Planning to Turn Your Basement into an Apartment or Income Suite? Read This!

Plenty of people are converting their basements into an apartment or income suite to be a source of extra income to help pay for mortgage and many other things. Other people simply have too much space and don’t want to waste an income opportunity. However, before you pool your resources and start construction or renovation, keep in mind that there are so many things to consider before transforming your basement into a basement apartment.

Questions You Must Ask Yourself

  • Do you really need to do this?
  • Do you know where to get funds to push through with this project?
  • Will converting your basement into an apartment be legal?
  • Will your plan for the basement apartment comply with the retrofit guidelines from the fire code?

If the answers to the questions above are all favourable, then you are on your way to having a basement apartment that can increase the overall value of your home and give you extra income. Note that doing anything illegal such as failing to comply with local fire codes and zoning laws mean that you will have to pay thousands of dollars in fine once reported to authorities such as your Town’s Building or Fire Department.

Things to Check

In the event that you will be buying a home with basement apartment that needs fixing, keep in mind that just because it is there does not necessarily mean that it is legal. You will have to check with your local Fire Department or with the city municipal standards department to find out if your baseline apartment is registered as a second unit. If this isn’t the case, then you will have to research how to secure a permit for it to be legal and comply with the fire code.

Also note that your area may or may not permit the building or conversion of a basement apartment. An example would be that basement apartments that were rented out prior to the 31st of October 1995 are considered legal although the local zoning code does not permit it.

Toronto Basement Apartment Considerations

In 2000, the City of Toronto has permitted having second suites on all semi-detached and detached homes in the city as long as they meet the following conditions:

  • The house and any additions should be at minimum 5 years old
  • The second suite must have its own bathroom and kitchen, a self-contained unit
  • The second suite cannot have a floor area that is larger than the rest of the house
  • The home with the second suite on most cases, must have a minimum of two parking spaces
  • Existing second suites should comply with the property standards, zoning standards and Fire Code in Ontario

All homes that do not meet the above must apply to the City for permission and note that other areas such as Vaughan, Mississauga, and Brampton, still do not permit second suites unless built or rented prior to November 1, 1995.

The four basic requirements of the Fire Code must also be upheld as well. They are as follows:

  • The main home and the second suite must have adequate fire separation
  • The basement apartment must have its own separate fire exit
  • Smoke alarms must be installed
  • The Electrical Safety Authority must conduct an electrical inspection to ensure that all occupants of the home and basement apartment will have access to sufficient electricity

More technicalities have to be observed but the above are the main requirements.

Should you still wish to build a basement apartment and need extra cash to fund such a renovation, or need some funds to ensure an existing suite is made legally compliant, a second mortgage or a home equity loan would surely help. Contact us to know more!

Everything You Need for Mortgage Refinancing Checklist

So we’ve talked about mortgage refinancing, but here we’re going to go over a quick checklist you’ll need when you come speak with one of our Toronto mortgage brokers. If there are any special documents you need aside from these we’ll let you know – but this list will about cover it. While a few things won’t apply to you, it’s important to read over the whole list! Don’t skip it! Read it right now! Before it’s gone forever – well no not really, but you get the point.

  • Photo or Picture ID – You need a way of proving that you are you. It’s better that the bank is paranoid about proving that you’re you and not some identity thief intent on stealing all of your equity with you none of the wiser. Passports, driver’s licenses, ID cards, anything generally issued by the government will help you establish your identity to a prospective lender.
  • Proof of Income – What do you do for a living? Self employed? Using your business to prove that you’ve got some kind of income rolling in? Paystubs? All of these things will help show that you have an income to pay your mortgage.
  • Bank Statements (Private and Business) – You’ll need bank statements for the last 3 to 6 months (farther back the better) to show that you have money in your account.
  • Divorce or Marriage Documents – Are you receiving alimony, child support from a divorce? You’ll need to bring in your divorce decree. Have you married since your mortgage started and you need to show that you have another income in your household that you want considered as your own? Bring your marriage documents with you.
  • Mortgage Documents – The loan origination document is VERY handy to have. You’ll also want to bring in statements (the most recent is best) from the current mortgage lender to show that you’re current with your payments. Don’t leave home without these if you have them, especially the most recent statement.
  • Tax Forms for 2 Years Prior – Showing proof of your income with your taxes is the best way to go about it. If you want your business income to be considered also bring tax returns for your business too.
  • Utility Bill – Most lenders are going to want proof that THIS is your home. A utility bill usually suffices to prove that this isn’t another mortgage refinancing on a rental property.

There are other things you might need to bring – but you’ll find these out when you schedule an appointment with one of our Canada mortgage brokers. Remember that each lender will be different and their criteria can range widely! Some won’t care if you’re refinancing a rental property or that you don’t have a utility bill. Others won’t care if you bring in information to prove that you and your partner live together. It all ranges wildly from one lender to the next, but when you work with us you’ll find out what you need to know.

Learn more about our great rates for mortgage refinancing here!

Open Up the Tap on Your Equity with a Home Equity Loan

You’ve been making timely payments all these years, isn’t it time your home started to give a little back? With the right mortgage broker (us!) and a home equity loan you can get all the money you need to consolidate your debts, send your kids to university or even start a business. With any kind of equity loan the devil is in the details and you don’t want to try and negotiate this one your own. Let’s explore how they work and why you would want one.

What is Equity?

If you don’t know, equity is how much you have invested in your home. If your mortgage(s) are completely paid off you have 100% equity. If you’re still paying off half your house you have 50% equity. You can figure out how much equity you have in your home by subtracting the remaining debt from the most recently appraised value of the home. This way you’ll be able to know exactly how much of a home equity loan you can take out.

Don’t Take Out a Large Home Equity Loan

Just because you’re approved for a big amount doesn’t mean you should actually borrow that much! You’ll want to work with one of our Toronto mortgage brokers; we understand the market, the tricks lenders pull and we’ll work hard to help you get the best equity loan possible. Every situation is different, don’t take a cookie cutter mortgage that just isn’t in your best interest. Also be careful about what the terms are before you sign on that dotted line.

Plan Ahead

When it comes to home equity loans you need to have a plan for the future. Why are you borrowing this money? Will you get some kind of return on it? Are you going to be able to pay it back? How much will you need to pay each month to pay back your home equity loan? If you don’t know the answers to these questions one of our Canada mortgage brokers can help. We have a lot of experience when it comes to home equity loans and we’ll be able to show you how to get the right loan.

Your Equity is Important

Each time you make a mortgage payment you’re socking away money for the future – that future is now. Why should you get robbed of your equity because you didn’t know any better? We’ll work with you to help you understand your rights and obligations as a borrower and to really understand what you’re signing. From finding the right mortgage lender to signing we’ll be there with you for every step of the way.

You’ve worked hard for your home and you shouldn’t have to lose it. Working with us as your Toronto mortgage broker will help you not only get the money you need now but keep your home in your future for years to come. Don’t get a bad deal, get the right deal!

Discover our home equity loans today!

How to Manage Home Equity Lines of Credit

Right now you can get excellent LtVs (Loan to Value ratios) on home equity lines of credit, but is it right for you? Here we’re going to go over everything you need to know about HELOCs and the differences between these and home equity loans. Always do extensive research before brokering equity in your home – speak with one of our Toronto mortgage brokers and see if this is the right choice for you.

What is a Home Equity Line of Credit?

Before we get started, let’s talk about what a HELOC is and isn’t. Every month you paid your mortgage bill you accrue equity in your home – this is like money in the bank that you can borrow against later when you need it. Unlike a home equity loan you won’t borrow a HELOC in one big lump sum. It’s more like a credit card that you use over time when you need to. Some will be structured to have a minimum rotating balance, some will only last for 2 years. The devil is in the detail and it’s important to get the terms just right and that’s why you need a Canadian mortgage broker.

What Can You do With a Home Equity Line of Credit?

You can do anything you want, but it’s important to manage it wisely. You’re effectively gambling with your future and you’ll want to put the money into something that will net you a good return. Education, improvements in your home to bring it up to the same level as other homes in the neighbourhood, and other things that will bring you a return. A vacation to Tahiti might sound nice, but you’ll want to use the equity in your home sparingly on frivolous purchases like these.

What Shouldn’t You Do with a Home Equity Loan?

Any Toronto mortgage broker will tell you to be careful with home improvements. IT’s easy to get carried away with luxury improvements to bring up the value, but there is no category for “super luxury”. Importing Brazilian hardwoods for your entryway and Swarovski chandeliers in a neighbourhood that nets homes around $100,000 isn’t really going to help! You’ll want to bring the home up to the same condition as other homes around you with a few touches that get people excited and interested. Your home is your greatest investment, don’t throw it away!

Home equity lines of credit can be tricky to negotiate, so don’t go it alone! Speak with one of our Canada mortgage brokers today and see what we can do for you. The line of credit may have compounding interest that can rack up pretty fast and if you end up with a predatory lender you could easily get upside down on your home – don’t let this happen to you. We’ll help you through the process step by step and help you understand your rights and responsibilities as a borrower so you know what you’re getting into before you sign on the dotted line.

Learn more about our home equity lines of credit here!

Why Private Mortgages Work

We’ve talked a lot here about how private mortgages work, but it’s time to start talking about WHY they work. Like always you’ll want to speak with one of our Canada mortgage brokers to make sure that this is the best route for you. While they are different, they’re virtually identical to every other sort of mortgage – you’re just dealing with a private lender instead of a bank or government organisation. Like mentioned earlier, everyone is different and you should do your research and talk to use first.

30 Year Mortgages are Out

With the last major changes made to the mortgage rules last year, 30 year mortgages are out. The max amortization rate for any kind of mortgage, including private mortgages, is now 25 years. While this will raise your payments a little you’ll be able to avoid a debt bubble. Any Canada mortgage broker can tell you that the longer your mortgage runs the more time you’ll have for something to go horribly wrong.

Private Mortgages Have Less Default Risk

Private mortgages year after year have been shown to have a much lower risk of default than other kinds of mortgages. Why is that though? Is there some dark magic at play or just better terms? Like all loans you’ll have to be careful about who you work with and what your mortgage terms are. When you work with us as your Toronto mortgage broker we’ll be able to work through your contract and understand if you’re getting a good deal or not. It’s only a lower default risk if you’re getting a deal that’s right for you.

Lower Interest Rates are the Norm

Most borrowers will see their interest rates drop a few percent when they pick a private lender, but some can see even larger jumps. It really depends on where you’re starting at – if you’re a higher credit risk or have a history of bad credit you could run into trouble. That’s exactly why you will want to work with us as your mortgage broker; no one should have to pay more than they have to and we’ll go over every aspect to help you make the most of your terms. Don’t get stuck with a bad deal when you can get the one that’s right for you.

Better Repayment Terms

Private mortgages feature better repayment terms. Most borrowers will see fewer punitive terms like early repayment penalties and late payment penalties with some interest forgiveness thrown into the mix. But everyone is different and each lender is going to offer you as a borrower a different kind of deal. That’s why it’s so important that you don’t do it on your own.

When looking for the right mortgage you need the right help. We’ll be able to help pair you with a lender that not only offers you a good deal now but a good deal later. We’ll make sure that you don’t just get a good teaser rate – you’ll get a mortgage you can live with. Visit our private mortgage page to learn more!

Your Mortgage Refinancing Checklist

So we’ve talked about mortgage refinancing, but here we’re going to go over a quick checklist you’ll need when you come speak with one of our Toronto mortgage brokers. If there are any special documents you need aside from these we’ll let you know – but this list will about cover it. While a few things won’t apply to you, it’s important to read over the whole list! Don’t skip it! Read it right now! Before it’s gone forever – well no not really, but you get the point.

  • Photo or Picture ID – You need a way of proving that you are you. It’s better that the bank is paranoid about proving that you’re you and not some identity thief intent on stealing all of your equity with you none of the wiser. Passports, driver’s licenses, ID cards, anything generally issued by the government will help you establish your identity to a prospective lender.
  • Proof of Income – What do you do for a living? Self employed? Using your business to prove that you’ve got some kind of income rolling in? Paystubs? All of these things will help show that you have an income to pay your mortgage.
  • Bank Statements (Private and Business) – You’ll need bank statements for the last 3 to 6 months (farther back the better) to show that you have money in your account.
  • Divorce or Marriage Documents – Are you receiving alimony, child support from a divorce? You’ll need to bring in your divorce decree. Have you married since your mortgage started and you need to show that you have another income in your household that you want considered as your own? Bring your marriage documents with you.
  • Mortgage Documents – The loan origination document is VERY handy to have. You’ll also want to bring in statements (the most recent is best) from the current mortgage lender to show that you’re current with your payments. Don’t leave home without these if you have them, especially the most recent statement.
  • Tax Forms for 2 Years Prior – Showing proof of your income with your taxes is the best way to go about it. If you want your business income to be considered also bring tax returns for your business too.
  • Utility Bill – Most lenders are going to want proof that THIS is your home. A utility bill usually suffices to prove that this isn’t another mortgage refinancing on a rental property.

There are other things you might need to bring – but you’ll find these out when you schedule an appointment with one of our Canada mortgage brokers. Remember that each lender will be different and their criteria can range widely! Some won’t care if you’re refinancing a rental property or that you don’t have a utility bill. Others won’t care if you bring in information to prove that you and your partner live together. It all ranges wildly from one lender to the next, but when you work with us you’ll find out what you need to know.

Learn more about our great rates for mortgage refinancing here!

Is Mortgage Refinancing Right for You?

Let’s face it, we all want to pay off our mortgage as soon as possible but sometimes you need a little help. Maybe you’ve gotten behind on your payments, maybe your interest rates are spiraling out of control – either way you need to know that you’re taking control of your mortgage, not the other way around. With interest rates now at the lowest they’ve been for years and soon to rise, now is the time to take advantage and get the deal that works out best for you.

The Good:

Sometimes mortgage refinancing comes with some great perks like:

Easy Access to Credit Means Cheap Money

When interest rates are this low, lenders are willing to work with just about anyone. Even if you have bad credit when you work with one of our Canada mortgage brokers you’ll get the help you need to find a mortgage that works for you. But while interest rates are low now, they aren’t going to stay this low forever!

Better Options than When You Started

When you first took out your mortgage you probably didn’t have the best credit – after years of timely payments you’re going to have a better track record that lenders will be interested in. All that hard work is finally going to pay off with better options for mortgage refinancing. Say bye bye to being a financial wallflower and hello to an option you can finally live with.

You Have More Leverage Now

You have something else you didn’t have when you started: equity. With equity in your home you’ll be able to secure a much better deal this time around. While you may have to give up a little equity to get a better interest rate, but for most it’s a great trade-off.

If you’re not sure what kind of equity situation you have, talk with one of our brokers.

The Bad:

Not everyone is going to benefit from mortgage refinancing.

Fees Can Cost You Big

Closing a refinance can be just as costly as getting a new mortgage – don’t do it just to save a point or two! You should be getting a seriously great deal on mortgage refinancing before you pay fees. Talk with one of our Canada mortgage brokers to find out if you’re getting the best rate for you.

Not Everyone Can Qualify

It’s important to understand that not everyone can qualify for a mortgage refinance their first time out – depending on your credit, how much equity you have and how much more time you’re willing to put into a mortgage will give you an idea if this is really the right way for you to go.

You’ll Extend the Life of Your Mortgage

If you’re trying to pay off your mortgage early, you might be hit with expensive pre-payment penalties and a few years of extra payments. Extending the life of your mortgage may not always be a great thing, especially if you want greater mobility (aka the ability to move out and move on).

Sometimes it’s a great fit, sometimes it’s not. Talk to one of our Canada mortgage brokers today or visit our mortgage refinancing page here to see if mortgage refinancing is really the right choice for you.

How Do Home Equity Loans Work?

Home equity loan or second mortgage allows you to treat the equity you have in your home for money. The sounds pretty straightforward, but it really is. You’ll be able to borrow up to 80% of their homes equity – but we don’t recommend doing that. Working with one of our Canada mortgage brokers we’ll help you understand your options, and here were going to explain both the benefits and disadvantages of this kind. From understanding the difference between fixed-rate mortgages and home equity lines of credit, you’ll learn the ins and outs of home equity loans work.

What is equity?

You’re going to first need to figure out how much equity you hold in your home. If you just got a first mortgage and only paid a 20% down payment, you only have 20% equity in your home (minus any interest from the first mortgage you took out).

You’re going to want to wait awhile before you start looking into a home equity loan if you’re in this boat. If you’d like to figure out how much equity you have, take the most recently appraised value of your home and subtract how much you owe your lenders or any liens on your house – et voila, you’ll know how much equity you have in your home.

What kinds of the home equity loans are there?

There are two main kinds of home equity loans that you can take out on your home. These fixed rate home equity loans, also known as second mortgages, and a home equity line of credit or HELOC. Each of these has its benefits and drawbacks, so you’ll want to be careful about which one you take out on your own home. One of our Canada mortgage brokers can help you find out which one is best for you.

What is a fixed-rate loan?

A fixed rate loan, or second mortgage, allows you to keep the same interest rate and terms over the life of your loan. These are the most desirable for borrowers because you don’t have to worry about your interest rate floating up and down with the prime – a big concern with HELOCs and variable rate mortgages. You’ll get this in one big lump sum that you use to pay off bills or complete a project.

What is a home equity line of credit?

A home equity line of credit is a kind of home equity loan that allows you to borrow against the interest on your home like a credit card; you can pay it off and borrow again as many times as you need over the life of your loan. This means you can open the line of credit and never use it until you need it – unlike a fixed rate loan or second mortgage.

Always borrow carefully

Before you borrow, speak to one of our Toronto mortgage brokers. We’ll be able to help you figure out if this is the right way for you to go.

Different Ways to Tap Into Your Home Equity

As a homeowner, you can put your home equity to much use. Converting this equity to cash is quite easy if you are aware of your options. Here’s a look at three common financing solutions that put your home equity to good use.

Home equity loan (HEL): Working pretty much like a traditional loan, a home equity loanprovides you a lump-sum payment at a fixed rate of interest. The borrowed amount plus interest must be paid over the loan term in the form of fixed periodic payments.

A home equity line of credit more is a credit line you can get against the equity built up in your home. There is a guaranteed amount of cash available to you; you can draw from this ‘money bank’ whenever there is such a requirement. The interest is paid on the actual borrowed amount, and the rate is variable over the loan term.

You can re-borrow the money that you just paid back, using checks or cards. A majority of home equity credit lines come with a variable rate, though you can also consider negotiating a fixed rate.

Cash out refinancing: Here, you take out a new mortgage of a higher value than the amount you owe on your current mortgage, and use the cash to pay off your existing mortgage. The difference is used as a home equity loan. The interest rate on such a financing solution is generally, but not always lower than that on a home equity loan.

Also, visit our home equity line of credit page today to learn more!

5 Reasons a Second Mortgage May be Right for You

Not sure where to get some much-needed funds or if you should go for a loan? If you’ve got home equity, then a second mortgage should not be a problem for you!

What is Second Mortgage?

Second mortgage is any other mortgage you make while you are still paying off your first mortgage. Usually, a second mortgage is backed up by a real estate property such as your home because it requires you to have something that has equity to borrow against. The equity can be from your home’s appreciation, your principal mortgage down, or from a large initial down payment you’ve made when buying property. By going for a second mortgage, you can refinance up to 85% of your property’s value!

So now that we know what a second mortgage is, let’s talk about the reasons why you’ll probably have to go for a second mortgage.

Buying Another Property

Buying a rental property is a wise investment because the rent from such can go into paying for the property itself, thereby earning you some profits once the property is fully paid off. The clincher is you often have to chalk up about 20% of the property’s value for your down payment – that’s where a second mortgage can come handy.

Investing

They say that it takes money to make money – so it goes without saying that to start a business or invest into something, you’ll need to first come up with a considerable amount of cash. You can use a second mortgage to start a business or beef up your portfolio. Just be sure to invest on something that will be worth your while.

Paying Off Debt

Debt that is left unattended can swell to unmanageable amounts because of high interest rates. Because second mortgages these days often have a low interest rate, it would be wise to use one to get rid of debts that have a high interest rate. You can also pay off several loans at once, leaving you with just a second mortgage to manage.

Renovating Property

Home renovations can get very expensive and getting loans for home renovations is often tricky. By going for a second mortgage, you can use your home equity to get what needs to be done, done!

Paying for School

Going for higher education can be very expensive. If you’ve got home equity, you can use that to get a second mortgage and go back to school or send your kid to school. Higher education also means better jobs and making more, so this is truly a wise way to use a second mortgage for!

Ready to get a second mortgage? Then be sure to contact a trusted mortgage broker! Our team of Toronto mortgage brokers can help you through all the steps to obtain a second mortgage fast and easy. Simply fill in your details via our online mortgage application form for fast approval and immediate assistance. Contact us and we’ll immediately get back to you answer your mortgage questions and to assist you with your needs.