collateral you’ve built up in your home to secure a business loan. The more collateral you’ve built up, the bigger the loan will be. Because you already own the home and were approved for the first mortgage, the chances of being turned down for a home equity loan are remote.

Can I use a home equity loan to buy a business?

Yes. One of the biggest benefits of a startup business owner taking out a home equity loan, is that it is s a personal loan, there are no restrictions. The money can be used for anything and everything: business or pleasure.

That can’t be said for a business loan. There are many drawbacks to using a bank to take out a business loan. One of them, is the restrictions associated with the loan. Namely, the money from a business loan can only be used to run the business.

If, for some reason, you are hit with an unexpected personal expense that keeps you away from your business, you cannot use the business loan. And your business could suffer.
Banks dictate how you can use their business loan. With a home equity loan, the money is yours to do with as you please.

Canadalend.com, Helping Canadians Secure Home Equity Loans

If you’re a small business owner or are looking to start or buy a business, the licensed mortgage experts at Canadalend.com can show you the benefits of home equity financing.

The mortgage professionals at Canadalend.com are independent, which means they have access to hundreds of different lenders. Many of whom specialize in helping entrepreneurs refinance their homes to start a business. There are also lenders who are dedicated to helping those with bad credit, no credit, and unreliable income secure a home equity loan.

To see what kind of home equity loan you qualify for, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

Transferring a mortgage from a home you just sold to a new property makes a lot of sense if you like the terms and conditions. And don’t like the idea of being hit with prepayment penalties. But transferring a mortgage is not as easy as it sounds, or in some cases, should be.

If you’re thinking of selling your home and transferring a mortgage, it’s important to know the facts. Below are some of the most frequently asked questions about transferring a mortgage.

Q. What does it mean to “transfer your mortgage”?

A. Transferring, or porting a mortgage, means taking your existing mortgage (along with the current rates and terms) from one property and transferring it to another. You’re only allowed to transfer a mortgage if you’re buying a new property at the same time that you’re selling the current one.

Q. Is transferring a mortgage the same as renewing a mortgage?

A. No. Homeowners that like the terms and conditions of their current mortgage will try and transfer it to their new property. Transferring a mortgage occurs when you’re in the middle of a fixed term, usually five years.

Renewing a mortgage occurs when the mortgage term (the most popular is five years) ends. When the mortgage term ends, you can choose to either stay with the current lender or you can switch providers.

Q. Can I transfer my mortgage to another property?

A. Absolutely. That’s the entire point of transferring a mortgage. Your current mortgage is tied to your home, but when you transfer a mortgage, you and your lender are agreeing to move it from the home you just sold to a new property.

Q. Do all lenders allow you to transfer a mortgage?

A. No. Some lenders will allow you to transfer your mortgage while others will not. If you’re thinking of moving during the term of the mortgage, it’s important to know if your current lender allows you to do this. A mortgage broker will be able to tell you which lenders allow you to transfer a mortgage.

Q. Can I transfer my mortgage to another bank?

A. When you transfer a mortgage you are simply moving it from one property to another. You do this using the same lender because you like the terms and conditions of the mortgage you have with them.

Transferring a mortgage to a different bank would mean you are actually breaking the mortgage during the term of the mortgage and requalifying with a different lender. This would also include paying a penalty for breaking the mortgage early.

Q. Can I transfer a mortgage if I move to a new city?

A. Some lenders will allow you to transfer a mortgage if you move to a new city while others will not. Why do different banks have different rules if you already own a property? Moving to a different city usually means you are taking a new job. If so, there is probably going to be a probationary period; this is an issue for some lenders.

Mortgage lenders like to know you have stable employment and income. Traditional mortgage lenders will sometimes not even consider your income to be stable if you’re on probation.

If you’re relocating to another city with the same employer, you won’t have any issue transferring a mortgage, since you will not be subject to a probationary period. If you sell your home and move to a different city without a job, it is going to be very difficult to transfer a mortgage. That’s because you have no secure income at all.

Q. Can I transfer both variable-rate and fixed-rate mortgages?

A. Not all mortgages can be transferred. Most variable-rate mortgages can’t be ported. Again, your mortgage broker can show you which mortgages can be transferred.

Q. How long does it take to transfer a mortgage?

A. With most lenders, the timeframe to transfer a mortgage is really tight, usually 90 days from the closing of the existing home. Some lenders allow just 30 days for you to complete the sale of the current property and purchase a new home.

Having just 30 or 90 days to find a new home, especially in a competitive market like the Greater Toronto Area or Vancouver, can be a deal breaker for many.

Q. Do I have to requalify when I transfer a mortgage?

A. Technically, you do need to requalify when transferring a mortgage. Even though you are just transferring a mortgage with a lender you already qualified with, your current lender needs to approve the transfer of the mortgage, and they will only do that after looking over information about the home, your credit history, and income.

Q. Can I port a mortgage with bad credit?

A. It’s entirely possible that, for whatever reason, your financial situation has changed since the bank approved you for your mortgage. Maybe your credit history has taken a hit, your income has dropped, or you’ve taken on unexpected debt. If so, it will be extremely difficult for you to transfer a mortgage to a new property.

Canadalend.com, Helping Canadians Secure Home Equity Loans

If you’re selling your home and would like to transfer your existing mortgage, speak to the licensed, independent mortgage experts at Canadalend.com. The mortgage transfer professionals at Canadalend.com can help you find a variable or fixed mortgage that matches or even beats the terms and conditions of your current mortgage.

How can Canadalend.com offer better rates and terms than the country’s big banks and other traditional lenders? The mortgage experts at Canadalend.com are independent, which means they are looking out for what’s best for you. Canada’s big banks will only try and sell you their own financial products, even if it’s not in your best interest.

Because our mortgage professionals are independent, they have access to hundreds of different lenders. Many specialize in providing mortgages to homebuyers with bad credit, no credit, and unreliable income.

To see what kind of mortgage you qualify for, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.