Whether you’re looking to purchase your first home, a second home/vacation property, buy an investment property, or you’re moving up the real estate ladder, having a mortgage expert working with you is a must. To have a competitive offer in this day and age, you have to be fully prepared with your financing before you’re even placing an offer. I do all the work upfront such as reviewing your credit, gathering and reviewing all of your income documentation and down payment documentation, so you know you’re shopping in the right price range. There’s a lot more to buying a home than most people are aware, and being prepared is the key to success.
If you own a home, the chances are you’ve seen some significant gains in equity (the value of your home, minus any debts owed) even if only in a short time frame. Do you want to access some of that equity to renovate your home? Do you have enough equity to buy a second home or investment property? Should you break your current mortgage to take advantage of lower market rates, and does it make sense even with paying a penalty to break your current mortgage? Do you want a lower monthly payment on your mortgage? If any of these answers are yes, then refinancing your current mortgage may be something to consider.
If you own a home with sufficient equity in it and are also carrying additional debts such as credit cards, lines of credit, high interest car loans, etc. you may want to consider consolidating those into your mortgage. If monthly cash flow is a concern, eliminating multiple payments with high interest rates into one lower monthly payment may be beneficial to you. You may be surprised about the amount you can save.
A home equity line of credit, or HELOC is a re-advanceable line of credit secured against your home. As it is secured by your home it comes with a more preferential interest rate than an unsecured line of credit you may be able to access at your regular financial institution. HELOCs are useful if you want to access equity in your home, but not necessarily immediately as you only pay interest on the funds when you draw on them. An example here would be if you wanted to do some renovations to your home in the future and didn’t want to be paying interest on the funds until you’re ready.
HELOCs can also be used for:
HELOCs are typically “fully open” so you can repay the whole balance at any time without penalty. As they are a line of credit, you can also elect to make an “interest only” payment each month.
Not all lenders provide HELOCs; some will do a mortgage and HELOC combination, some a standalone HELOC, and others will allow a second position HELOC behind the mortgage of another financial institutions mortgage.
Just because you received a renewal offer from your current lender, that doesn’t mean you can’t get a better deal elsewhere. Most Canadians will just sign this renewal assuming it is the best rate there is, however this if often not the case. You may not have the time to put the legwork into shopping your mortgage rate, but a quick conversation with me and I can let you know if you’re getting a great deal or not. When your mortgage is up for renewal, you can also leave that lender without incurring a penalty, and a new financial institution will happily cover the cost to bring you to them. As there’s no penalty, it may also be the time to think about whether refinancing, debt consolidation or a HELOC may be appropriate for you based on your future goals.
The Canadian government heavily regulates mortgages, and as such, not everyone falls within the qualification range for a traditional mortgage. A private mortgage may be required if your credit score is on the lower end, or if you are trying to finance a property outside of traditional income qualification guidelines. Private mortgages have higher interest rates and additional fees attached to them, but come with little documentation requirements. I consider a private mortgage a last resort, and will always explore every other option before arriving here.