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When you want to revise and replace the terms of an existing loan agreement, this is referred to as refinancing. One of the most common types of loans that is typically refinanced in this way is a mortgage. 

Refinancing a mortgage essentially involves rearranging the mortgage agreement to make favourable changes to certain factors, such as the interest rate, payment schedule, or mortgage type. If these changes are approved, the borrower’s new mortgage contract replaces the old one. 

Most of the time, borrowers try to refinance certain debt obligations and obtain more favourable borrowing terms in response to shifting economic conditions or because their credit profile has improved since the initial mortgage agreement.

If you want to refinance your mortgage, it is necessary to approach either your current lender or a new one to make this request. You will then have to complete a new loan application.

Once you apply, your credit terms and financial situation will be evaluated, and an appraisal will be done on your home to establish its current market value. Then, the lender will extend an offer for a new rate and terms. If you agree to them, you can sign your new agreement, submit the necessary documentation, and pay the necessary fees to finalize the refinance.

Why is it important to ask your mortgage broker the right questions?

The mortgage refinance process may seem straightforward enough. Still, it is always crucial to ask professional mortgage brokers the right questions during this process to ensure you get the best deal possible.

Although the objective of a mortgage refinance is always to improve the terms of your agreement with the ultimate goal of saving you money, some refinance agreements will be better than others. This means it is necessary to do what it takes to secure an agreement that will best help you meet your financial goals. 

Therefore, you will need to discuss these matters with your mortgage broker and, most importantly, ask them the right questions to get the answers you need.

What are the best questions to ask your mortgage broker about refinancing your mortgage?

Many vital questions are worth asking your mortgage broker when refinancing a mortgage. However, the following are some of the most crucial things to inquire about if you want to end up with the best mortgage refinancing situation for you:

1. Will refinancing benefit my current situation?

A good mortgage broker will be able to help you figure out whether refinancing is the right call for you after considering your financial situation as a whole, along with your ultimate goals.

There are several ways that a mortgage refinance could potentially help you, including the fact that it could grant you access to lower interest rates and lower monthly payments. It could also help you consolidate all your debts into one monthly payment.

2. Will there be any break costs, and if so, how much will they be?

It is essential to understand whether you will be facing any break costs if you refinance your mortgage. In most cases, this kind of fee only applies if you break a fixed-rate mortgage contract to switch to a variable-rate mortgage loan. However, a broker can help you figure out whether or not you will owe such a fee and how much it will be.

3. How much does it cost to refinance?

There are multiple costs that are generally associated with refinancing your mortgage. Thus, it is better to have a solid understanding of all these costs early on so that you can decide if it is worth proceeding with the process. 

These costs typically include the upfront fees your lender charges, the new loan application fee, the fee for evaluating your property, Lender’s Mortgage Insurance (if you still owe more than 80% of your home’s purchase price), and stamp duty fees.

4. Will I be able to access the equity in my home?

One of the biggest reasons many people choose to refinance their mortgage is to access their home's equity. Obtaining this equity could be helpful if you want to renovate your home, invest in a new property, or consolidate your debts.

However, the amount you can release depends on how much you still owe on your mortgage and your property value. Therefore, it is a good idea to question your mortgage broker about whether you can release your equity and how much you can release.

5. Should I choose a fixed or variable rate loan?

It can be quite challenging to decide whether you want to go with a fixed or a variable rate loan when you take out your new mortgage. If you are unsure which direction to take regarding this decision, you can ask your mortgage broker about the pros and cons of each option.

After taking your financial situation and goals into account, they should be able to offer you some guidance about the type of loan to apply for when you refinance.

How Canadalend Can Help Answer Your Questions About Mortgage Refinancing

If you want to ensure that you are dealing with professional mortgage brokers who will be able to answer all of your questions relating to mortgage refinancing, Canadalend can help.

As one of Ontario's most reliable mortgage brokerages, we take pride in helping our clients secure mortgages that work for them and allow them to reach their financial goals. Our team of professional mortgage agents has access to banks, credit unions, and alternative/private lenders, and we will ensure that you can obtain the most competitive mortgage rates on the market.

The specialized industry knowledge that all of our agents possess relating to products, features, and rates makes it easy for us to answer any questions you may have about mortgage refinancing, no matter how general or specific they may be. 

We make it our priority to foster a friendly environment so that all of our clients know their questions are always welcome, and we do everything possible to show our dedication to getting you the mortgage products you seek. For your convenience, our agents are available seven days a week to help advance your mortgage application because we also value speed and efficiency.

For more information about how our agents can guide you through the mortgage refinancing process or to schedule an appointment with one of our agents today, call Canadalend at 1-844-586-0713 or contact us here.

When most people consider mortgage loans, they typically think of receiving such a loan from a major bank. However, this is certainly not the only type of lender. It is also possible to get a mortgage from a private lender. This is an individual who lends their own money or a private corporation (such as a mortgage investment corporation) that pools money from private investors to fund syndicated mortgages.

Private lenders are not federally or provincially regulated since they do not accept deposits from the public. Thus, when you get your mortgage through a private lender, it may be referred to as a private mortgage.

In most cases, private mortgages in Ontario typically come with higher interest rates, ranging from 6% to 18%, and higher fees than traditional mortgage lenders offer.

However, they are generally easier to qualify for than a traditional mortgage because private lenders are not usually as strict about doing background checks. Therefore, when prospective homebuyers are unable to secure a traditional mortgage, a private mortgage is usually one of the alternative options they consider.

When does it make sense to apply for a private mortgage?

Although the thought of paying higher interest rates over a shorter term may not seem ideal, there are a few different circumstances when it makes sense to get a private mortgage.

For instance, if you have a bad credit history that is preventing traditional loaners from approving you for a mortgage or that is preventing them from approving you for enough funds to purchase a property, then looking into a private mortgage makes sense.

A private mortgage is also worth considering if you need the money for a house quickly and do not have time to go through a traditional lender’s approval process, which can sometimes be lengthy.

Alternatively, it might be difficult to meet traditional lenders’ approval requirements if you are a newcomer because of your foreign credit history and short employment history within the country. Someone who is self-employed or has irregular income may face similar complications as well.

Private mortgages are also a popular option for purchasing an unconventional property, such as a fixer-upper, an inherited home, or a home in a rural area, for which traditional lenders may be hesitant to approve a mortgage.

How does a private mortgage typically work?

A private mortgage is mainly meant to be a short-term solution, so a private mortgage’s amortization period is typically between six months and three years. The idea is that if a homeowner makes all their mortgage payments on time during this term, they will be in a better position to apply for a mortgage from a traditional lender.

Although getting a private mortgage is considerably easier than qualifying for a traditional one through a bank, there is still a process that you must go through, and there are certain eligibility requirements that you must meet.

Private lenders may also have certain conditions, such as a set maximum loan-to-value limit. In an urban market, a mortgage for up to 85% of a home’s value may be possible, but in rural areas or specialty properties, the loan-to-value may be less. Aside from that, the main requirements that you typically need for a private mortgage approval include the following:

1. Proof of income

To be approved for a private mortgage, it is important to demonstrate that you will have enough income to make your mortgage payments. If you are self-employed, this could be a potential obstacle, but as long as you can provide some documentation to prove your income, it should be manageable.

2. A down payment

If you want to get a private mortgage, it is almost certain that you will need to pay a down payment. In most cases, this down payment must be at least 15% of the house’s purchase price.

3. A sellable property

A private lender will also generally consider the type and condition of the property you intend to purchase. This is because the lender will want to take possession of the property and sell it to recover their investment if you default on your mortgage payments.

Factors to Consider When Seeking a Private Lender

Since private lenders are not regulated, it is important to ensure that you are working with a reputable lender. Whereas some private lenders will force a foreclosure or a power-of-sale if you default on your payments, it would be better to find a lender that is more flexible and willing to work out arrangements under such circumstances.

Make sure that once you settle on a private lender, you read your contract carefully to be certain you fully understand the terms of your agreement.

If you notice a “bona fide sale clause” in your mortgage contract, this could be a major red flag. This means that selling the house is the only way for you to break your mortgage contract.

Of course, signing such a contract and agreeing to the terms could prove problematic for a number of reasons, so it would be better to avoid signing contracts that include this type of clause.

How Canadalend Can Help You Secure a Private Mortgage

If you are interested in obtaining a private mortgage in Ontario and want to work with a reputable private lender you can trust to keep your best interests in mind, Canadalend can help.

We network with a variety of private investors and lenders who can help you with private mortgage financing so that you can purchase a house no matter what your credit history is like and regardless of whether you are self-employed or earn foreign income.

To avoid the stress of dealing with a traditional bank’s mortgage approval process, our team of professionals will help you choose the best private mortgage option on the market.

Our goal is always to offer our clients top-quality service, which is why our lending specialists even provide free personal consultations. After getting a sense of your needs, we can help you find solutions quickly. When you find a private lender through us, you can trust that they will arrange a fair and transparent mortgage agreement that is in line with your requirements.

For more information about how we can help you find the perfect private mortgage lender or to schedule a free personal consultation with one of our lending specialists, call Canadalend at 1-844-586-0713 or contact us here.

When you need money, look at your home to help you get a loan. Using the equity or appreciation of your home can be a great way to get the cash you need at interest rates that are often better than credit cards or personal loans.

Two types of loans worth considering are home equity loans and cash-out refinancing.

These are excellent tools, and each works best in specific circumstances. This article will define each of these methods, examine the primary differences between them, and assess their pros and cons.

What Is a Home Equity Loan?

First and foremost, we need to define what a home equity loan is. A home equity loan allows homeowners like yourself to borrow against the equity you have built up in your property.

Simply, it means that you can access your home's equity before selling it. The great thing about a home equity loan is that you can use the cash for anything you want. People often use this money for renovations, debt consolidation, or emergency funds.

There is even a chance that the interest paid on your loan is tax-deductible; depending on your specific circumstances, you may be able to write off the interest on the loan if you use the money for home improvements.

Since you're taking out a second mortgage, you should know that the interest rates can be higher than your first mortgage, but that is still not certain.

What is a Cash-Out Refinance?

A cash-out refinance is another way to access the equity built up in your home. In this method, you will replace your existing mortgage with a larger one. By doing this, you're taking out a loan based on your home's increase in value.

However much your home has appreciated, that's the cash you get. Just like a home equity loan, you can use the money you get for anything you like.

You can opt for a fixed or adjustable interest rate when you refinance. This choice can allow you to have some say in what your mortgage looks like. Refinancing your home can offer lower interest rates than other borrowing options, such as personal loans or credit cards.

Since you have increased your mortgage, you should be mindful that your monthly payments will increase.

Primary Differences

The primary and noticeable difference between a home equity loan and a cash-out refinance is what happens to your first primary mortgage. With a home equity loan, your first mortgage remains unchanged. With a cash-out refinance, you can get a new mortgage and reap certain benefits, such as extending the repayment term.

The closing costs of a home equity loan are typically lower than cash-out refinancing. As we mentioned, the interest on your home equity loan might be tax-deductible.

Experts state that a home equity loan is better for specific and minor expenses.

Cash-out refinancing typically comes with lower interest rates than a home equity loan. As well, this method can be better for getting more money. Of course, this depends on several factors, such as the equity you have in your home and interest rates.

Pros and Cons

Benefits of Cash-Out Refinancing

As mentioned, cash-out refinancing often comes with lower interest rates than home equity loans. In addition, because your home has likely increased in value, cash-out refinancing typically allows you to access a more considerable amount of money.

Potential Drawbacks of Cash-Out Refinancing

If you extend the term of your new mortgage, you risk paying more interest over the loan's lifetime. Furthermore, because cash-out refinancing allows you to access more money doesn't mean you necessarily need that money, and you can overborrow.

Finally, your interest rate may change over time if you opt for an adjustable-rate mortgage. You may not be interested in taking on that risk, depending on your goals and needs.

Benefits of Home Equity Loans

Home equity loans usually have a fixed interest rate, which lets you know exactly how much your monthly payments are. Also, because it is a loan separate from your existing mortgage, it does not affect the terms of your first mortgage.

We have already mentioned the potential tax benefits and the lower closing costs compared to a cash-out refinance.

Potential Drawbacks of Home Equity Loans

Since you are taking out a second mortgage on your home, that loan will usually have a higher interest rate than your first mortgage.

Also, the amount of money you can borrow is determined by the amount of equity you own in your home. You should consider why you need the money and if you own enough equity to consider a home equity loan.

Which is Better For You?

Of course, there's much to consider when deciding between a home equity loan and a cash-out refinance. It can take time to determine the correct path forward. You must look critically at your financial situation, goals, and needs. In this article, we have outlined a few considerations for this decision.

Consider how much money you need, what kind of repayment you can, and if you want to make any changes to your first mortgage. There is much more to consider, and you should seek a professional's advice.

Getting sound and trustworthy advice is always recommended. We are a friendly team of licensed professionals who genuinely want to help you find the best loan. We are confident in our service and are proud to offer 24-hour approvals and even a free personal consultation to get you started.

For more information about home equity loans and cash-out refinancing, call Canadalend at 1-844-586-0713 or contact us here.

You probably have lots of ideas for what you could do if you had more money to spend. You could renovate your home, pay off high-interest loans, plan for retirement, invest, or do anything else.

Looking at the equity you have built in your home is a common way to get the cash you need. Second mortgages are a fantastic option for many people, and this article will help you better understand how a second mortgage can be right for you.

Like with all mortgages, there is a lot to consider. We want you to understand what a second mortgage is, how it differs from your first mortgage, when you should (and should not) consider a second mortgage, and how to assess your eligibility.

1. Understanding Second Mortgages

Understanding a great deal about obtaining a second mortgage is important, and this article is an excellent place to start.

You should know that a second mortgage differs from your first mortgage and when you should/should not begin a second mortgage. We will also introduce you to some common concepts that we use when discussing a second mortgage.

Second mortgages are just that, a second loan taken out against the equity in your home on top of your pre-existing mortgage. It is a way to access the equity you have built in your home and borrow money to invest, consolidate your debt, or save in an emergency fund.

At the outset, an essential thing you should understand about second mortgages is that they typically hold a subordinate position to your first mortgage. This facet means that the repayment priority goes to your first lender.

Second mortgages often come with higher interest rates (but that is not guaranteed). They are a great option in certain circumstances, but only on some occasions, so it's essential to know the specific use cases where a second mortgage is best for you.

2. Difference From Your First Mortgage

Your first mortgage is the primary loan you used to purchase your home or property. These mortgages often have a repayment period of 15 to 30 years. To repay the loan used in the purchase, you pay a monthly fee that covers both the principal and the interest.

Second mortgages usually have a shorter repayment (especially compared to your first mortgage). Rather than the borrowed amount being used for the entire purchase price of the property, the amount you can borrow is dictated by the amount of equity you have. To learn more about second mortgages, you can read our article here.

The main difference between a first and second mortgage is the purpose of the loan. A first mortgage is a loan for purchasing your property. In contrast, a second mortgage allows you to extract some of the equity in your home to put towards anything you like.

Since these are two separate mortgages, you will have to manage two separate monthly payments, so it's worth considering if you can do that beforehand.

3. Know When (And When Not) to Get a Second Mortgage

Depending on your circumstances, a second mortgage could be an excellent decision. Second mortgages are a great way to get money for investments, debt consolidation, home improvements, emergency funds, planning for retirement, or anything else you may need.

One of the great things about a second mortgage is that you can do anything with the money. While there is potential for lower interest rates than other types of loans, second mortgages are based on your credit score, equity in your home, and other variable factors.

Two primary types of second mortgages are a Home Equity Loan and a Home Equity Line of Credit (HELOC). These two methods offer flexibility in how you receive money from the equity you have in your home. A Home Equity Loan is a one-time lump sum payment.

A Home Equity Line of Credit allows you to take out the money as you need, and as you pay it off, you can borrow more money (up to the limit), much like a credit card.

Of course, you need to understand that the interest rates on your second mortgage will likely be higher than your first mortgage. You must also manage two mortgage payments instead of the original one. Therefore, before taking out a second mortgage, you should seriously consider the pros and cons of repayment.

4. Eligibility

To be eligible for a second mortgage, you must meet your lender's requirements. These usually include the lender looking at your credit score (the higher, the better), the equity you hold in your home (also the higher, the better), and your Loan To Value (LTV) Ratio (the ratio between your mortgage amount and the appraised value of your property).

Canadalend has access to Canadian banks, credit unions, and other lenders, so we can ensure you get the best and most competitive rates on the market. Our friendly and professional agents thoroughly understand all products, rates, and features of the financial tools available to you.

5. Seek Professional Advice

Creating a second mortgage can be a great way to get the money you need. Yet, you must carefully consider all variables to ensure this is your right choice. We have already discussed some of a second mortgage's pros, cons, and complexities. What you need is professional guidance from people you trust.

We are committed to finding you the best home equity loan to fit your needs. We offer great rates and 24-hour approvals. Our team of licensed mortgage professionals will help you every step of the way- even offering you a free personal consultation.

For more information about second mortgages (and alternatives), call Canadalend at 1-844-586-0713 or contact us here.