Advantages of Debt Consolidation Loans in Canada

Debt consolidation loans are increasingly becoming popular, but what benefits can you get if you decide to apply for a debt consolidation loan in Canada?

Debt Consolidation Loan

A debt consolidation loan is a type of loan that an individual with a lot of various loans can apply for in order to convert multiple loans into 1 easier-to-manage loan. People apply for a debt consolidation loan because having just 1 loan to think of means it is easier to keep track of and pay, not to mention that most types of debt consolidation loans offer lower interest rate than other loans such as personal loan, credit card loan, and car loan. An interest rate difference of just 1% can mean saving thousands of dollars down the line.

Advantages of Debt Consolidation Loans

There are many benefits of debt consolidation loans. They are:

  • Easier to fit into one’s budget because there is only 1 monthly fixed rate payment
  • With a set time frame
  • Usually with a lower interest rate, saving you a lot of money
  • With a lower monthly payment

Get a Debt Consolidation Loan in Canada

You can contact various lenders to apply for a debt consolidation loan. The key to getting approved is to communicate that you’ll be able to pay. Note that lenders are usually looking for the following:

  • Your monthly expenses and budget to show that you can pay loan payments
  • Evidence of enough income to make payments such as pay stubs or pay slips
  • Extra layer of security such as having collateral or having a co-signer

Once you have the above, you can apply for a debt consolidation loan from a bank or other lenders. Note that whoever you apply to, they’ll look at your credit score, your employment status, and your debt service ratio because they will want to make sure that you have the capacity to pay off your loan.

During the loan application process, you must make sure that the following are ready:

  • Your recent pay stub or any proof of income
  • Your recent income tax assessment
  • Your current bills and debt statements
  • Any document that can prove you have assets (if applicable)

Risks for Debt Consolidation Loans

Understand that getting a debt consolidation loan will only work in your favour if you will use it as a tool to help you pay all your debts. It is not a perfect solution unless you are willing to work with it because it is still a loan that you will have to pay off. What it can do for you is to make paying your debts a bit easier and to save you from a financial crisis due to not being able to afford the high interest rates most loans have.

Some debt consolidation loans require a collateral. That means that you can lose whatever you use as collateral if you are unable to honor the terms of your debt consolidation loan. For this reason, it is best to seek the help of loan and mortgage professionals if you want to get a debt consolidation loan. Contact us at Mortgage Central Canada if you have questions or need assistance getting a loan.

10 Things You Must Know About Second Mortgage in Canada

Getting a second mortgage in Canada is not just becoming more popular, it might also become the norm in the years to come. Whether or not you’re planning to get a second mortgage in the future, now is the best time to familiarise yourself about some details so you can make the right decision in the future.

Second Mortgages Come in Many Forms

Basically speaking, loan products that use home equity can be considered a second mortgage. Notable examples are HELOCs and home equity loans. The type of second mortgage that you have to apply for is the one that fits your needs and ability to pay.

A Second Mortgage Uses Your Own Money

When you apply for a second mortgage, you are basically applying for a ‘loan’ that uses your own money. You have to be careful though, as tapping your home equity means placing your home on the line if repayment does not go as planned.

Private Lenders May Be Better Than Banks

For most people, qualifying for a second mortgage from a bank is near impossible, but private lenders often have looser qualifications that make it easier for those who are self-employed or those with bad credit to qualify.

Second Mortgages Are Used for Huge Expenses

Because this type of mortgage gives the homeowner access to their home equity, second mortgages are often used for debt consolidation and for paying for home renovation. This is to take advantage of the lower interest rate that second mortgages have compared to most other loans.

You Can Borrow A Lot or Borrow As Little As You Need

Different loan products have varying minimum loanable amount and maximum limit. When you qualify, you may borrow as little as you need or as much as you want within these parameters. Go for a HELOC for smaller recurrent loans or apply for a home equity loan to access a lump sum of funds.

Interest-Only Payments Are Possible

Some types of second mortgages allow for interest-only payments, making them easier to handle for your wallet.

A Second Mortgage Can Be Used for Anything

Once your loan is approved, you can use it for almost anything! Some people use it to finance a business, some to pay for home improvement, some for expensive university education, some for a dream car or vacation, and some to buy another property. As long as you pay within the terms, you can use your loan any way you want.

It Is Not Free

Aside from the interest rate, second mortgages come with fees. These fees may vary from lender to lender so be sure to talk about this detail with your mortgage professional.

Interest Rate Varies A Lot

Just as the fees vary from one lender to another, the terms and interest rates vary as well. A mortgage professional can help you compare interest rates between lenders so you can save some money too.

You Can Repair Bad Credit with A Second Mortgage

By using a second mortgage to consolidate loans, you can pay off other loans while getting lower interest that will be easier for you to pay off as well.  As you do this, your credit score will repair itself soon enough.

Thinking of applying for a second mortgage? Contact us at Mortgage Central if you have mortgage questions!

How to Borrow Against Home Equity

Owning a home comes with a lot of financial responsibilities which can add up and make things difficult especially for those who are just making enough to cover their needs. For a lot of Canadians, having a savings account for unforeseen needs is not always possible and hence, tapping their home equity is one of the best financial solutions to cover a large expense. So, what should one know about borrowing against home equity?

For starters, home equity is defined as the value of one’s home that the homeowner truly owns. If you’re paying your mortgage, the money that goes towards payment builds your home equity. It can also be defined as the market value of the home minus the amount still owed in the mortgage. This means that when property prices increase, your home equity rises with it.

Borrowing Against Home Equity

Given the above, the first thing you should do before you borrow from your home equity is to determine how much home equity you have. You need a computation of how much you still owe in your mortgage and have your home appraised to know the current market value.

There are many different ways to borrow against home equity and they all come with specific requirements when it comes to the minimum home equity a homeowner should have before qualifying for a home equity loan.

Types of Home Equity Loans

There are 3 common or traditional ways to access home equity. By getting a home equity loan or a second mortgage, by getting a HELOC, or by refinancing your mortgage.

Getting a second mortgage will allow you to access up to 80% of your home equity. It works like other secured loans with the main difference being the fact that this one uses your home equity as security. Failing to pay a second mortgage can still result to you losing your home although, in case of continuous nonpayment, the primary mortgage will be the first one to get paid after assets are seized.

Getting a HELOC (Home Equity Line of Credit) is like getting a credit card with a relatively substantial credit limit and is backed by your home equity. Just like a credit card, you can keep borrowing from a set limit as long as you adhere to the set terms. A HELOC is great for covering small expenses that can’t be covered by your income. Most HELOCs require that you have at least 20% equity and a good credit score but some lenders may be more lenient.

Refinancing your mortgage allows you to access some of your equity after you break your first mortgage with your current lender. Refinancing will let you access up to 80% of your equity but remember that you’ll have to pay prepayment penalty fee for breaking your first mortgage.

Using Your Home Equity Loan

You can use your home equity loan to fund big projects, to invest in your home, pay for university education, or start a new business. The key to success with borrowing against your home equity is to approach the right lender with your intent and show that you’re capable of handling the loan you’re applying for. If you need help borrowing against your home equity, contact us at Mortgage Central Canada.



Get a Second Mortgage with Bad Credit

Bad credit may get in the way of getting a second mortgage but it is still possible to get approval even with a less-than-desirable credit score. This is definitely worth a consideration because a second mortgage can be used to improve one’s credit score. A strong application is a must and you must shop for the best interest rate to reap the most benefits.

Dealing with Bad Credit

Getting a second mortgage with a bad credit comes with certain disadvantages. First of all, a second mortgage already comes with a higher interest rate than a first mortgage but with a bad credit, the lender will surely ask for a higher interest to cover the risk of lending to you. This is because a second mortgage is subordinate to the first mortgage and the lender for the second mortgage runs a higher risk of not getting paid if financial troubles arise. It is therefore only logical to be given higher interest rates for a second mortgage if you have bad credit but you can still get a good deal by shopping for the right lender.

Apply for a Second Mortgage with Bad Credit

The first step that you must do before applying for a second mortgage if you have bad credit is to find ways to improve your credit score. It is possible that there are some mistakes that can improve your score once corrected. By getting a copy of your credit history and reporting wrong entries, you may be able to get a great boost in your credit score for a relatively short span of time.

The second step that you must take to get a second mortgage despite having bad credit is to actively work towards reducing your debt, particularly the high-interest ones such as credit card debt. If it is possible, pay them off in full or make sure that the balance is below 30% of your credit card limit. Don’t fall for converting your credit card debt into new lower-interest card debts because this won’t help you in getting approval for a second mortgage. It will look like you have multiple credit applications which will make it seem that your finances are in worse shape than it really is.

Find the Best Lenders in Canada

Getting help from a mortgage professional will make your second mortgage application a lot smoother if you have bad credit. Mortgage professionals know which lenders are more lenient and which lenders will give you a better interest rate. Mortgage professionals can also share some tips for faster approval such as having a co-signer with a good credit score.

Getting a second mortgage with terms that you can manage within a short span of time will drastically improve your credit history and open the possibility of qualifying for other loans in the future. Contact us if you have bad credit and need help with applying for a second mortgage in Canada. We’ll be more than happy to discuss possible solutions with you at Mortgage Central Canada!

Get Out of a Bad Debt in Canada

Getting out of a bad debt is quite a challenge, but to try to do so with a bad credit is even harder to accomplish. A bad debt is a debt that you can’t afford to overlook payments for but the terms of payment are making it near impossible for you to have the debt taken care of. It takes a bit of planning and financial maneuvering to get out of a bad debt and we’ll share about this below.

Assess Your Debt Situation

If you have a bad credit or a bad debt, the first thing you need to do to pay off the debt is to find out what caused your present financial situation to begin with. Where you in the habit of purchasing things that are beyond your means or was your situation because of repeatedly forgetting to pay on time, thus damaging your credit score and accumulating lots of interest? Understanding the cause of your bad debt and/or bad credit situation will help you pick the best solution and plan for payment.

You also need to ask yourself if you are truly in debt. Most people are not aware that simple mistakes in recording or computing interest can cause a downward spiral that can place a person in debt although there is no debt, to begin with. Checking one’s credit history is important to see if all information contained therein are accurate. If everything is accurate, then it is time to find a way to pay off the debts.

Consolidate Loans

A possible solution to paying debt is to consolidate your loans to a lower-interest debt in order to manage payments easier. Going this route can help you get out of both bad credit and bad debt by eliminating huge fees for interest and taking care of the hassle of trying to get separate bills paid on time. However, you have to understand that simple debt consolidation may not be enough if you don’t take your financial history into consideration because the truth is, having bad credit and/or bad debts are just symptoms of having a deeper issue with handling your finances. You have to pick a solution that works for your long-term benefit.

Plan for the Future

A personal plan for paying debt allows you to see what you can afford to pay towards debts each month. To determine how much you can set aside for debt payment per month, list down all monthly expenses and subtract the total from your expected monthly income. Whatever is left is what you can truly afford to set aside for debt payments. Determining this prevents you from agreeing to payment terms that you cannot fulfill which will just result in worse credit and worse debt down the road.

Get Out of a Bad Debt the Smart Way

Some smart ways to take care of a bad debt and bad credit is to use your home equity for paying debts or to get a bad credit loan. Both have pros and cons that are worth a look to see which would suit your financial needs better. Contact us at Mortgage Central Canada for an obligation-free initial consultation as soon as possible if you need help with getting out of a bad debt.


What You Have to Know About Refinancing Your Mortgage

Refinancing your mortgage is a major financial decision that is best made when you fully understand what you are getting yourself into. Know that although mortgage refinancing is quite common, the outcome and benefits will not be the same for everyone because of various factor that have to be considered. Below are some of the most important things you have to know before refinancing your mortgage.

What is Mortgage Refinancing?

Mortgage refinancing means getting a new loan on a home with a new set of terms. Most people choose a mortgage refinance to get a better interest rate or to change a loan’s length of payment in order to save money. Some choose refinancing to free up some cash that can be funneled elsewhere.

What You Have to Know About Refinancing Your Mortgage

Refinancing to a shorter term will mean getting done with a loan sooner although doing so will result in higher monthly payments. A shorter term also means paying less interest overall, thus saving money. Some homeowners may choose to refinance to a longer-term loan to have lower monthly payments which will allow them to allocate the money to other necessities or financial projects.

Mortgage refinancing is a decision that should not be made lightly. It is meant to improve your current financial situation and help you plan for the long-term. You need to consider your current home’s value, your current mortgage size, the terms of the new mortgage that you’re taking out, your current interest rate, the possible new interest rate, and closing costs plus fees. You have to make sure that any fees you pay will not cost you more in terms of long-term benefits.

When to Refinance?

Your credit score as well as other factors may have changed a lot since the time you first took out a mortgage. This means that you may now be eligible for better interest rates which can save you quite a sizable sum over the remaining years of payment. Aside from wanting to change the length of your mortgage to save money, you may also want to refinance to switch to a fixed-rate mortgage from an adjustable-rate mortgage which will then give you better control over your finances.

With the above said, refinancing is not for everyone. If your home equity is below 20% or if your credit score has gotten worse, you may not qualify for a mortgage refinance. The same is true if you’re planning to sell your house soon or if you’re going through a severe financial difficulty at present time. It is best to find the perfect timing before refinancing your mortgage so that you can be sure that you’ll be able to abide by the new terms.

Overall, your entire financial situation will have to be assessed before you go for refinancing your mortgage. Our mortgage professionals can help you determine whether refinancing your mortgage is the best choice for your situation. Contact us today to schedule a consultation!


Advantages and Disadvantages of Using Your Home Equity to Pay Off Debt

Trying to pay various bills per month can take a lot of effort, not to mention worrying about racking up fees due to interest and dealing with the stress brought on by seeing bills pile up. Consolidating bills can give you the breathing space you need so you can focus on working to pay instead of worrying about paying on time.

One of the best ways to consolidate debt is to use a home equity loan because unlike transferring to a lower-interest card or getting a personal loan, using home equity to consolidate debt have fewer disadvantages. We’ll talk about the advantages and disadvantages of using home equity to consolidate your debts below.

Advantages of Using Home Equity to Pay Off Debt

Saving on interest is the most popular reason why people turn into using their home equity for debt consolidation. The savings are usually in the thousands of dollars per year on average. The lower fixed-rate interest of a home equity loan is also far easier to manage than trying to gain control over multiple loans. Another bonus is that the interest for a home equity loan is oftentimes tax-deductible because it is considered a second mortgage. On the other hand, if you choose to access your home equity via HELOC, you’ll have to make sure that you get a capped lifetime rate and that you make payments towards the principal to avoid fees as much as possible.

Fewer monthly payments is another popular reason for debt consolidation using home equity. It is near impossible to forget to pay when you only have to deal with a single bill instead of several.

Access to higher loan limits is one of the best advantages of using home equity for debt consolidation. If you try to consolidate debt by transferring to a lower-interest card, the limit will usually be low more so if your credit score isn’t speaking much for you; and the same goes for a personal loan. In using your home equity, you can access as much as 85% of it minus what you still owe in your mortgage. This amount can be in the hundreds of thousands, allowing you to take care of all your debts in one swift consolidation move.

Disadvantages of Using Home Equity to Pay Off Debt

The main danger in using home equity to pay off debt lies in forgetting that it is also a loan that will have to be paid later. It isn’t a long-term solution unless you take it upon yourself to learn to budget and address the factors that got you into debt, to begin with. Because using home equity for debt consolidation means taking out a loan with your home equity as collateral, failure to abide by the terms can result in you losing your home. The above are why you need to be sure that you get loan terms that you can handle, otherwise, you’ll be back in square one.

Are you thinking of consolidating debt using home equity? We can help you get on the right track! Contact us for an obligation-free initial consultation for debt consolidation.

7 Things You Have to Know About Second Mortgage in Canada

Getting a second mortgage is becoming increasingly common in Canada these days; however, not a lot of people know what a second mortgage is and how it can help them manage their finances if used correctly.

A second mortgage is a type of loan that allows homeowners to access their home equity provided that they can meet the terms set by the lender. Because a second mortgage is a loan that uses home equity as collateral, defaulting on it can mean losing one’s home. This is why you must know what you’re getting into if you’re planning to apply for a second mortgage. Before you try to find a lender, below are what you need to know about getting a second mortgage in Canada.

Bad Credit Can Be Fixed With a Second Mortgage

Consolidating multiple high-interest debts can help you pay them off faster and improve your credit score in the process. More so, getting a second mortgage even with bad credit is possible through private lenders.

Second Mortgages Come in Different Forms

There are different types of second mortgages, with a HELOC and a home equity loan being the most common. They come with different terms to meet varying needs and demands. Be sure that you pick the type that is in-line with your financial plans and status.

Interest-Only Payments Are Possible

Some second mortgages allow you to pay only the interest until the time that you decide to sell your home. This means that you can take out a second mortgage to help you finance a home renovation prior to selling so that you can sell your home for a higher value. You can then pay the second mortgage from the proceeds of the sale.

Borrow as Little or As Much as Possible

Second mortgages come with a ceiling amount or a borrowing limit that is usually based on how much equity you’ve got in your home. It is possible to tap as much as 80% of your home equity in a second mortgage with the right lender!

It is Not Free

Second mortgage fees do exist and you’ll have to consider them when weighing whether you should get a second mortgage or not. The good news is that mortgage professionals may be able to connect you with the right lenders so that whatever fees you end up paying will still be outweighed by the benefits you’ll be getting.

Interest Vary Widely

Different lenders use different interest rates depending on the type of second mortgage you’re applying for and other factors. You have to be sure that you compare lenders to get the best mortgage deal.

You Can Use Your Second Mortgage for Anything!

Funds from a second mortgage are usually used for debt consolidation. You can also use it to finance further education, invest in a business, renovate your home, go on your dream vacation, or even pay for huge medical expenses. Ask your mortgage professional for more uses for a second mortgage! Contact us today if you need help getting a second mortgage in Canada!

Mortgage Rate Hike Possibly Coming Soon

It looks like recent job losses are not going to prevent an upcoming mortgage rate hike. The Bank of Canada is still poised to raise interest rates in October 2018 despite the losses in the part-time work market in August.

Survey Results Fuel Disappointment?

The August 2018 survey of the Statistic Canada’s Labour Force was released after an earlier report came out stating that the rates will remain the same for the time being. Many were disappointed with the reported figures although investors expressed that they still think that an interest rate hike will be announced on October 24. This prediction has a certainty rate of about 60%.

Andrew Kelvin, TD Securities Senior Rates Strategist thinks that the survey results will still lead to an October interest rate hike. Note that the survey data shows that 51,600 jobs were lost in August 2018 further increasing the jobless rate from 5.8% in July to 6% in August. This is not the whole picture though, employment rate grew by 0.9% YoY or about 172,000 jobs. Aside from this, hourly wages for August rose by 2.6% compared to a similar time period in 2017; however, this figure is the lowest in the past year since October 2017.

What The Numbers May Mean

Meanwhile, Reuters reported that a similar event might happen in Canada, referring to the expected increase in interest rates in the US by the Federal Reserve following a strong showing of the US job market.

BMO Capital Markets Senior Economist Sal Guatieri says that although the part-time job figures this month was disappointing for showing a retraction compared to the previous month’s gains, full-time jobs are still up and that is good news, stating that full-time positions increased by 40,400 positions despite part-time employment decreasing by 92,000 jobs.

Canada’s most populous province Ontario had 2 months of increases but lost 80,100 jobs in August while employment grew in other places such as Manitoba and Alberta.

More Interest Rate Hikes in Canada Foreseen

Interest rates are also likely to further increase in the coming year, although it may be too early to predict right now just by how much the looming interest rate hike will increase. Some speculate that the interest rates will face a few more hikes before it settles to a more stable rate by 2020. It might be best to get one’s finances in order this year before further increases take effect to avoid paying higher interest rates.

With mortgage interest rates poised to increase in the near future, now would be the perfect time to apply for a mortgage or other loans if you’re planning to buy a home, invest in property, or consolidate debts. If you want to find alternative lenders in Canada or interested to find out how much you can borrow for your needs, contact us and we will find the best financial solution for you. We will assess your current situation and propose possible solutions that will work for you and possibly save you lots of money as well. Talk to us today!

For more mortgage related news or to apply for a home equity loan, second mortgage, home equity line of credit and more, please visit us at:

Bank Mortgage Declined? Get a Private Mortgage Instead!

Qualifying for a mortgage these days is seriously a lot of hard work. Banks are stricter than ever, government regulations are tightening up, and interest rates are rising too; meaning, it will even be more challenging to qualify for a mortgage from a bank more so for people who don’t have an impeccable credit history.

People who are self-employed, living in non-hot real estate areas, and those with other loans are often declined by banks and told that they don’t qualify for a home loan. Because of this, more Canadians are finding ways to fulfill their home financing needs with the help of a private mortgage lender. Far from what most people think that private mortgage lenders are last resort options, the way they operate these days can make them a wiser choice than borrowing from banks.

Why Consider Borrowing from a Private Mortgage Lender?

You can borrow from a private mortgage lender with less fuss than borrowing from huge financial institutions like banks. This is because private mortgage lenders are often small companies or individuals who offer loans for a small profit. They are not as bureaucratic as banks and tend to consider each borrower as a person rather than just a number. They also set their own criteria for lending because their funding is from a group of investors or can just be an individual investor. Because of this, they are more flexible with their process and can entertain people with unconventional circumstances.

Who Are Recommended for a Private Mortgage?

Generally speaking, people who are likely to be declined by banks have a better chance of borrowing from a private mortgage lender. Examples are those who:

  • Have bad credit
  • Are self-employed
  • Want to purchase raw land or unique property
  • Wanting a short-term loan
  • Need funds for home improvement projects but do not qualify yet for certain loans
  • Need access to their home equity but can’t refinance an existing mortgage for various reasons
  • Need funds for debt consolidation

How  a Private Mortgage Can Help You

The best person to ask about the ins and outs of how a private mortgage works is a mortgage professional who has a keen knowledge of alternative lending services. A private mortgage may work differently depending on several factors so all details must be considered. This is why mortgage professionals ask for your information so that they can determine how you can qualify for a private mortgage. Once it has been determined that you are eligible for a loan, the next assessment will be about your ability to pay. After the mortgage professional has these details, several mortgage solutions that meet your needs and means will be proposed to you. After this is done, a deal will be put in place together with an exit strategy so you’d know exactly until when you are supposed to pay and by how much.

Mortgage professionals do this service for a fee and what you get is a great deal that can help you smooth out your finances. Have you been declined by a bank? Contact us to get a private mortgage loan instead!