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Each time you contribute to paying off your mortgage, the equity in your home continues to add up, meaning you technically own increasingly more of your house over time.

The best way to figure out the amount of equity in your home is to determine your home’s current market value, and then subtract the amount you owe on your mortgage. So, if, for example, you have a home worth $550,000 and have $250,000 remaining on the mortgage, your equity would be $300,000. It is important to grasp how home equity works to understand how to utilize this equity to your advantage.

One of the main ways to benefit from considerable equity in your home is to take out a home equity loan, which is also often referred to as a second mortgage.

With a home equity loan, it is possible to cash out 80% to 85% of the equity you have in your house, thus receiving a lump sum. This is a fixed rate loan that uses your house as collateral, and generally requires that you pay it back over a period of 5, 10, or 15 years.

How to Plan for the Future by Using Your Home Equity Loan as a Retirement Income Source

There are a number of different ways that a home equity loan can be used, such as to consolidate debt, pay for another property or for renovations to an existing property, or pay for your children’s university education.

However, another way to leverage a home equity loan for your benefit is by utilizing it to improve your financial security in retirement. After you retire and your main source of income no longer exists, it is crucial to be fully prepared financially to continue living comfortably without running out of money. One potential way to do that is by accessing the equity in your home through a home equity loan.

Everyone takes a different approach when preparing for retirement. Although consistently putting away money throughout your career to build up your savings and benefit from compound interest will definitely give you an advantage, not everyone can take this approach.

In fact, many people struggle to save any money at all, or they burn through their savings before reaching retirement due to unforeseen expenses. Fortunately for homeowners in such a predicament, this shortfall can be rectified with a home equity loan.

Other Ways to Access Home Equity in Retirement

If you have examined the numbers or have spoken to a financial advisor about your situation, and they have helped you to see that your income after retirement will not be sufficient, then it is a good idea to start looking into ways to access your home equity.

Aside from a home equity loan, there are other approaches you can take to tap into your home equity for retirement. The method that is best suited for you will depend on the specifics of your situation. The following are some of the other potentially viable options that you may have:

A Home Equity Line of Credit

Another way that you can utilize your home equity to stabilize your finances after retiring is by taking out a home equity line of credit (HELOC). This will provide you with a line of credit that you can tap into whenever you need, rather than a lump sum payment.

Most of the time, you can continue to draw from this line of credit for a defined “draw period,” which usually lasts about 10 years. As well, you do not have to pay back any of the money that you borrow until after this period has ended.

Generally, HELOCs are variable rate loans. This means that the interest you will be charged on the portions of the line of credit you use will be determined by the movement of the underlying benchmark index that your lender uses.

Although a HELOC is especially worth considering if you have a big expense or costs that suddenly arise in your retirement (and you want more flexibility), if you have planned expenses in your future, such as a home renovation, it may make more sense to choose a home equity loan.

A Reverse Mortgage

While reverse mortgages received a bad reputation in the past as a carefree or risky way to access cash, the market for this type of loan is different these days. As rules and regulations have been set in place, this has become yet another good method for generating income in retirement.

This loan also involves borrowing money in such a manner that uses your home as collateral. However, rather than making monthly repayments, interest and fees continue to add on every month, and the loan must be repaid when you no longer live in the home.

Since there are many specific requirements and details that pertain to a reverse mortgage, it is a good idea to speak to a financial planner about the particulars of what you must and must not do before taking this route to access your home equity.

How Canadalend Can Help You Secure a Home Equity Loan

If you would like to protect your financial well-being in retirement and you are interested in accessing your home equity in Ontario to make that possible, Canadalend would be happy to help you in this potentially confusing and complicated process.

We understand the importance of having financial security, and we fully grasp the ins and outs of accessing home equity to establish such security. Thus, it is our goal to aid our clients throughout this process in order to provide them with everything they need.

Unlike the big banks, we do not fuss over matters such as your citizenship, credit history, or income level, as all we are focused on is your home value and your outstanding loans.

We can simplify the process of accessing the equity in your home that you deserve to receive so that you can get your finances in promptly and without unnecessary delays.

Our experienced in-house team can provide as much help as needed if you are uncertain about what direction to take in order to tap into your home equity, and will base our guidance on the specifics of your personal circumstances.

We can help you secure a number of different loan types, including a home equity loan, a HELOC, or a reverse mortgage.

For more information about how we can help you access your home equity in Ontario, or to learn more about the various other types of loans that we are equipped to assist you with, call Canadalend at 1-844-586-0713 or contact us here.

Purchasing a home is never a small expense, especially not in Canada these days, as the housing market has recently seen record-high prices for homes in many places.

Therefore, the vast majority of people require a sizable mortgage loan in order to make the purchase of a home feasible. When it comes to such major loans, many people’s immediate instinct is to go to major banks to get this money.

However, there is another possibly more viable option in Ontario that also exists: getting a loan from a private lender. This is also often referred to as a B lender or a subprime mortgage lender.

When a private corporation or individual lends out their own money, they are considered a private lender. This category includes mortgage investment corporations that pool together money from private investors in order to fund syndicated mortgages.

Private lenders are not federally or provincially regulated because they do not accept deposits from the public. Since private mortgage terms are generally shorter and come with higher interest rates and fees than from traditional lenders, they are mostly meant to be a temporary measure to use before transitioning back to typical mortgage lenders.

Who should seek help from a private lender?

While not everyone may require the services of private lenders in Ontario, there are a number of different categories of people for whom these types of lenders can be incredibly helpful.

Traditional lenders can be quite strict when deciding on who to lend to. However, as private lenders are much less strict, their biggest clientele base includes the different groups of people who are most likely to be denied a mortgage loan from a traditional lender.

Therefore, the following are the most common groups of people that are perfect candidates for a loan from a private lender:

1. New immigrants

Unfortunately, many recent immigrants likely do not have enough work experience within the country or a good enough Canadian credit score to be approved for a loan by a traditional lender.

Although not all private lenders will immediately accept mortgage loan applications from new Canadian immigrants, there are exceptions. Indeed, the chances of getting a loan from a private lender under such circumstances is still definitely higher than getting one from a traditional lender.

2. Self-employed individuals and those with irregular incomes

Since most traditional lenders want to see at least two years of employment history in Canada before offering a mortgage loan, if someone is self-employed or their income is irregular or commission-based, they may not be approved for such a loan. Thus, such people may also opt for a loan from a private lender.

3. Individuals with foreign income

These days, with remote work becoming increasingly common, it is more commonplace for Canadians to be employed by foreign companies. However, when it comes time to apply for a mortgage loan, if you only have foreign income, it will be difficult to get approved by a traditional lender, whereas some private lenders may still offer you a loan.

4. Individuals with bad credit scores

Another factor that deters traditional lenders from accepting a mortgage loan application is a bad credit score. However, private lenders may have mortgage loan options available even for those who have sub-par credit scores (below 600). That being said, if your credit score is particularly bad, the mortgage interest rate that you are offered may be especially high.

Important Factors to Consider When Deciding on the Right Private Lender in Ontario

If you have settled on going with a private lender to get your mortgage in Ontario, there are a number of different factors to carefully consider in order to find a lender that is the best fit for you. These factors include the following:

1. Private lender fees

Since private lenders are not subject to any regulations in Canada, they can each set their own fees and lending conditions.

Before you agree to a loan from a private lender, make sure you have a full understanding of their fees, including private lending fees, brokerage fees, legal and appraisal expenses, set-up costs, and administration fees.

Note that you may be able to find certain lenders that charge much lower fees than others. It helps to form a budget ahead of time, as this will guide you in the right direction and help you find a lender that is well-suited to your needs.

2. Interest rates

While the average interest rate you will be offered on a mortgage loan from a private lender will generally be higher than those from traditional lenders, shopping around for a private lender can be beneficial, as some of them offer much better rates than others.

It can be helpful to consider a given lender’s interest rate and fees as two parts of a bigger picture. For example, one lender may offer an 8% interest rate without fees, while another may offer an interest rate of 6%, but by the time all of their fees are added up, this may equate to about 9%.

3. Mortgage conditions

Another matter that is important to ask questions about before signing a mortgage loan agreement with a private lender is the conditions of the loan. For instance, it is necessary to understand exactly what will happen if you miss a mortgage payment.

It is also essential to understand elements of the loan such as prepayment privileges, or penalties and potential costs to get out of the mortgage. Never sign a mortgage loan agreement until you know exactly what you are getting into, and do not be afraid to ask questions ahead of time.

How Canadalend Can Help You Find a Reliable Private Lender

If you are searching for private lenders in Ontario who will work with you to meet your needs as you pursue a private mortgage loan, you can rely on Canadalend to keep your best interests in mind.

We have access to banks, credit units, and other alternative private lenders, and our agents always work hard to ensure you get access to the best, most competitive rates available.

If you ever have any doubts or questions, our agents would also be happy to answer your questions and offer guidance, as they have a thorough understanding of all products, features, and rates.

When you work with Canadalend for mortgage loan approval, you will never have to worry about frustrating delays. Our agents are available seven days a week to ensure that your application stays on track. We genuinely care about your needs and will always go the extra mile to get you the mortgage loan that you are looking for.

For more information on how we can help you find the best private lenders in Ontario, or to learn about the role we will play in the process of getting you a mortgage loan, call Canadalend at 1-844-586-0713 or contact us here.

When you pay for a portion of a property with a mortgage loan, rather than buying it outright, equity is an important matter to consider.

Equity refers to the fair market value of your home minus the remaining amount you still owe on your mortgage. So, it is essentially a measure of the portion of your home you have paid off and what that portion is worth. For instance, if your house is valued at $350,000, and you have $150,000 left to pay on your mortgage, your home equity would be $200,000.

A home equity loan is a type of financing option that basically functions as a second mortgage and involves borrowing against this home equity. In most cases, the total amount you can borrow could be up to 80% of the value of your home minus the current amount you still owe on your first mortgage.

Returning to the above example, if your home is worth $350,000, then 80% of this would be $280,000. Therefore, you could receive a loan of up to $130,000 after subtracting the remaining $150,000 that you owed on your initial mortgage loan.

How is a home equity loan different from a personal loan?

There are some similarities between home equity loans and personal loans. As they both require an approval process in which factors such as your credit score are analyzed, you have to go through banks or credit unions to get approved for either of them. For both types, you must pay them back gradually over a predetermined period.

However, one of the biggest differences between a personal loan and a home equity loan is that while a home equity loan basically involves borrowing from yourself, a personal loan involves borrowing a sum of money from a financial institution.

Thus, a home equity loan is borrowed with significant collateral secured against your home, whereas a personal loan is generally unsecured. For this reason, the interest rates you must pay on a personal loan tend to be much higher than those you pay on a home equity loan.

How to Tell Whether a Home Equity Loan or a Personal Loan Is Better Suited to Your Needs

If you are trying to decide whether a home equity loan or a personal loan is a better option, there are a number of different factors to consider as you make this decision. These include the following:

1. Do you have home equity, and how much of it do you have?

If you do not own a property, obtaining a home equity loan will not be possible since you will have no home equity to offer as collateral. Therefore, a personal loan would be your only option.

However, having your own property does not necessarily guarantee that a home equity loan is right for you either, as this largely depends on how much equity you have in your home.

Most lenders require that you have at least 20% equity in your home to qualify for a home equity loan, but the potential loan amount you could get will depend on your equity amount. So, it is important to figure out ahead of time if this amount will be enough to cover the costs needed for this loan.

2. What do you hope to achieve with the loan?

The type of loan that will be best suited for you also depends on your goal. For instance, if you only need to cover a one-time expense, such as the purchase of a new vehicle, and you know that this cost will be less than $50,000, then a personal loan may work.

On the other hand, if your aim is to pay for several home improvements that will be ongoing for at least a year or so, then a home equity loan may be optimal, as this loan type is better to use when the total dollar amount that you require is uncertain.

3. How is your credit score?

Your credit score is an important factor to consider in this process as well. Thus, it may be worth it to do a soft check on your score before applying for either loan type.

If you have an excellent credit score, your options are more open, as this score may help qualify you for better personal loan interest rates than the average person.

On the flip side, if your credit score is not great, a home equity loan may be the better option. Although this score is a factor that is considered when you apply for such a loan, the fact that the loan is secured against your house means you will likely still be approved.

4. What is more important to you: interest rates or risk?

Since home equity loans are secured, their interest rates tend to be lower than personal loans if you have a good credit score. Paying higher interest rates on a personal loan means that this option will likely be more costly for you over time. However, because this loan type is unsecured, you do not have to worry about the risk of losing any kind of collateral.

On the other hand, if you do not stay on top of your home equity loan repayments, you run the risk of the bank/loaner foreclosing on your house. This may be a risk you would prefer to avoid unless you are certain you will always be able to make your loan repayments on time.

How Canadalend Can Help You Secure a Home Equity Loan

After you have considered all the factors mentioned above, if you are still uncertain of whether to choose a home equity loan or a personal loan, Canadalend has many experts in this domain who would be happy to guide you in the right direction.

Our team of licensed mortgage professionals has a wide range of solutions for all your financial needs. We have the knowledge and expertise needed to explain the subtle differences between these options so that you can fully grasp which one is best suited for you.

We will be there to guide you through these important decision-making processes every step of the way, answering any questions you may have and offering valuable advice when you need it.

For more information about how we can help you secure a home equity loan, or to learn about how we can help you get the best possible interest rate on such a loan, call Canadalend at 1-844-586-0713 or contact us here.

If you already have a property with a mortgage that you got during your initial purchase of this home, it may be possible to get a second mortgage on this property. This type of finance allows you to secure additional credit so you can repay as a second priority to the existing mortgage payments you are making on your home.

If you take out a second mortgage, you will generally be given a lump sum payment that is determined based on the amount of home equity that you have (the amount of your house that you have already paid off), as a lien is taken out against this portion of your home.

Similar to your first mortgage, it will be up to you to pay off this second mortgage with monthly payments over an agreed-upon period of time. Your payments will cover both the return of the loan and the accrued interest.

How can you get a second mortgage?

When securing a second mortgage, a few things are needed before applying. One of the most important factors is that you have a sufficient amount of equity in your home, as the loans will be borrowed against this equity, and it will act as collateral for your second mortgage.

Most lenders will require that your house is officially appraised first to determine the current value of your equity in it. They will allow you to borrow up to 80% of your home equity for a second mortgage, but you may not qualify for such a loan if you have less than 15%-20% equity in your home.

Another important factor that will be assessed when applying for a second mortgage is your credit score. Most lenders have a minimum cutoff of anywhere from 620 to 680. If your score is below these figures, you likely will not qualify for a second mortgage.

In addition, you need to prove that you can repay your second mortgage payments by providing documentation such as proof of your income.

Is it a good idea to use a second mortgage to pay off your debt?

There are a number of different reasons why people are drawn to the idea of applying for a second mortgage. These include their desire to borrow money to make a larger purchase, to do expensive home renovations, or even to purchase a second property.

However, one of the most common reasons people apply for a second mortgage is to pay off their debts. A second mortgage can be used to repay most kinds of unsecured debt, including credit card debt, personal loans, and tax debt.

Although this motivation for second mortgage applications is extremely widespread, some people still question whether it is a good idea or not to pay off their debt.

In reality, receiving a lump sum from a second mortgage can be incredibly useful in particular situations. For instance, when your debt carries an exceptionally high interest rate, using your second mortgage to get rid of this debt could end up saving you a significant amount of money in the long run.

Although the interest rates you will be offered for a second mortgage are generally higher than for a first mortgage, these rates are often still much lower than credit card debt (for example). This means that you will be throwing less money away in interest payments on a monthly basis after paying off your existing unsecured debts.

In addition to saving you money in interest, most second mortgages will also allow you to consolidate your debts. Thus, you can combine them all into one place to make it significantly easier and more convenient to pay them off, as you will not have to worry about juggling multiple bills and payments each month.

What is the main risk of using a second mortgage to pay off debt?

Although taking out a second mortgage on your home has many potential benefits (especially if you use that loan to pay off debts), there are also certain risks of such a loan that must be considered before deciding whether to apply for one.

The biggest danger to keep in mind is that since this loan involves a lien against your property, if you fail to keep up with the second mortgage payments, your house will be at risk of foreclosure.

This is definitely not a situation that you want to find yourself in. This is why lenders typically go through a thorough qualification process to ensure you can afford your payments.

Fortunately, if your finances are in order, you have a steady income, and you stay on top of your first and second mortgage payments, you will never have to worry about facing foreclosure.

How Canadalend Can Help You Secure a Second Mortgage to Pay Off Your Debt

If you are looking to pay off your existing debts, or there is another reason why you feel a second mortgage could be financially beneficial, Canadalend can help you get the loan you are seeking.

We have a wide range of solutions for various second mortgage needs and the capacity to fine-tune our services to specifically meet your financial requirements.

One of our lending specialists would be happy to sit down with you for a free consultation so that you can look over your mortgage options and find the best possible solution for your situation.

We make high-quality customer service our top priority and will go out of our way to do everything we can to satisfy your individual needs throughout this process. Whether you have questions that need answers immediately or simply need some guidance in the right direction, we will be there every step of the way.

We also make the application process for a second mortgage as efficient and streamlined as possible for a smoother experience.

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