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Every facet of your life uses your credit report, from getting a cell phone plan or utility service to applying for a job or getting insurance.

Home loans are no exception. In order to assess your credit history and your credit score, your mortgage lender will examine your credit score and your credit history. Defaulting on previous loans or not paying on time in the past will be a big red flag for your lenders.

In order to qualify for a mortgage, you must have a good credit score given that mortgage lenders lend out hundreds of thousands of dollars to applicants. A credit report calculates your credit score. Your credit report contains information lenders have provided to Equifax Canada and TransUnion Canada, Canada's two main credit reporting agencies.

In addition to your payment history, your credit report will contain information about your credit limit, your credit history, the type of debt you have, any bankruptcy or past-due collections history, and records of when your credit report has been reviewed by lenders.

There are plenty of factors that will impact your credit score so it’s important to understand what those are and what power you have to change things for the better. Consider these tips if you’re looking to improve your credit score:

Make Sure Your Credit History Is Accurate

It is imperative that anyone considering a traditional mortgage review their credit history before assuming that their credit is too bad.

Credit scores measure how well you have utilized past credit in Canada and range between 300 and 900. Over 80 percent of people have at least one mistake on their credit history that affects their credit score. You should take the time to review your credit report and be prepared to contact any creditors you have already paid. Often, these discrepancies can be resolved very quickly once they are reported.

Choosing the Right Lender

Typically, lenders will not approve your mortgage request if you have a credit score below 600. If your credit score needs to be raised, you can either work hard to raise it, or find a lender who will work with you.

Usually known as "B" lenders or "subprime" lenders, they work almost exclusively with people who have less-than-ideal credit, and they can be of great assistance to you. It may be necessary, however, to work with a private lender if you have filed for bankruptcy or consumer proposal within the past two years. A mortgage broker can recommend a private lender that will best suit your needs if this is the case.

Save More Money by Saving a Larger Down Payment

The down payment is almost certainly going to be larger than normal, regardless of whether you work with a subprime lender or a private lender. A large down payment reduces the lender's risk.

There is a possibility that any bank or lender - including a private one - won't consider your mortgage request unless you've saved as much as 20% to 25% of the total purchase price. One of the benefits of a higher down payment is the ability to negotiate better interest rates.

A Higher Than Normal Rate and Extra Fees Are to Be Expected

Private lenders can charge high-interest rates as they manage to mitigate some of the risks associated with providing large amounts of money to people who have low credit scores. It is a fact that you may be able to refinance your mortgage at a much lower rate if you are diligent in paying your mortgage payments on time and improving your credit score.

Even though bad credit mortgages require a large down payment, fees, and a higher-than-usual interest rate, keep in mind that these rates are not permanent. It is possible to rebuild your credit enough to refinance in the future at a lower rate if you make timely payments on your mortgage while you work to improve your credit.

People with bad credit often think there is no chance of them getting a mortgage to purchase their own homes. Luckily, this is not true. Even if you have damaged credit because of bankruptcy or delinquencies, there are several ways to obtain a mortgage.

1. It is important to know how much debt you have to your income. Keep your credit card usage below 30% of your credit limit at all times. Having this reputation gives the impression that you are a responsible borrower and spender.
2. If you apply for too many different types of credit, lenders will consider you to be an unstable borrower, as you might need fast cash.
3. It is important that you have a long credit history if you want to improve your credit score. Getting rid of old credit cards reduces your credit history and shortens your credit history, both of which are bad. You should always keep your oldest account open in case you need it in the future.
4. Pay your credit card debt off as soon as you can and make sure you pay your bills on time (utilities, phones, credit cards, etc.). When in doubt about your ability to pay, do not ignore the bill as that will escalate the situation and further harm your credit score. You should instead discuss a payment plan with your provider.

Having a high credit score decreases your risk to a lender, so you'll be offered lower interest rates, allowing you to save thousands over the loan's life.

You should be aware that the credit report you see will differ from the credit report a lender sees. Even though the differences are often very small, each credit agency calculates a score differently so sometimes there may be credit agencies that consumers don't have access to that can explain small differences in numbers.

You'll be able to make a more informed decision about what to do next when it comes to pursuing a mortgage and buying a home if you know your credit score and what category you fall under.

For more information on applying for private loans in Ontario, call Canadalend at 1-844-586-0713 or contact us here.

In the wake of the COVID-19 pandemic, more homeowners have been renovating their homes to convert rooms to home offices, increase the amount of living space or just make improvements to feel more comfortable indoors and outdoors. According to the latest consumer study, 23% of Canadian homeowners have renovated in the past year and another 21% are planning to do so in the near future.

Reduced spending on going out for dinner, movies, commuting and even clothing, 25% of Canadians find that they have saved money during the pandemic, according to Scotiabank’s November 2020 survey. In spite of these savings, however, Canadians will have to borrow at least part of the cost of their renovations. The question is what is the best option for them?

Here Are Some Common Financing Options for Home Renovations

First, Determine If You Can Afford to Finance the Renovation

As long as you have the ability to repay the debt you incur from a renovation, it's okay to borrow money for it. The key here is to understand how your loan's interest rate and repayment structure will impact your finances. Would you be able to afford the monthly payment on a loan of $30,000 or a line of credit of $50,000, for example?

In the event of a steady income, you may be able to qualify for credit. This does not mean you should apply right away, however. It is probably a bad idea to renovate if you cannot get a secured loan or a line of credit.

A lender's decision to decline your loan is based on your credit history, debt, income, and other factors, including the scope and affordability of the project. You might want to scale back the renovation or wait until you've saved up a greater chunk of the cost.

Home Equity Loans (HELOC)

Generally referred to as a HELOC, a home equity line of credit is a credit line that you can secure by using the equity in your house. A HELOC can be obtained from nearly any bank or credit union, and since the loan is secured by the home, the interest rate is lower than that of an unsecured loan or line of credit.

Borrowers usually can borrow up to 80% of the appraised value of their home minus any mortgage payments they owe. Besides structuring interest payments, the homeowner can move money in and out of the line as desired.

You can use the money for whatever you like once you've been approved. HELOCs are often set up with lenders by homeowners to make credit available immediately in case of an urgent need. A person prone to overspending or who has trouble setting boundaries may find it dangerous to use this type of credit.

The following is an example. Your lender approves a HELOC of $100,000 or more at a great rate and you only need $10,000 to fund a small renovation. Taking a vacation or increasing the scope of your renovation can seem extremely appealing. Payments made back to the credit line make the credit available again, allowing you to borrow again. Making only the minimum payment each month – usually just the interest on what you've already drawn – can result in your debt skyrocketing.

If you use a HELOC to cover planned expenses only, avoid using it to fill budget gaps or make discretionary purchases.

Ask your lender for a limit you can afford if you're concerned about overspending on a HELOC. Getting the maximum amount approved does not obligate you to accept it. If all you need is half of what they're offering, ask them to meet you there.

A HELOC is typically applied for by homeowners through their mortgage lender, but a mortgage broker can help you find a better rate. If you decide to go this route, be sure to ask the mortgage broker if there are any fees associated with their services, as the lender typically pays the broker but not always.

Mortgage Refinancing

The amount of money you borrow to purchase your home increases when you refinance your mortgage.

Your mortgage is then rolled into balance with the new amount. Your mortgage payment covers your loan and line of credit payments, so you don't have to worry about them separately. Many homeowners choose to refinance their mortgages because they offer the lowest possible interest rate since it's a first mortgage backed by equity in their home.

The process of refinancing with your mortgage lender is relatively straightforward, and our experts suggest you do it when your mortgage is up for renewal. Fees may be significant if you refinance during your mortgage term. Despite fees, you may benefit from the new rate if it is significantly lower; ask your lender to crunch the numbers before committing.

If you have a tendency to spend, refinancing your mortgage is a smart idea since it requires less discipline. There will be a lump sum provided to cover the cost of your renovation, and the repayment schedule is fixed. You cannot actually abuse that money, nor can you get extra.

By adding to your mortgage principal, you will owe more, and consequently, your monthly payment will be higher. Even if you borrow more, if you lock in a lower rate when adding to the loan, you could actually end up paying less monthly.

Loans or Lines of Credit That Are Not Secured

Banks, credit unions, and subprime lenders offer unsecured personal loans and lines of credit. Personal loans are lump sums that you repay with interest on a set schedule. As you repay the funds borrowed, you will continually regain the credit limit you originally borrowed, but at a higher interest rate since your home is not secured. Most personal loans and personal lines of credit come with similar rates of interest.

Although this kind of credit can be useful during an emergency, it's not a good option for planned renovations. In addition to the higher interest rates on these options, you will likely have less money available to you, which limits your options.

In certain circumstances, however, a line of credit or an unsecured loan from a reputable lender may be helpful. In some cases, it's better than using a credit card as it's easier to pay it off quickly.

On the other hand, it isn't ideal for most people or inexpensive. HELOCs are usually indexed to the lender's prime rate plus 1%, whereas personal loans may have interest rates between 6% and 16% or more, depending on the lender and terms, as well as your credit history and debt load. Standard credit cards have interest rates of 19% or higher.

What's the point? Although personal loans can be a lifesaver in an emergency, they aren't ideal for most homeowners and should not be used for discretionary purchases.

Borrowing Money from a Family Member

It's common for your parents or other family members to offer to lend you money towards your home renovation, but this is not always the best choice. In the CRA's perspective, the lender's interest rate is supposed to be determined by a formula, but that doesn't happen very often.

Family dynamics can be affected as well, resulting in conflict or tension. When there are a lot of siblings in your family, it is best to avoid borrowing money from your parents. This could lead to awkward situations commonly found when dealing with family estates.

Consider These Other Factors When Borrowing Money for Home Renovations

Renovations can be expensive, but they often increase the value of your home, which is helpful if you're planning to sell soon. You may get a good return on your investment. In addition to improving real estate value, home renovations can also have a positive impact on your quality of life.

For more information about mortgage refinancing in Ontario, call Canadalend at 1-844-586-0713 or contact us here.

What is the power of sale? It’s a default process that puts the lender in control of the sale of the property. A lender is then given the authority to sell the home or property. Powers of sale allow the lender to sell the home, but the homeowner still owns it.

Default occurs when property owners fall behind on their mortgage payments or fail to meet other mortgage terms. Taking possession of a property and selling it is now legally possible for a lender.

Banks and other lenders have offered mortgage deferrals to more than 750,000 Canadians this year. Some of these programs have ended or will end soon, so borrowers must make both deferred payments as well as new ones.

Many homeowners will wind up facing mortgage arrears due to a "mortgage cliff" as predicted by some experts. Some may have to resort to the power of sale.

In Ontario, what does a power of sale look like? Additionally, if you're a homeowner behind on your payments, you may want to know how to stop the sale of your home.

This guide has the solutions you need, as well as advice on avoiding the power of sale situations.

What Is Power of Sale?

In most mortgages, there is a clause called a "power of sale". In the case of nonpayment of the mortgage, the mortgage lender can sell the property.

When a borrower defaults on a loan, lenders commonly recoup the loan amount through a power of sale. Due to the fact that property is valuable and can be sold, it is usually a straightforward way for lenders to collect their money.

How Power of Sale Differs from Foreclosure

The power of sale may sound like another process you've heard of: foreclosure. In some cases, the bank might foreclose on a house when people default on their mortgage.

Power of Sale vs. Foreclosure: How are they different? Do they mean the same thing?

It may seem like they're similar, but they're two different legal processes. A power of sale allows the lender to sell a property under their control. A power of sale also allows the lender to evict the homeowner.

In contrast, foreclosures give the lender legal ownership of the property. Therefore, they become the owner. All debts and liabilities will be assumed, such as property taxes arrears and liens.

In most cases, however, foreclosure results in a sale, since the lender is able to recoup their money. Lenders prefer the power of sale because foreclosure is usually slower and more expensive. Most power of sale transactions is completed in 90 days or less.

How does the Power of Sale Process work?

By using a power of sale clause, a mortgage lender can take possession of a property if a borrower falls behind on their payments.

First, a lender must issue a demand letter when invoking the power of sale clause. It outlines what is needed from you by the lender to return the mortgage to good standing.

Typically, in Ontario, borrowers will receive a "Notice of Sale under Mortgage."

Notice of Sale Under Mortgage: What is it?

Essentially, it's a demand letter for repayment. Mortgage default will be noted in the notice of sale.

As part of the notice, you'll also find:

• Checklist of items to be paid
• The deadline for paying the listed items. Missed mortgage payments, as well as penalties, typically fall under this category.
• After the default is notified, the notice of sale is drawn up 15 days later. Most items need to be paid for within 30 days.
• The redemption period occurs during this timeframe. Here is your chance to prevent the power of sale proceedings from proceeding and bring your mortgage into good standing.

Notice of Claim, Writ of Possession, and Sheriff's Eviction

The lender and their law firm may move to the next step if a homeowner cannot pay off their mortgage arrears and bring their mortgage back into good standing within the redemption period.

Next, the lender's law firm issues a statement of claim, which is the second step in the power of sale process.

In layman's terms, what is a statement of claim? Basically, you file a lawsuit at a local Small Claims Court or Superior Court of Canada. By default, the court asks that the lender be granted possession of the property.

Statements of the claim are legal documents. It also serves as a notice to others with a stake in the property. Your statement of defence must be filed with the court within 20 days of the lender filing a lawsuit.

To stop the power of sale, the lender may demand that the mortgage be repaid in full after the redemption period has expired.

After that, the lender's law firm will also be able to issue the writ of possession. Essentially, they can appoint a sheriff to evict you from your home using this legal document.

Power of Sale: The Last Steps

You will have an eviction notice from a sheriff and a certain time frame to vacate your property after it was served. Once that happens, your property belongs to your lender.

There is no time to waste for homeowners who wish to halt the power of sale process at this point. You have to take action immediately.

In Ontario, How to Stop Power of Sale

Selling on your terms is the best strategy for avoiding the power of sale altogether. If you're worried about paying your mortgage, selling will allow you to do so. You may then want to consider renting a property or finding a manageable property.

A lender can help you if you are at risk of defaulting on your mortgage and selling your home isn't an option.

You should contact your lender as soon as possible if any payments on your mortgage have been missed. A notice of sale is issued after only 15 days of missing a payment.

After the process has begun, your options and time will be more limited.

What to Do After You Receive a Notice of Sale to Stop the Power of Sale

You have a few choices if you've already received a notice of sale under the mortgage. Paying the lender's demands is the first step. In this situation, quick action could prevent the lender from advancing with the sale. As the process develops, legal and administrative fees will accrue.

The fees will be added to the mortgage. In other words, you'll also have to pay them. The best way to avoid these fees adding up and making getting your mortgage back on track more difficult is to stop the power of sale as soon as possible.

Power of Sale: How can you stop it?

Stopping the power of sale may require you to take out a loan. You should have some equity in your property if you've lived in it for several years.

Arrears on your mortgage can be paid with home equity. In such a way, you can avoid the power of sale and restore your mortgage to good standing. Another name for this is a second mortgage for stopping a power of sale.

A personal loan may be available to you if you have a good credit score. Furthermore, you may be able to avoid the power of sale if you have available credit, such as a line of credit or even a credit card.

There may be savings you could use if these options aren't available.

After the Redemption Period, how to stop the Power of Sale?

After the redemption period expires, you may be concerned about losing your house. It is still possible to stop the power of sale.

Your arrears and court costs may be repaid in court. In the event you were unable to come up with the financing before the redemption period ran out, a court case could result in the mortgage being reinstated.

The lender may ask for full repayment at this point, plus any penalties and costs. The solution may be a private mortgage to stop the sale. You can then pay off the existing mortgage and apply for a new one on the property.

If you're having trouble getting a loan, talk to a mortgage broker. If you need assistance finding lenders who can extend the funds for your mortgage and any added costs, they can assist you.

The best way to avoid eviction is to bring your mortgage back into good standing.

You can pay arrears up to the time when the lender enters into an unconditional agreement of purchase and sale with a new buyer. You can, however, stop the sale if that contract contains a redemption clause.

Whenever possible, you should stop the process. It has already been mentioned that the loan servicer and their law firm will charge all fees associated with the power of sale process to the mortgage. It's your responsibility to cover them if you'd like to pay off arrears or pay off your mortgage.

Stopping Power of Sale Through Legal Means

Sometimes, a legal remedy may be available to help you avoid eviction and stop the power of sale.

Until the appropriate time period passes, the lender cannot move forward with the power of sale. Any action they take too soon can be argued to be a hasty one.

A lender could issue a demand letter after 10 days instead of 15 days. Lenders are acting too quickly, starting the power of sale process too soon.

Alternatively, a lender could issue a writ of possession or a statement of claim before the redemption period has ended.

Lenders can be invalidated if they act in haste. Court orders would then be needed to continue.

Homeowners are also entitled to the information. Upon request, you can get a statement of account and information about the power of sale proceedings. During the first 15 days, the lender must respond or the process may be suspended.

Alternatively, if the lender provides incomplete or incorrect information in response to a request for information, then the process can be suspended.

To avoid situations like this, lenders will most often follow the letter of the law. Legal representation is always a good idea so that the process is followed correctly.

In the event of the lender selling your house, what happens?

In the event you can't stop the power of sale, then your house will be sold by the lender. As a result of the sale, your mortgage will be paid off.

Is it possible that the house sells for more than the amount owing on the mortgage? Besides these costs, any remaining proceeds belong to you.

Most of the time, there is not much left over after the power of sale process. This is due to fees being charged back to the mortgage.

To stop a power of sale, it's usually better to find a private mortgage. That way, you avoid additional fees and keep your home.

For more information on applying for a Second Mortgage in Ontario, call Canadalend at 1-844-586-0713 or contact us here.

Through 2022, Toronto's housing market will likely remain in strong seller's territory because of low housing supply and strong demand.

Single-family homes enjoyed the largest year-over-year price increase last year for single-family homes, rising from $1,477,519 in 2020 to $1,710,304 in 2021 (+15.7%). In 2020, townhouses rose from $835,615 to $935,015 (+11.9%); and condos climbed from $673,708 to $709,602 (+5.3%).

A higher level of inventory supply is expected to lead to higher activity in the fall of 2022 in the condo market, which was the most active property type in the fall of 2021. After COVID-19, increasing levels of employment and income will both be key factors in a growing real estate market.

It became clear very early during the pandemic that inter-provincial migration was a trend that would be sustained through 2022. As a result, Toronto's immigration rate will far outweigh its out-migration trend, inflating Toronto housing prices further in 2022.

In 2022, Toronto housing prices are expected to rise by 10 percent on average.

Canada's Housing Market Outlook for 2022

According to RE/MAX's 2022 Canadian Housing Market Outlook Report, the national real estate market is expected to sustain steady growth in 2022, mainly driven by inter-provincial migration.

Brokers and agents participating in RE/MAX surveys contributed to the report. Housing shortages will continue to drive prices higher for some time. Due to these factors, RE/MAX Canada expects Canadian home prices to rise 9.2 percent on average.

In the summer of 2020, the real estate trends began to see more interprovincial relocation, which is expected to continue in 2022 based on feedback from brokers and agents. Less densely populated areas and neighbourhoods are more affordable and often come with more amenities such as space, which makes them appealing to buyers.

It is quite clear that the housing supply has to be expanded in these regions so they are able to retain these attractive qualities and also their relative market equilibrium. There is a high probability that conditions in these regions will worsen if there are not more new homes built and if demand rises.

The real estate market in Canada continues to be robust despite the global pandemic. A survey done for RE/MAX Canada found that 49 percent of participants believe real estate in Canada will continue to be one of the best investment choices in 2022 (59 percent of homeowners compared to 34 percent of non-homeowners, including renters and those looking to buy). The Canadian real estate market is also anticipated to remain stable next year, with 49 percent of respondents believing so.

The following is a detailed breakdown of TRREB's market outlook for 2022:

• The number of sales through the Multiple Listing Service in the GTA is expected to reach 110,000 in 2022, a drop from 2021, but still a strong result when compared to earlier years.
• Altogether, the average selling price for homes is expected to climb to $1,225,000, up approximately 12% from last year.
• It is likely that housing markets in 2022 will continue to be impacted by factors that include labour market conditions and population growth, as well as the prospect of multiple interest rate hikes by the Bank of Canada this year.
• As a result of the limited number of listings, competition among buyers is expected to remain high and prices will rise by double digits.
• The early stages of the pandemic brought on a trend of migration across provinces, something that had been prompted by the new remote work culture and it is still going on. At the same time, there has been a collective desire for bigger living spaces to make home life more comfortable while working remotely and spending much more time at home.
• Like last year, 2022 will be the same - too many buyers, too few homes available.

A few key factors will keep home sales from reaching last year's record pace.

• The increase in borrowing costs in 2022 will have a negative impact on some consumers on the edge of affordability who may temporarily put off their purchases.
• Despite a year of above-average per capita housing sales in 2021, there will be some reversals in 2022 because there is a smaller pool of buyers.
• As a result, there will always be a shortage of inventory in the Greater Toronto Area, meaning that many potential buyers will not be able to purchase a property.

In the TRREB's latest Consumer Survey, Ipsos polled consumers about their buying intentions for 2022 and the results of those polls indicate that overall spending plans are down, while the percentage of consumers who said they are very likely to buy this year remained consistent with what TRREB forecasted.

According to the findings, buyers who are fully committed to buying a home in 2022 will purchase one, whereas buyers on the fence may decide to put their decision on hold.

A Few Highlights:

With prospective buyers, detached houses remain the most popular type of home, especially in suburban areas.

Condos are expected to be hot property in Toronto for the foreseeable future. New listings should creep up between February and March and then from March to April, when you tend to see a higher number of listings. April tends to be your strongest month for new listings. Thus, you see that your strongest month is generally May - just that some of your listings in April turned into sales in May.

The percentage of first-time buyers is likely to decrease overall over the next few years. There will be fewer homeowners in the Greater Toronto Area (GTA), including Toronto and the surrounding suburban areas, who are likely to list their homes for sale in 2022.

Homeowners in Canada are aware of their home's value as well as its potential for investment. There was considerable anxiety this past year regarding local markets due to rising prices and limited supply, causing frustration among those looking to enter the market as well as those looking to move up in it.

Although there may still be obstacles to overcome, it is encouraging to see that the majority of Canadians are confident in the housing market in 2022 in regards to buying Canadian real estate.

For more information on getting a Mortgage in Toronto, call Canadalend at 1-844-586-0713 or contact us here.