Mortgage Arrears and Foreclosures

Mortgage arrears is increasingly becoming a problem for more homeowners these days. No matter how much one’s finances are planned, it is not uncommon to fall behind on payments during months of financial difficulty. Most people do not realize how important it is to make sure that they should prioritize paying their monthly mortgages. It seems it is easy for a lot to forget that failing to pay one’s mortgage on time can result in mortgage arrears and foreclosures depending on the terms in one’s mortgage.

What to Do if You Missed Some Mortgage Payments

The first thing you should do when you realize that you’ve missed some mortgage payments is to contact your lender right away. Ideally, you should do this prior to missing any payment at all. Be sure to be as open and honest as possible with your lender so that your lender can offer a solution or a compromise that can work well with both of you. Make sure that you honour any new payment agreement with your lender and cooperate as best as you can.

Note that failing to pay your mortgage or not following through with a new payment scheme can mean hearing the word “foreclosure” from your lender. Lenders will typically avoid foreclosure because it is a lengthy and headache-inducing process. However, also note that lending companies cannot afford to let people simply not pay their mortgages. To recuperate their losses, they are within their legal rights to foreclose a home with mortgage arrears.

What is Foreclosure?

By definition, foreclosure is a legal action taken by a lender against a mortgage borrower who failed to make payments beyond the terms agreed upon by both parties. Because the home is the collateral for a mortgage loan, the lender is legally allowed to repossess a home and sell it to recover any loses from the money that the is owed.

Foreclosure can happen after a homeowner failed to make several mortgage payments. It doesn’t happen after a single missed payment. Foreclosure happens as a result of mortgage arrears, which means missing payments for a few months in a row and not cooperating with the lender in terms of payment. The process is lengthy and will mean receiving a few demand letters at first, typically at the 30 days, 60 days, and 90 days mark of missing a payment. Mortgage arrears will kick in after 90 days of non-payment. The foreclosure process will then soon follow.

The foreclosure process can vary between provinces in Canada. It is best to take initiative and address any mortgage arrears as soon as possible to avoid foreclosure. Once a property has been in mortgage arrears for more than a certain length of time, the lender can either go through a judicial sale or a power of sale for them to be able to recover their loses.

Save Your Home

The best way to save your home in case of mortgage arrears is to contact the lender or find a way to make payments as soon as possible. We may be able to offer some mortgage arrears solutions for you at Mortgage Central Canada. Contact us and we’ll discuss what we can do for you based on your situation.

 

How To Get A Homeowner’s Loan

A lot of homeowners these days are finding out that they can use their home equity to apply for a homeowner’s loan. It can sound quite simple at first glance but getting a homeowner’s loan can have some confusing steps that can cost you both time and money if you make some mistakes at any point of the process. In this article, we will tell you about the things to consider about how to get a homeowner’s loan.

Take A Look At Your Credit Report

Your credit report will tell lenders how good you are at staying on top of your financial obligations. This can make lenders either want to lend to you or avoid lending to you. Generally speaking, the bigger the institution that you are trying to borrow from, the more they will care about what is in your credit report.

Checking your credit report can alert you to wrong entries that may be dragging your score down. A few bills that were recorded as having delayed payment can have a huge impact on your report so correcting this can bring your score back up to lender-friendly levels.

Assess Your Options

Do not forget to do your research. When you are properly informed, you can avoid stressing yourself over small details that may not have an impact on the borrowing process. What you need to look into are mortgage rates, loan requirements, lender track record, and more. Make sure to consider your future financial standing when trying to assess which homeowner loan options and lenders will work for you. Things can look good now, but the situation can quickly change with just a couple of missed paychecks. Pick the borrowing option that will give you some elbow room in case you find yourself in a financial pickle. The last thing you want is to place yourself in an even bigger financial predicament.

Get A Mortgage Broker

It is not a weakness to recognize when you are possibly biting off more than you can chew. Finding a lender with good interest rates and who will be interested to lend to you can be a big challenge. By hiring a mortgage broker or using mortgage broker services, you will be availing yourself of access to a directory of trusted lenders whose terms are compatible with your financial situation and means. Because a broker will take charge of matching you with the right lender, you will save a lot on both money and time. Just take for instance getting a homeowner’s loan with Homebase Mortgages. If your requirements are already prepared, their mortgage broker services can get you a homeowner’s loan approval in as fast as a single day! Since they have an established relationship with lenders across Canada, you can be sure that the lenders are honest and will not take advantage of you. You may even find yourself having to pick from several offers of homeowner’s loans instead of scouring for a meeting to get a bank to lend to you. This will even out the playing field and ensure that the lender that you pick will have payment terms that are favourable for you.

Home Equity Borrowing Is More Popular Than Ever in Canada

More Canadians are using their home equity now for financial relief and it is not just because some people are struggling due to the COVID-19 pandemic. Quite a number of people are using their home equity to buy second homes and to fund investments while taking advantage of favourable terms that are available these days.

Why Borrow with Home Equity?

Using one’s home equity to borrow money come in many forms. As a homeowner, you can tap your home equity with the use of a HELOC, a second mortgage, a mortgage refinance, and a reverse mortgage. These options for home equity borrowing allow Canadians to withdraw money temporarily from the accumulated value that they built in their property without having to sell their property.  For example, a reverse mortgage gives borrowers a lump sum that they do not have to repay but just gets deducted when they sell their home. There is also a home equity loan that grants borrowers a certain lump sum that has to be paid in monthly installments. A HELOC gives borrowers access to a line of credit that can be reused until the date specified in the payment terms. And lastly, borrowers can choose to refinance their mortgage which can give them access to some extra cash if they applied for it at a favourable time.

Borrowing from one’s home equity gives the homeowner access to cash that they otherwise won’t have in a way that doesn’t overly burden them financially. Although borrowing with home equity comes with fees, requirements, interest, and more, this way of accessing cash is friendlier to the pocket than borrowing with unsecured loans or using other means such as maxing out one’s credit cards.

Borrowing with Home Equity Now

According to the latest industry data, lenders saw an increase of 14% to 200% when it comes to the various forms of borrowing using home equity between November 2019 and November 2020. The same industry experts report that they see this trend continuing this year because the low-interest rates for 2021 make conditions favourable for borrowers.

The demographics are changing a lot too. Using home equity for cash is no longer seen as mostly for seniors who are struggling. Borrowers these days tend to be homeowners who are doing great with their finances and are simply looking for ways to grow their wealth and make their money work for them better with the help of smarter financial planning.

With the above said, know that home equity borrowing is not new. This is a financial norm that has been growing stronger for the past 50 years as its own industry. People are more open now to using their home equity to give them more elbow room when it comes to financial decisions. It should be mentioned as well that with recent increases in property values in almost all of Canada, homeowners are simply wanting to enjoy the fruits of their wise investing decisions in the past. When used wisely, tapping one’s home equity can make some people more financially stable and in some cases, grow even wealthier!

Are you looking for ways to gather funds for your business projects or perhaps you are looking for more spending freedom? Contact us and we will be happy to discuss how using your home equity can do that for you!

 

Buying A Second Property? This is How You Fund It with Your Home Equity!

Do you know that one of the most popular reasons that Canadians tap into their home equity is to use the extra cash to buy a second property? Although having a second home may sound excessive to some, having a second home can mean a lot of things to different people.

Why Buy A Second Home?

Some people buy a second home to have a place to unwind in, such as a cottage or a summer home. Some people purchase a second property as an investment or a source of income such as in the case of rental properties. With the recent changes in the housing market and how difficult it may be for young couples to buy property, some parents buy a second property to give to their children, taking advantage of their long-established financial record to avail of better deals in the real estate market. With interest rates now at record-breaking lows, 2021 truly sounds like a great time to buy a second property and even better when you can do so with the help of your home equity!

Financing A Second Property with Home Equity

Unlocking your home equity is one of the best-kept secrets that homeowners have when it comes to buying a second property. Whereas some people may feel that they need to have hundreds of thousands in savings in order to put a deposit for a house, or some people think that they need to sell their current home to finance another one, the fact is that you can tap your home equity with a home equity loan and you’ll be able to turn your hard-earned asset into cash without having to let go of your current home.

There are several ways that you can unlock the equity in your home. You can choose to refinance your mortgage, apply for a HELOC, or opt for a home equity loan or a second mortgage. All of these choices will do a great job in unlocking your home equity, but they differ in how they can help you achieve your financial goals plus how they relate to your current financial situation. Each option got terms, conditions, fees, and other requirements that you may or may not qualify for. Some will put a lot of consideration on your credit score and income sources while some will basically only look at your home equity.

With the above said, lenders are much more lenient when the borrower is applying for a secured loan and much more so when the collateral is one’s home. They know that lending to people who are willing to put their home on the line have significantly lower risks than lending to other borrowers when it comes to non-payment or defaulting. More so, lenders know that someone who will use the cash to buy another home is likely someone who plans ahead when it comes to finances and thus, is also more likely to be approved fast.

Are you interested to use your home equity to purchase a second property? You can apply for a second mortgage, a HELOC, or get a mortgage refinance with our assistance. Contact us to avail of our 24-hour evaluation!

 

Is it Time to Use Your Home Equity?

World economy has taken a hit due to the months-long lockdowns and quarantines that a lot of nations had to place themselves under of. Even countries with stronger economies like the United States and Canada are not exempt from the financially crippling effects of the COVID-19 pandemic. The best way to bounce back is for households to have more purchasing power to in turn, jumpstart the economy; but that is something that is easier said than done. A lot of people have lost their jobs and sources of income, how then can they recover quicker?

Is it Time to Use Your Home Equity?

The good news is that the majority of people own their homes in North America. Owning a home means that the homeowner is sitting on a sleeping mound of financial asset in the form of home equity. When tapped, home equity can be a good source of emergency funds for households.

Unfortunately for Canada, more restrictions were placed on mortgage recently to address the housing boom as well as to control property prices. This means that it may not be as easy for many to liquidate their home equity into spendable wealth. There are also a lot of requirements, fees, and mandates that can hinder those with lower credit scores and no current income to qualify for ways to access home equity. A way to adapt to the looming economic crisis is to create easier qualifications that can allow the creation of more new home equity loans as well as approve more applications for refinancing mortgage.

Why Tap Your Home Equity?

It is estimated that the combined value of residential properties in the United States is at nearly $30 trillion. With this in mind, it won’t be a far out thought to estimate that Canadian home equity is also worth trillions of dollars. Given this data, hundreds of billions of dollars can easily be injected into the economy in the next few weeks if a small fraction of homeowners choose to borrow from their home equity at this time. Hundreds of billions of dollars can boost economic activity and keep everything running until businesses have had a chance to recover.

How About the Regulations?

There is talk that if the concerned agencies create a carve-out, it would be easier for lenders to have less strict requirements. It could be something that the Canadian government may look into in the following weeks to make it possible for lenders to approve more mortgage refinancing applications as well as have more slots for home equity loans.

Is it Smart to Get a HELOC or to Refinance Your Mortgage Now?

A $10,000 HELOC at 4% interest would mean having to pay only $33 per month in interest. Paying this is a cheap price to pay to enjoy extra funds and to have a means to get back on one’s feet. If regulations are relaxed, not only can more people avail of a HELOC, but more people will also be able to qualify for mortgage refinancing.

Are you a homeowner who’s open to try to apply for a HELOC or a mortgage refinance with a private lender? Contact us at Mortgage Central Canada today and let us walk you through your options.

 

Borrow Money In 2021 By Using Your Home Equity!

Do you know that one of the easiest ways to borrow money if you are a homeowner is to use your home equity? Yes, this is true! This is because homeowners who were able to build a significant amount of home equity are perceived by lenders as more trustworthy and financially stable. More so, being a homeowner means that you can use your home equity as collateral for a loan.

Building Home Equity

If you have been paying a mortgage for quite some time, you have probably built up a sizable amount of home equity. The more you pay towards your mortgage, the faster and bigger you make your home equity. Another way of building your home equity is by improving your home through small projects that increase the home’s market value.

Estimating Home Equity

As a rule of thumb, an easy way to estimate home equity is by subtracting all home liabilities or debts from the professionally assessed current market value of the property. If the property was assessed to be worth $900,000 and debts on the property amount to $150,000, then it can be safe to say that the home equity is around $750,000 give or take a few thousand. The bigger your home equity is, the more attractive you become to lenders. Remember that lenders want borrowers who are most likely to be able to repay loans.

Borrow Money In 2021 By Using Your Home Equity

Once you have established that you have enough home equity to use as leverage for borrowing money, you can use that to apply for a home equity loan. With a home equity loan, you can get a new car, consolidate your debt, pay for needed or wanted home renovation projects, fund your child’s education, invest more into your business, choose to get a second home, and more. Basically, you can use home equity for anything that would require a significant amount of cash that you cannot cover by savings alone.

You can choose to access your home equity in a number of ways with various types of home equity loans such as a second mortgage or a HELOC.

Applying for a second mortgage will give you access to a lump sum that you will have to pay over a fixed length of time with a predetermined monthly rate. This can give you the most predictability although this option can be difficult to manage if you end up having financial difficulties later on as you still have to pay your fixed monthly payments. The beauty of this is that there is so much you can do with a lump sum of cash including things that can help you gain financial freedom in the future.

Applying for a HELOC is a popular option for a home equity loan because it is friendlier on the wallet. It can be easier to manage too for those who have recurring expenses such as expensive treatments or tuition because instead of a lump sum, it gives you a line of credit from which you can withdraw as little or as much as you want. A HELOC only charges you interest for the money that you take out at any given time so if you end up not withdrawing too much, then you don’t have to pay much either.

Know that each option for a home equity loan has pros and cons that need to be weighed carefully. Contact us if you need professional assistance to borrow money using your home equity.

 

8 Things You Must Know About Second Mortgages in Canada

Second mortgages are nothing new to most Canadian homeowners; however, not everyone has an equal understanding of what a second mortgage really is and how it can benefit them. For starters, a second mortgage is a secured loan with the security being the home equity. It is a type of home loan that allows homeowners to tap into their home equity.

Second Mortgages Come in Different Forms

Do you know that there are different types of second mortgages? As a loan product, a second mortgage can be accessed as a lump sum in the form of a home equity loan, or as a revolving line of credit in the form of a HELOC.

Second Mortgages Common Uses

Most Canadians get a second mortgage to help them consolidate debt. By using a second mortgage to pay off high-interest debts, they save on interest as well as make payments easier to manage for themselves. Another common use for a second mortgage is to finance home upgrades or home renovations. By doing this, a homeowner can significantly increase the value of his or her home and effectively make the debt pay for itself.

Your Home is On the Line if You Apply for a Second Mortgage

Because this type of loan products uses your home equity as collateral to the lender, the lender is entitled to take the collateral in the event that you fail on your obligation to pay. If you are sure that you can pay, though, this loan product offers significantly lower interest than unsecured loans.

There are Flexible Payment Options

Do you know that some types of second mortgages allow you to make interest-only payments? This gives you more room to maneuver with your finances such as when you use the second mortgage to pay for renovations to increase your home’s value, pay only the interest, and pay the loan after you sold your home for a much higher price.

Your Home Equity Can Be Used for Lots of Things!

Need money for an investment opportunity? Use your home equity! Have expensive tuition? Pay that with your home equity! These are just a few of the ways that you can leverage your home equity to make your life easier.

You Can Borrow A Lot or a Little

The amount that you can borrow is based on the equity you have on your home. If you’ve built huge home equity and need a lump sum, then get a home equity loan. If you need recurring smaller amounts for a period of time, then a HELOC is for you. These loans allow you to borrow 60-85% of your home equity depending on other factors.

Borrowing Isn’t Free

Because borrowing from your home equity requires paperwork and other processes, there are fees that you have to pay. The fees can vary from lender to lender so it is best to ask around before you make a decision. Don’t forget to ask about early payment fees as well.

Interest Rates Vary Too

Depending on the type of second mortgage you go for, the interest payments can vary by as much as thousands of dollars because of the difference in interest rates. If you can talk to a mortgage broker who is connected with a lot of lenders, you stand a better chance of getting the best interest rate.

Are you interested to apply for a second mortgage? Make sure that you understand what second mortgages are and how they can help you! Contact us to discuss your options for tapping your home equity!

What is The Best Way to Consolidate Debt for 2021?

Debt is one of the most challenging things to manage for a lot of people, more so during the pandemic. It is not just because it can be easy to have too many debts such as mortgages, loans, and credit cards, but a lot of people have seen their incomes dwindle if not totally evaporate this time. If you are one of the many who is struggling with paying bills these days, you might be wondering about the best way to consolidate debt for 2021. Find out below!

How to Consolidate Debt?

There are many ways to consolidate debt but the best choice depends on the existing cumulative debt balance as well as the type of debts that you have. The most common type of debt that Canadians struggle with is credit card debt. Because credit card debt has a high interest, it follows that the smart way to consolidate them is to seek a lower-interest option that can save you thousands of dollars in interest fees in the long run.

Why Consolidate Debt?

The number one reason for wanting to consolidate debt is to be debt-free. It helps you manage your finances and not forget to pay because instead of multiple bills, debt consolidation will transform them into one bill. With a lower interest rate, you will end up paying more towards the amount you truly owe versus paying for just the interest. With a single bill, you will also be likely able to pay on time and avoid late fees. It is all about saving money while repaying debt.

What You Need to Know About Consolidating Debt

Most people think that debt consolidation is simply taking all other existing debts and putting them in one loan. It is not as simple as that because most loans are difficult to qualify for and have high interests as well. To successfully consolidate debt, you need to make it benefit you in the long term. One way of doing that if you own your home is to get a home equity loan. A home equity loan has a pocket-friendly interest because the loan is guaranteed by the equity you have in your home, making it less risky for the lenders. If a loan has less risk for lenders, it follows that they charge lower interest.

Why Get A Home Equity Loan?

With a home equity loan, you will be able to access the value that you built up in your home without having to sell your property. It is one way of making your money work for you and making your life easier. Since it has a lower interest than other loan types, you will be able to pay off sooner and be debt-free faster.

A home equity loan can be used for other purposes aside from consolidating debt. Any extra from a home equity loan can be used for investment, paying for tuition, getting a home renovation, or funding home repairs. If you use a home equity loan wisely, it can give you a lot of elbow room to fix your finances. Contact us if you want to apply for a home equity loan to consolidate debt.

Is 2021 The Time for Debt Consolidation Using Your Home Equity in Ontario?

A lot of people are feeling the extra pressure as they face increasing bills during the pandemic. Is now the time to consider debt consolidation if you own a home in Ontario?

Do you know that the average household in Ontario owes around $124,700 to $157,700? Considering that the national average is just $114,400, it is clear that the average Ontarian has more financial responsibilities regarding debt. The good news is that applying for a debt consolidation loan is quite commonplace in Ontario especially for those who own a home.

What Is A Debt Consolidation Loan?

A debt consolidation loan is a loan that allows you to pay off multiple loans at once by using the funds from the loan. It combines multiple bills into a single monthly payment which is quite helpful for people who experienced a recent job loss, have unexpected expenses, have excessive credit card spending, or have too many credit cards to pay off. By getting a debt consolidation loan, financial obligations and multiple debts can be made easier to handle.

Debt Consolidation Benefits

Aside from making it easier for you to pay off multiple bills and debts, debt consolidation can improve your credit score. It is no secret that missing several monthly payments can drastically hurt your credit score. By being able to pay on time easier, your credit score can improve through consistent repayments. Once you have a better credit score, you may qualify for a lower interest rate for future loans. A small reduction in interest rate can easily translate to thousands of dollars in savings for big purchases. This will enable you to enjoy faster repayments and thus, make it more attainable for you to become debt-free. Above all, debt consolidation can bring you peace of mind with fewer bills to pay and seeing your finances improve little by little.

What Types of Debt Qualifies for Debt Consolidation?

Most lenders in Ontario have a limit to the type of debts that can be consolidated. Unsecured loans such as unpaid utility bills, credit card bills, and payday loans are usually qualified. Mortgages and car loans might be qualified under some lenders too, so be sure to inquire first.

Borrow Against Your Home Equity for Debt Consolidation

If you have a bad credit score, qualifying for a personal loan for consolidating debt might be challenging for you. The good news is that if you’re a homeowner in Ontario, you can use your home equity to access a big sum of cash to pay off your other loans. It works like a secured debt which means that the interest rate is friendlier to the wallet and the terms are slightly easier to qualify for. More so, getting a home equity loan for debt consolidation can allow you to benefit from the rising value of your property without having to sell your home. It’s a win!

Contact us as soon as possible if you need assistance with applying for a home equity loan for debt consolidation in Ontario. Our offices are open to serve you virtually as well.

 

How to Use Home Equity to Unlock Tax Deductions

Do you know that there is a way for the CRA or Canada Revenue Agency to allow something that would be akin to letting taxpayers deduct mortgage interest from their taxes just like what our American neighbours have down south?

How?

By using the Smith Maneuver, a way to deduct from taxes created by retired financial strategist Fraser Smith from Victoria, BC two decades ago. The Smith Maneuver goes around the fact that although mortgage interest is not tax deductible in Canada, loans on investment are.

How to Use the Smith Maneuver

By making use of the Smith Maneuver, a Canadian who has some substantial non-registered investments can use the funds from the investments to purchase a residence or pay off an existing mortgage. Now, you have to note that depending on your mortgage and whether it is closed or open, paying it off before the end of term may warrant prepayment penalties. You have to keep this in mind to assess whether using the Smith Maneuver would truly benefit you.

Let’s say that the numbers are in your favour. A few days after using the Smith Maneuver, you will be able to use your property as collateral when applying for a separate loan for investing purposes. Also keep in mind that a substitute of collateral may later be agreed to between you and the lender if you decide to move houses while this is ongoing. Once this is done, you can then reinvest funds from your loan into qualified, non-registered investments and deduct the interest on the investment loan from your taxes. Be sure to stay away from RRSPs and TFSAs as those are categorized as registered investments!

How the Smith Maneuver Can Benefit You

Strategizing using the Smith Maneuver allows you to use your home equity to invest and grow your assets over time because it lets you deduct from your taxes as you continue to grow your investments. It is making your money work for you and not the other way around while still keeping everything legal. Yes, this deduction is legal and permitted by the CRA though it would be best to ensure that you still keep a record of all tax deductions just so you have complete documentation in the event that your deductions are questioned.

When Would the Smith Maneuver May Not Work for You

The Smith Maneuver isn’t the answer everyone is hoping for. In the case of Canadians who take out mortgage loans to buy rental property, the high interest rates associated (because lenders usually add a premium to homes that are not occupied by the legal owners) may not make the maneuver worth it at all. It is therefore helpful to compare mortgage interest rates and really do your research to ensure that you won’t be at the losing end.

Just to add, under CRA rules, if you’re someone who does at least half of your work from home (in your home office), you may be able to deduct some or your home office’s cost from your taxes although note that this does not allow deductions of your actual mortgage. This is still a win, right?

Do you want to know more about how some loans can help you out? Contact the mortgage experts at Mortgage Central Nationwide or apply for your own home equity loan in minutes today!