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With interest rates as low as they are, many homeowners are eager to take advantage of this fact by refinancing their home loans.

However, while a refinance can help to shorten your mortgage term and reduce your payments, among other benefits, there are a number of factors to consider along the way in order to be certain that you’re making the right move.

In this article, we’ll outline seven of the most common mistakes that homeowners tend to make when refinancing their home mortgage, so you can rest assured your refinance move will benefit rather than harm you.

These seven errors are as follows:

1. Failing to shop around

A large majority of borrowers will go right to the bank for their home loan or refinancing needs, or will spend very little time scanning the rates of various lenders to then simply choose the cheapest option. Many homeowners are even under the false belief that they must refinance with their current lender.

In reality, you should be carefully exploring a variety of different lender options by comparing the rates, fees, and terms offered by each. With mortgage pricing being rather complicated, it’s definitely worth taking the time to assess such factors because as little as a one-eighth difference in a percentage point can result in tens of thousands of dollars in savings over the duration of your reverse mortgage loan.

2. Placing too much focus on mortgage interest rates

An extremely common (and costly) mistake among borrowers is putting sole focus on interest rates when comparing potential mortgage lenders. In some cases, a comparatively low-interest rate from a lender will be used to conceal a loan with unconventionally high fees in other areas, resulting in the borrower paying even more than if they went with a lender with higher advertised rates.

This is why it’s important to inquire about more than just mortgage rates when weighing your options, including loan origination fees, application fees, title fees, appraisals, points, credit reports, and any other kinds of costs before you put in your application.

Additionally, be sure to pay careful attention to the prepayment terms, and read the good faith estimate document provided by your lender, which outlines all of the costs in order to ensure that refinancing will be financially worthwhile.

3. Trying to time mortgage interest rates

Just as it isn’t advised to try and time the stock market, we also don’t recommend trying to time mortgage interest rates. Waiting and hoping that interest rates will eventually drop even further is often a strategy destined for failure, as rates very well may rise again at the drop of a dime.

If you aren’t a psychic (like the rest of us), then it’s best to just lock in any low interest rate you are presented with while you can, while all other conditions are also in line with your needs.

4. Not refinancing for an affordable amount

As refinancing can be quite an expense, you’ll want to ensure that you’re doing so at the appropriate amount. If your mortgage refinancing will involve taking out some of your equity and you are refinancing for an amount greater than your current traditional mortgage balance, make sure to request an adequate amount of equity to use with the long-term in mind.

Additionally, ensure that you’ll be able to afford the increased monthly payments before setting anything in stone.

5. Refinancing too often

Many homeowners will be tempted to refinance in cases of interest rates nearing attractive lows. Unfortunately, however, refinancing will only be fiscally advantageous if you’re saving enough in interest to ultimately make up for the closing costs. This will not always be the case when you consider that closing fees of mortgage refinancing can cost as much as 3 to 6 percent of the loan balance.

These costs add up over time, especially for borrowers that refinance too often. It’s much easier to avoid these piling costs by keeping refinancing to a minimum.

6. Taking out too much home equity

It’s a common practice to use a mortgage refinance as a way to borrow against equity, using some of these funds toward things like home improvements, repairs, or even significant purchases/investments. It makes sense to do so seeing as mortgage interest generally qualifies as a tax write-off, and rates are relatively low compared to other loan types.

Taking out home equity usually only becomes a problem when borrowers take too much out, leaving themselves financially vulnerable should the housing market take a dive or other issues arise. It’s best to always err on the more conservative side when taking out home equity.

7. Extending your loan term

Extending your mortgage loan term may seem like an attractive idea, as it will go a long way in reducing your monthly payments. However, homeowners should be aware that this move will likely end up costing them more in interest fees in the long term, even in the case of re-entering at a lower mortgage rate.

The wiser approach would be to refinance into a new loan term that is shorter, or, more specifically, a term similar to the duration remaining on your current mortgage.

Start Saving Through Mortgage Refinancing Today

When it comes to headache-free mortgage refinancing in Ontario, our experts are here to lend a hand. Canadalend.com can provide you with an optimized mortgage solution that is smart and beneficial to your specific circumstances, so you can start breathing a little easier.

To learn more about our mortgage refinancing solutions and financing options, call Canadalend.com at 1-866-I CAN LEND or contact us here.

Reverse mortgages are a great option for homeowners who are looking to add to their fixed or limited income.

Contrary to a HELOC (home equity line of credit), a reverse mortgage grants Canadian borrowers tax-free money accessed from the existing equity they have built in their home (up to 55% percent) to use as they wish, with no month-to-month payments required.

Fortunately, in Canada, reverse mortgages are a highly regulated financial product; however, the same cannot be said for many other countries. This has resulted in a variety of misconceptions regarding the Canadian CHIP Reverse Mortgage®, in particular.

Thus, we created this article to bring peace of mind to Canadian homeowners by disputing nine of the most common myths about reverse mortgages in Canada.

These nine myths are as follows:

Myth #1: You Will No Longer Own Your Home

Loss of home ownership with a reverse mortgage is quite a common myth that causes unnecessary worry for homeowners. However, just like with a conventional mortgage, you and your spouse (if applicable) will continue to own your home and maintain the title. You may continue to live there for as long as you desire, and the bank will have no power in forcing you to sell.

Similarly, it is often believed that a homeowner’s children will lose the family home with a reverse mortgage, as well, when this is simply not the case. Any heirs will maintain the option of keeping the home as long as they continue to pay off your reverse mortgage after your passing.

Myth #2: You’ll End Up Owing More Than Your Home’s Worth

Another popular assumption among homeowners that is simply false is that a reverse mortgage will result in owing more than the property’s value. In reality, reverse mortgage rules in Canada will enable you to borrow a maximum of 55% of the home’s worth, meaning you’ll retain a considerable chunk of the equity.

While interest fees on the loan can play a role in abrading this equity, your home’s value along with its respective equity is still likely to increase with time. In other words, property values would need to suffer a serious decline to ever result in you ever owing more than your home’s worth.

Myth #3: You Must Be at Least 65 Years Old to Qualify

While this might be the case in other countries, Canada’s CHIP Reverse Mortgage is available to homeowners aged as young as 55 years and older. In fact, the older a borrower is when they apply for the CHIP Reverse Mortgage, the greater the loan they will likely be eligible for.

Myth #4: The Application Process is Too Complex

The process for obtaining a reverse mortgage is actually very similar to that of a conventional mortgage. In conjunction with your home appraisal, you will need to put together paperwork demonstrating sufficient income, and also report any debts that are secured by your property, as well as any mortgages you have on additional properties.

The only real difference with a reverse mortgage application process is that you’ll need to acquire independent legal advice prior to your approval in order to be accepted. This advice serves as a form of protection to ensure borrowers thoroughly understand how a reverse mortgage works.

Myth #5: Reverse Mortgages Are Very Expensive to Arrange

Yet another misconception about reverse mortgages is that they are very costly. The truth is that while you’ll still need to pay for your property’s appraisal in addition to independent legal advice (as with traditional mortgages), your only other expenses with a reverse mortgage will include the one-off closing and administration fee. 

When you compare this to other alternatives, a reverse mortgage actually ends up being the more cost-effective option.

Myth #6: Interest Rates on Reverse Mortgages Are Higher Than on Conventional Mortgages

While interest rates for reverse mortgages are often greater than those of conventional mortgages, the difference is typically by only one or two percentage points. Reverse mortgages will have only slightly higher interest rates since they don’t require monthly payments to be made by borrowers.

Myth #7: Reverse Mortgages Are Impossible to Leave

Fortunately, reverse mortgages are possible to get out of. In fact, there are workable options available for repaying reverse mortgage principles and interest if homeowners decide to go this route. 

With conventional mortgages, however, you might be presented with a prepayment charge, particularly if you wish to discharge the full balance in one go (such as with selling the home).

Myth #8: You Must Obtain Mortgage Insurance

This is another myth about reverse mortgages that only applies to other countries. When Canadian homeowners take out a CHIP Reverse Mortgage, they won’t be required to pay for mortgage insurance.

Myth #9: You May Face Eviction if You Miss Payments

With a reverse mortgage, there is actually no schedule of payments at all, so it would be impossible for you to ever miss any. This is due to the fact that the equity you have in your home takes care of the interest on a reverse mortgage.

Ready to start reaping the benefits of a reverse mortgage?

If you’re looking to unlock the equity you have saved in your home with a reverse mortgage, our mortgage lenders in Ontario are ready to lend a hand. Canadalend.com can help you begin the hassle-free process of obtaining a reverse mortgage, so you can move closer to achieving your financial goals.

To learn more about our reverse mortgage solutions and financing options, call Canadalend.com at 1-866-I CAN LEND or contact us here.

Many homeowners throughout Ontario remain in search of an experienced private lender to help them finance their mortgages.

No matter what a borrower’s specific financial situation may be while looking for such solutions, the main goal is unanimous among all householders: to profit from significant equity gains, and tap into the wealth created from their precious property.  

With that being said, homeowners may be wondering whether a private loan in Ontario is even the right option for them, especially if a loan from the bank is not feasible.

We wrote this article to help ease your concerns about private lending practices in the province, and to provide some clarity regarding whether this common financing option is right for you.

Options for Private Lending in Ontario

It’s normal for Ontario homeowners to feel overwhelmed while exploring the various mortgage lending options that are available.

By learning about the three main categories of mortgage lender types, borrowers can get a clearer idea about which type of loan will be most suitable for them. The three main categories of lenders are:

• A lenders: An A lender is the type of lender that banks classify as such. As the lender with the most strict lending criteria, borrowers must complete meticulous mortgage stress tests that have historically become more difficult to pass due to the tightening of mortgage rules. Banks also require near-perfect credit scores, along with a low debt ratio and clearly demonstrated and significant household income.

• B lenders: A B lender is the type of lender that trust companies and credit unions classify as such. While these lenders don’t require credit scores to be as high as bank lenders do (credit must be above 550), there is still a preference for household incomes that are easily demonstrable.

• C lenders: Finally, a C lender is the type of lender that private lenders classify as such. While these lenders will typically charge higher rates when compared to A lenders, they are far more flexible when it comes to negotiating private mortgage financing, even for borrowers with poor credit and/or unstable income (such as freelance or contract-based work, or self-employment).

If a borrower is struggling with poor credit, then the best route to take may be a private mortgage loan until they can restore their credit back to health. On the other hand, if a borrower has an income that is particularly difficult to calculate, then they may also benefit from private mortgage financing.

Depending on a homeowner’s individual financial situation, private mortgage lenders may offer:

• Short-term mortgage financing, which is generally a duration of 1 to 3 years.
• A quick private loan negotiation, generally within 1 to 5 days.
• Using the borrower’s property to leverage the loan against.
• Overlooking credit issues in particular cases.

Calculating Private Loans in Ontario

A private mortgage loan is calculated by taking a homeowner’s existing home equity measured from a current home appraisal, the location of the property, its general condition or state (assessed for issues such mould, water damage, etc.), in addition to the overall loan-to-value (LTV) ratio.

Private lenders tend to prefer that a borrower has a minimum of $70,000 in existing home equity. According to these lenders, the golden standard when calculating your loan-to-value ratio should be to a maximum amount of 75% LTV. This represents a green light to lend as much as 75% of the appraised value of your home.

Understanding Private Mortgage Rates

For borrowers that meet the stricter criteria of having a substantial and demonstrated income, a low debt ratio, and an impressive credit score, a bank will be able to provide competitive mortgage rates. Borrowers with less-than-ideal credit, however, can seek approval for mortgage financing through the services of a private lender, but will need to make peace with paying slightly higher rates.

More specifically, rates charged by private lenders generally range from around 7% to 12%, depending of course on a homeowner’s individual financial situation. At Canadalend.com, though, private mortgage rates start as low as 3.99%.

Moreover, private lenders will typically charge fees that represent between 3% and 6% of the complete loan cost, which (fortunately) include administration fees in addition to other costs necessitated by the lender.

Can Ontarians feel safe about seeking private lenders?

It’s common for borrowers in Ontario to have concerns regarding rules and regulations around private lending practices. The good news is that homeowners can rest assured that private lending in Ontario is regulated under the Ontario Mortgage Act, where the rules and laws apply to every type of lending, including the world of private lending.

A lender does not need to be licensed if he or she is offering mortgage lending independently. However, any mortgage broker specializing in private lending, such as the experts we work closely with at Canadalend.com, will generally be licensed.

Private mortgage lending is not only a safe financing solution for homeowners in Ontario, but is also an economically sage choice. Any borrowers with credit problems can take advantage of this financing alternative to help restore their credit, thus increasing the likelihood of achieving additional and suitable mortgage financing in the future.

Ready to start borrowing from a trusted private lender?

The most preferred method of securing a private lender is through a mortgage broker or lending specialist such as Canadalend.com. Our team of mortgage lending experts completely understands the average Ontario homeowner’s concerns and needs when it comes to financing property, and we’re here to help make the process run as smoothly as possible.

At Canadalend.com, we work alongside a number of private investors and lenders who successfully assist our clients with private mortgage financing every day.

To learn more about our financing options, or to begin your mortgage application, call Canadalend.com at 1-866-I CAN LEND or contact us here.

Many Ontarians have been thinking about how they could enrich their present lives and secure their future through acquiring a second home. Does this sound like you?

Whether it be a pied-à-terre-style home away from home, or a lakefront cottage for those much-needed escapes from the city, a secondary property can provide homeowners with a foundation for new amazing memories, all while securing additional long-term profits and a diversified investment portfolio.  

However, how exactly can homeowners in Ontario go about financing an additional home? In this article, our experts at Canadalend.com will discuss some of the options available when it comes to financing your secondary property, so you can reap the rewards starting today.

Option One: Refinance Your Current Mortgage

In most cases, the best choice available is to refinance one’s current mortgage (a.k.a., breaking the mortgage early) in order to gain access to funds to purchase a second property. Referred to as the “first-position charge on the title,” this loan will generally come at the lowest rate when compared to other loan types. If a borrower chooses to refinance their current mortgage, however, they should be aware that there are penalties for paying out the mortgage loan ahead of its renewal. That’s why it’s important to go over these numbers with a Canadalend.com mortgage advisor prior to making your decision, so you know exactly what to expect.

Option Two: Use Your Home Equity as Security Against a Second Loan

If refinancing your current mortgage is not feasible, it is possible to tap into the equity you’ve accumulated in your primary residence. Then, you can use this home equity as security against an additional loan.

Understanding Home Equity

Briefly, home equity is the amount of property that a borrower owns as they continuously pay their mortgage down. This appreciates in value along with the price of the residence. The prices of homes will generally rise each year, so as homeowners continue to pay down their principal loan balance, their stake in the property simultaneously increases. It’s standard for borrowers to wonder whether home equity can be used to purchase a secondary property. While the answer is “yes,” the amount of equity that is attained in the property will have an impact on just how much money they are allowed to borrow.

Understanding the Home Equity Line of Credit (HELOC)

A common option for tapping into home equity is via a HELOC (home equity line of credit), which is a loan provided by either a bank, credit union, or alternative lender (including our Canadalend.com team) that is secured by the value of the primary home, and, therefore, coming at a relatively lower rate. In many cases, when a borrower receives their first mortgage, they will automatically be eligible for a HELOC, and it will reflect the already accumulated equity in the home. Fortunately, a HELOC is generally flexible in nature, and allows for money to be withdrawn, paid, and even borrowed again at the borrower’s convenience. Interest is only to be paid on the portion of the HELOC that is being used. Moreover, Canadians are eligible to receive up to 65% of the value of their property through a HELOC. However, the balance of the mortgage loan outstanding, in conjunction with the HELOC, cannot equate to more than 80% of the property’s value. Option Three: The Second Mortgage

“Second mortgages” provided by private lenders are another option but are generally used in cases where a borrower needs to consolidate debt if they’ve recently experienced the loss of a job or issues with credit health. These mortgage proceeds come in one lump sum, but also have a higher rate due to the greater risk involved. Furthermore, borrowers must reapply for another loan if they require more money beyond that initial lump sum. In some cases, homeowners use a second mortgage as a down payment on their property as a way to avoid mortgage insurance. Occasionally, taking out a second mortgage may actually be the more cost-effective route for a homeowner. For example, your primary mortgage may be locked within a fixed period, requiring you to pay a hefty penalty in order to prematurely close the deal. On the other hand, your first mortgage may even be locked in at an attractive rate. Fortunately, Canadalend.com offers second mortgages with rates beginning at 9.99%.

When in Doubt, Seek Advice from the Pros

Taking on an additional mortgage can be a major decision for many Ontario homeowners. Thus, borrowers will want to be sure they’re working alongside experienced professionals who are equipped with solutions for all of their financial needs. Luckily, when it comes time to finance a second home in Ontario, Canadalend.com’s team of licensed mortgage experts can help you to navigate the seemingly complex world of mortgage loans.

Borrowers Should Be 100% Confident in Managing a Second Property Before Purchasing

Here’s a rule of thumb for anyone to follow before they purchase a secondary property: Never sign a contract unless you’re entirely positive that your income will be sufficient enough to support it through every stage. By knowing what you can comfortably afford to spend prior to making such a major investment decision, you can make your choice more confidently and without feelings of high stress or doubt.

Thinking about buying a second home in Ontario?

If you’re considering buying a second home in Ontario, let us lend a hand. Canadalend.com grants you access to second mortgages through lenders that don’t require you to meet any strict income or credit qualifications, helping to make your dream of acquiring a second home a reality. To learn more about our financing options, or to begin your application for financing a second home, call Canadalend.com at 1-866-I CAN LEND or contact us here.