How a Mortgage Broker Can Make Your Life Easier

Mortgage brokers either have a negative or a positive image depending on one’s background and personal experience but the truth is, mortgage brokers only act as an agent or a middleman between a borrower and a lender, although some may be more conscientious about their job than others.

What Does a Mortgage Broker Do?

A mortgage broker acts as the go-between for both the mortgage lender and the homeowner. Mortgage brokers work with borrowers to help them qualify for a loan or a mortgage while also working with lenders to connect them with homeowners who are in need of cash.

The communication between homeowner, mortgage lender, and mortgage broker isn’t like a three-way system. The mortgage broker talks to the borrower and the lender separately and negotiates agreements between parties. When the mortgage broker finds parties that are amenable to each other’s terms, the mortgage broker will then draw up the paperwork for the loan.

The above is possible because the mortgage broker already knows what both parties want. This is why mortgage brokers ask you a series of questions and go into personal financial details with you as part of the initial consultation.

Some financial information that your mortgage broker may ask from you include:

  • Details regarding your assets such as savings and properties
  • Your income (your pay stubs, tax returns, employment or business history)
  • Your financial standing (including your credit score)

The above information are required to determine your capacity to pay and therefore, determine your ability to get a loan. In some cases such as when you’re after a mortgage refinance, your equity and current home value will be assessed to determine your qualifications and what loan type would be best for your needs.

More Than Just A Go-Between

Good mortgage brokers do more than simply connect lenders and borrowers. They take time to consider what the borrower needs and match them with mortgage lenders with terms that are within the borrower’s means. It is also not uncommon for a good mortgage broker to suggest another financial solution that may be of a better fit for the homeowner.

The mortgage broker will compare various banks and private lenders to determine the right fit in terms of fees, rates, type of loan, and risks involved. The final decision is made by the mortgage lender and homeowner, but a good mortgage broker will save both parties plenty of time and plenty of money in fees. In exchange, the mortgage broker earns by commission. This commission is just about nearly the same amount of money wasted on fees should a homeowner decide to do everything on their own instead of having a mortgage broker.

Getting a mortgage (or any type of loan) can be very tricky. It pays to have a seasoned professional, such as a mortgage broker, do the heavy lifting for you. Not only can we help you to understand what you are getting into, but we’ll also help you save time and money while making sure that we connect you with the right lenders. Contact us at Mortgage Central Canada today!

Managing a HELOC – Dealing With Interest and Payments

Although a lot of Canadians are interested in getting a HELOC or a home equity line of credit, the majority are concerned about being unable to manage making payments on time more so as interest rates seem to be seeing an upward trend these days. News saying that HELOC payments will increase also abound, causing fear and worry for those who are already struggling financially.

The Current Situation

More than 2 million Canadians Have an existing HELOC or are on the process of getting one. They’re due to see an increase in their payments in the coming months, news that are not welcome for many.

A HELOC is a revolving loan that is secured by a home’ equity. This means that failure to make payments can place one in the danger of becoming homeless. This, of course, sounds dramatic; however, this won’t be an issue for a properly managed HELOC.

Advantages of a HELOC

A home equity line of credit allows a homeowner to tap home equity whether or not they have mortgage. In getting a HELOC in Canada, what matters is that the homeowner has built up some equity on the home and that the homeowner qualifies for the criteria set by the lender.

HELOCs are a lot more flexible than a second mortgage and works almost like a credit card but with markedly lower interest rates. With a HELOC, a homeowner can access a part of or the full amount of a predetermined loan ceiling when needed. Interest is only paid on the exact borrowed amount (for most HELOCs) and there is no penalty if the homeowner decided not to use the HELOC at all. Payments are not expected until the agreed upon payment period, giving homeowners ample time to prepare themselves financially  to afford making payments.

About Interest Rates

Now, HELOC interest rates are lower than that of a credit card; however, they are variable just like the interest for a credit card and the rate is set by the lender. This means that when interest rates go up, HELOC payments would also go up.

The prime rate jumped up 0.75% a few weeks ago. What was formerly 0.50% is now 1.25%. This may seem like a huge increase and yes, it is, but considering that credit cards charge upwards of 20%, the increase in HELOC rates is certainly a lot more manageable although still considerable. More increases are due by the end of 2018 and until 2019.

Coping with Changes

Because of the forecasted rate increases, it may be wiser to choose to convert your HELOC into a fixed rate mortgage This will incur charges so this option is best for those who still have a lot to pay on their HELOCs. For those who have a little left to pay, it would be smart to make sure that payments are made on time to minimize the possibility of getting a huge rate increase from your lender as lenders typically assign a higher rate for those who also have an increased risk of non-payment.

Getting a HELOC is huge and important decision that is best made when you’ve had enough time and consideration to not make blindly. Questions about getting a HELOC or how to leverage your home equity should be answered before you sign any papers. If you have any questions do not hesitate to contact us at Mortgage Central. We’d be glad to assist you with managing a HELOC and getting it.


Ontario Investors Lost $1B in Syndicated Mortgages According to Toronto Lawyer

David Franklin, a real estate lawyer from Toronto believes that Ontario investors have lost more than $1B of their investment money in syndicated mortgages. A CBC news report recently shared that 120 Chinese investors in the GTA stand to lose about $9M in investments like these and David Franklin adds that this news is just a small fraction of what’s going on.

Bold Opinions

Franklin was recorded to have stated that the $9M loss is the smallest one he’d seen after he reviewed the contracts with Black Bear Homes.

Franklin further stated that in his opinion, the said investments deals are fraudulent. He also shared that based on the court documents that he’s been able to take a look at, the investors will lose an amount that’s more than a billion dollars in Ontario.

Investors who provided funding for the syndicated mortgages with Black Bear Homes were tricked to provide mortgages in values that far exceed the real worth of the investment properties. On top of this, interest payments from their own capital were given to them until the funds were used up.

As a backgrounder on syndicated mortgages, they can be legal or legitimate investments where a borrower forgoes going to the bank and instead, just finds more than one private lender to invest money in a property.

Franklin adds that more syndicated mortgages like those for Black Bear projects are being sold by several companies. With further digging, CBC News found out that the Financial Services Commissionof Ontario has shut down at least one of those companies.

The Investigation Deepens

Back in October 2016, a cease and desist compliance order was issued by FSCO for Tier 1 Mortgage Corporation. Since that day, the interests of syndicated mortgage investors have been protected by an appointed trustee in 16 Tier 1 real estate development projects.

It is to be noted that one registered mortgage broker named Dominic Ha solicited investors for investors Black Bear projects and did the same thing for Tier 1. A CBC News investigation has found that some of the syndicated mortgages investors for Black Bear projects are also investors for Tier 1 projects.

Investor Guan Bai Long shared that has $180,000 worth of investments in Tier 1 and Black Bear projects through Dominic Ha. He also shared that the agent even went to his home to have him sign documents and convince him to invest another $150,000 from his retirement funds. These investments were supposed to be paid back to him more than 2 years ago. Guan shared that as a result of the unfortunate turn of events, he had to take out loans to fund his children’s tuition.

Mortgage agent Ha began soliciting syndicated mortgages investors in 2011. He also had an appearance in Chinese TV promoting the investments just 2 years ago in 2015. Ha insists that all pertinent information has been provided to investors, his lawyer shared.

Open Fraud

Certified fraud examiner Bill Vasiliou shared that after taking a closer look at the investors’ stories, ledgers, and syndicated mortgage contracts of Black Bear projects, he believes that there is an ongoing fraud. He was also quick to add that there are similar cases and that the Black Bear cases are mere peanuts compared to others he had seen.

Worried that you may be falling for an investment scam? We can help you make better decisions with your investments by arming you with the information you need. Contact us at Haywood Hunt Private Investigators.

Why Borrow Against Your Home Equity?

Borrowing against their home equity gets some people feeling iffy, viewing the transaction with suspicion and thinking that it is a ploy for lenders to rob someone off of their home. The truth is far from this. Borrowing against one’s home equity can prove to be a smart financial decision as long as it is done right and for the right reasons.

Using Your Home Equity

Your home equity is the value your home that you actually own. It is defined as the difference between what the homeowner still owes in the current mortgage and the home’s current market value. Considering this definition, there are 2 ways to increase your home equity. One is when you make payments towards your mortgage, and another is when the value of your home increases such as when real estate value increases or when you make certain home improvements that add value to your home.

Borrowing Against Your Home Equity

You can tap your home equity by getting a loan against it. There are different types of home loans that are taken against your home equity. We will talk about the 3 most popular options today – getting a HELOC or a home equity line of credit,  getting a  mortgage refinance, or getting a second mortgage or a lump sum home equity loan. It can get confusing regarding whether you should go for a HELOC, a second mortgage, or a home refinance to access your home equity so read on to get an idea about each one.

Mortgage Refinance

A mortgage refinance is a great way to tighten things up when there has been a significant change in your home’s value such as in the case of skyrocketing home prices in areas that have undergone some recent development. Depending on the terms of the refinance, you may find yourself saving a lot of money on interest fees, finding that it is easier to pay your loans, or even both.

Second Mortgage

Also called home equity loan, a second mortgage allows you to tap your equity and get a lump sum of cash that you can use to consolidate debt or pay for any huge expense. Debt consolidation is a popular reason for applying for a second mortgage because it lets the homeowner save so much on interest fees for high-interest loans. The downside is that paying back a second mortgage usually comes with a short time frame.

Home Equity Line of Credit

A HELOC is the most flexible compared to the previous 2 ways to tap your home equity. The payment for a HELOC can also prove to be the easiest to manage; however, you won’t benefit much from a HELOC unless you need access to a revolving credit source cash for quite some time. Remember that payment will be scheduled at a certain time so you can’t just go to the lender and pay back your HELOC even when you have the means to do so.

Are you still unsure whether is it time to leverage your home equity? Talk to us and let us know what your concerns are so we can help you choose a loan product that will best suit your needs. Contact us at Mortgage Central Canada today!

Should You Choose a HELOC, a Second Mortgage, or a Refinance to Access Your Home Equity?

There are many ways by which you can access the equity that you have in your home, but choosing which one to go for will not be an easy call. You have to consider the purpose that you’ll be using your home equity for, your financial goals, and how you’ll be able to pay back the funds after you’ve used them.

Your equity is one of your biggest assets; hence choosing what to do with it and how to access it is not something that can be taken lightly. Luckily for you, we’ve summarized some information that can help you decide whether you’re thinking of accessing your home equity via a second mortgage, a HELOC, or a refinance.

Get A Second Mortgage

If your credit score is less than 650 and your home equity is just around 20%, your best option to access your home equity is through a second mortgage. Second mortgages are relatively easy to qualify for, with some private lenders only requiring a 10% home equity and a credit score between 550 and 700; however, you have to be ready for the fact that you’ll pay mortgage fees, legal fees, self-insured fees, and appraisal fees. This makes getting a second mortgage less attractive than the other options to access your home equity below but remember that a second mortgage like this can still save you a lot of money if you’ll use it to consolidate high-interest credit card debt. Don’t forget that payments for a second mortgage go on top of your payment for your primary mortgage.

Refinance Your Mortgage

A refinance is a smart way to use your home equity if you know how much funds you need and you have a credit score of at least 650. A refinance will allow you to access as much as 80% the value of your home provided that you meet the lender’s parameters which you can get via a lump sum and pay with a fixed or variable interest rate. Note that with a refinance, you will be charged interest on the entire loan, unlike a HELOC below.

Apply for a HELOC

HELOCs have many advantages and disadvantages but the most attractive feature is definitely the flexibility to only withdraw or use a portion of it when you need it. A HELOC won’t force you to use the entire loan amount and will only charge you interest on the amount you use. It is a form of revolving credit so you can pay and reuse until a predetermined time or value is reached. Lenders typically require about 20% home equity and a credit score of about 650 to qualify for a HELOC, however, private lenders may be able to provide you with options depending on a variety of factors.

The above are the 3 most common ways to access the equity of your home. Should you need further details, feel free to contact us at Mortgage Central Canada.

Must Read About Home Equity Lines of Credit (HELOC)

You may be interested in getting a home equity line of credit or perhaps have at least heard of it, bringing you here to read this blog. A HELOC comes with a lot of benefits such as relatively low interest rare, possible tax deduction, and access to your home equity, no wonder it is so tempting to get a HELOC!

Is a HELOC Right for You?

If you’re looking for ways to tap your home equity, then getting a HELOC is one of the options that could be right for you – but at a cost. A HELOC is still a type of loan and loans always come with a set of risks along with potential benefits. It is up to you to research these factors and determine if the benefits outweighs the risks. Remember, failure to pay your HELOC can mean the loss of your home as this type of home loan uses your home as collateral.

What is a HELOC in Simple Terms?

A HELOC is a line of credit that is tied to your home’s equity and functions as a revolving form of credit. It is similar to having a credit card but with potential for a truly high credit limit because the homeowner’s home equity is a major factor in determining how much can one borrow through a HELOC. Because of this, people who get a HELOC often do so to finance major expenses such as paying for higher education, recurrent medical bills, or home improvements.

How Does a HELOC Work?

With a HELOC, the borrower is approved for a certain credit limit that the borrower can borrow all at once, or little by little if needed be. The credit limit is based on several factors including the value of the home equity that the homeowner had built, the ability to pay, credit score, financial history, outstanding debts, and other financial obligations.

HELOCs typically come with a fixed period of borrowing followed by a period of repayment as well as possible renewal. Note that some plans will require a full payment before allowing a renewal while some will allow to renew as soon as the borrowing period is over. This varies from one lender to another.

Shopping for the Right HELOC Plan

Getting a HELOC comes with obligations and certain limitations. You will want to make sure that you’ve considered various lenders/providers to see which plans will fit your needs and ability to pay. Different plans have different features as well as interest rates. A low interest rate may apply for the first few months, so you better watch out for possible financial traps that you might overlook. You should also consider accompanying fees, needed paperwork, and upfront charges before choosing a provider. It won’t hurt to consult with mortgage professionals to explore other ways of tapping your home equity, such as getting a second mortgage instead of a HELOC.

Getting a HELOC is an important decision that you shouldn’t make blindly. If you have questions about getting a HELOC or how to leverage your home equity, do not hesitate to contact us at Mortgage Central. We’d be happy to help!

4 Fast Tricks to Build Home Equity

Building your home equity is one way to build wealth. After all, your home equity can be used as an emergency fund or even as funding for your next home. But how easy or how challenging is it to build home equity? What can you do to make sure that you gain equity the fastest ways?

Home equity grows over a period of time as you continue to pay your mortgage. It also grows when home prices in your area goes up as it is defined as the difference between what amount you owe and your home’s market value. For the fastest ways to build home equity, take a look at the tricks below.

Start With a Large Downpayment

Although paying the least amount for the required downpayment when buying property is tempting (more so if you have great credit), it will be in your best interest to go for the biggest downpayment that you can afford. A large downpayment means that you own a larger portion of your home’s value from the start, therefore letting you start home ownership with a substantial equity.

Pay More Toward The Amount You Owe

Paying more towards your principal will help you pay your home loan a lot faster. Do you know that just paying an extra month of mortgage payment per year can shave off 7 to 8 years of payments from your payment schedule. Paying off your home quicker means building equity at a faster rate.

If you’re not sure whether you’ll be able to afford paying an extra month a year, then start with paying a little over your required payment per month. The idea is really to just pay more towards your principal to cut your loan quicker. You’d be surprised at what an extra $100 and above per month can do.

Go for a 15-Year Mortgage Loan Instead of a 30-Year One

It is a common misconception that choosing a shorter-term mortgage loan means having to pay twice the monthly payment required for say, a 30-year loan. Once everything has been computed, you’d be glad to know that choosing a 15-year loan over a 30-year one can mean paying just a few hundred dollars more per month.

Although coming up with a few hundred dollars more per month may seem like a huge adjustment, the point here is to consider asking for computations based on shorter term loans. You might just be able to afford it and also allow yourself to build your home equity faster.

Choose Home Improvement Projects Wisely

Anything that can boost the market value of your home is a way to build home equity. This means that any renovations and additional features or upgrades you do will increase both the value of your home and your home equity.

The key here is to invest in home improvement projects that won’t empty your bank account yet give you huge returns. Examples are upgrading kitchen appliances (that can drastically increase your home’s value) or even just investing in some new turf for your front lawn (which adds a few thousand dollars to your home’s market value) for landscaping.

Now that you know how to build your home equity, it will also be great to know about how to use home equity to benefit you financially. Learn about second mortgages and the benefits of home equity loans by talking to us. Contact us if you would like to discuss more tips about using your home equity today!

Is It Time to Leverage Your Home Equity?

If your homeowner with equity, you can cash in and start making equity in your home work for you with a home equity loan. After all, you’ve been saving for years, making your payments on time, isn’t it time you started getting something back? This kind of mortgage, also known as a second mortgage, can help you remodel your home, start a business, pay for retirement, or help you buy a new home. Under the current mortgage rules, you can burn up to 80% of your home’s worth; you may not actually borrow this much though! Here were going to talk about equity, how one of our Toronto mortgage brokers can help you, and if this is the right choice for you.

What Is a Home Equity Loan?

After years and years of payments, you’ve started building value in your home, and that’s equity. The less debt you owe on your home, the more equity you have. As Canada mortgage brokers we can help you unleash the power of your home’s hidden equity to get the money you need for your next project.

But before we talk about qualifying for a home equity loan we need to talk about loan-to-value ratios or LtV. No one will ever get 100% loan to value, even with the 720 or above credit score. You’re most likely to get between 60% and 80%, and you’ll only be able to borrow up to 80% of your home’s value – and that’s after they subtract whatever you still own it. This is why you to have as much equity available as possible.

Who Can Qualify for a Home Equity Loan?

If you have equity you can qualify for home equity loan – the trouble is finding the RIGHT but home equity loan. When you work with us as your Toronto mortgage broker you’ll understand what your real options are. We don’t work for the banks, we work for you, so you’ll know what you’re supposed to be getting. Credit, employment history, and payment history all play a role in your eligibility.

Understanding the Risks of Borrowing

Anytime you borrow against your home there will be risks. What we can do as mortgage brokers is mitigate those risks, helping you understand if now is the right time to get a second mortgage on your home. After all, what’s the point going through with it if you’re only going to end up losing your home?

Let Us Help You

Working with us will help you save time, money, sanity, most importantly your home. We’ll help you understand if your lender is on the up and up, you can find a better deal somewhere else, or if maybe you should just wait to borrow against your home. A little time can do a lot of things for your credit, and the better your credit is, the better your mortgage terms will be. Visit our home equity loans page today, and see how much you could save on your next mortgage!

Understanding HELOCs – The Pros and Cons of Home Equity Line of Credit

Understanding what a HELOC is can be simplified, which is what we aimed for in this write up. A HELOC stands for Home Equity Line of Credit, a type of second mortgage that allows homeowners to access as much as 80% of their home equity in the form of revolving credit.

Most people apply for a HELOC for funding home repairs or home renovations so that they can further increase the value of their home. This is a smart move as long as you’re sure that you have the capacity to pay because failure to do so can result to you losing your home.

How Does A HELOC Work?

The easiest way to remember how a HELOC works is to think of it as a credit card backed by your home’s equity. With a HELOC, you will be given a spending/borrowing limit and you can borrow against it as often as needed, repay, and borrow again. This means that a HELOC can give you flexibility and freedom in ways that other home loans cannot.

A key information to remember about HELOCs is that they have variable interest rates. The lender will start with an index rare that can go up and down based on many factors. Factors include your credit profile, local economy, etc.

What a HELOC Means for Your Credit Score

HELOCs are often treated by financial institutions as installment loans rather than revolving lines of credit. This means that borrowing your entire HELOC credit limit can impact your credit score the same way that maxing out your credit card can. This also means that you’ll have a temporarily lower credit score once your HELOC is approved.

Pros and Cons of HELOCs

Even in view of the above, there are still many reasons to get a HELOC. Your HELOC might even be tax-deductible if used in specific ways such as improving your home. Other reasons to get a HELOC include needing a new car, having to fund a wedding, consolidating loans,  and paying for college.

Some people may be better off avoiding a HELOC if having it can make them lose their home. Examples are if you are unemployed or not sure if you can pay as failure to pay can result in you losing your home. For situations like this, looking into other types of loans could be the better option. Other reasons not to get a HELOC are if the fees cannot justify the amount you want to borrow or if you are on a very tight budget as of now and additional expenses will just mean more debt.

Home Equity Loan VS. HELOC, Which is Better?

Whether a Home Equity Loan or a HELOC is better for you depends on a lot of factors. One thing of huge significance that you must look into is how much do you want to borrow and need asap. A Home Equity Loan will give you a lump sum that you must pay in installment whereas a HELOC will allow you to reborrow even though you’re still repaying what you initially borrowed. Both are smart ways to tap home equity but one comes with a fixed interest rate (and fixed loan) while the other comes with variable payments and interest (and can be used like a credit card). Talk to us to discuss which one could be the smarter choice for your financial needs!

Getting a Home Equity Loan or a Line of Credit is bound to come with challenges. This is why it pays to arm yourself with knowledge and contact mortgage professionals with a proven track record to help you with your HELOC application. Contact us today if you have questions!


What You Need to Know About Getting a Home Equity Loan

With the steadily rising home prices at present (more so in key cities), it isn’t far fetched that you’re probably sitting on a huge equity especially if you’ve been paying your mortgage for about 10 years or more. Tapping into your home equity by using a home equity loan can give you a huge advantage in paying off high-interest debts and affording some expenses without having to sell your home.

Do you know that approximately 10 million homeowners will take a home equity loan between 2018 to 2022 as predicted by a TransUnion study? That’s double the numbers from 2013 to 2017! What better time than now to understand how equity loans work and find out what you need to know in order to get one?

Know Your Credit Score

Your credit score is a key factor in determining whether your loan will be approved or not, so finding out your credit score is a must more so if you want to really plan out your options just in case a line of credit or a home equity loan may not come into fruitition.

Find Out How Much Debt Do You Have

The current debt that you have may become a hindrance to your securing a loan. Although a lot of people get a home equity loan for debt consolidation, wanting to do the same may not sit well with some lenders. Lenders lend you money so that they can get interest in return. They know they won’t be getting any if your existing debts are eating up 43% of your income or more.

Determine Your Equity

Your equity will let you know about how much you can tap by getting a home equity loan or a line of credit. Do this after the initial steps above. To simplify, you need to have an estimate of your home’s current value and subtract how much you still owe from that. Reduce the answer to 80% of your numbers and that will be the maximum a lender is probably going to lend you. Plan around that accordingly to avoid surprises and determine if the effort of filing and fees will be worth it.

Why Are You Getting A Loan?

Assess why you are getting a loan and what you can do besides applying for a home equity loan. Find out what are the types of home equity loans and determine which will fit your needs and goals better. Do you need a huge lump sum payable in the next 5 to 15 years? Then a home equity loan is the right option for you. If what you need is extra funds for repeated expenses, a line of credit can help ease your financial burden for about 10 years.

Want to talk with Canadian mortgage experts about ways to use your home equity in the future? Talk to us and we’d be happy to walk you through the various details of applying for a home equity loan as well as the benefits of home equity loans.