A Toronto bad credit debt consolidation loan is definitely something than can be secured, provided that you’re looking in the right place and making sure that you’re putting your best foot forward in the process.
If you truly have bad credit, then there is not likely going to be any, yes any, bank or institutional lender that will be able to help you. And if you’re in any type of a time crunch, its very easy to waste time with a conventional lender before they actually tell you “No” or decline your application.
And many times, individuals seeking debt consolidation will waste an inordinate amount of time trying to locate financing from a source that is not going to provide anything to them.
The main source (and many times only source) of bad credit debt consolidation loans is private mortgage lending sources. Private mortgage lenders take more of a home equity mortgage approach in that their target market is basically those individuals who cannot meet the credit and/or repayment requirements of the bank or institutional lender.
Most private mortgage for the purpose of debt consolidation are provided via a private second mortgage behind an existing bank or institutional residential home mortgage.
But even with private lenders, it can be hard to secure a bad credit debt consolidation loan if the applicant is viewed to not only have bad credit, but can only demonstrate very little if any responsible credit management practices.
Its one thing to have bad credit, but yet another to be making no positive steps to improving your credit.
As an example, a private lender is more likely to provide a mortgage to someone with bad credit that can show that they have been able to keep everything up to date for the last few months and have a plan towards improving their overall credit profile than to someone who has late payments every month and shows no regard whatsoever towards meeting their credit obligations.
Not too many people are prepared to take on a headache account, so even basic improvements to your near term story that leads up to the point where you’re applying for financing can be of benefit.
That being said, there are still private lenders that will take on some of the worst bad credit profiles. These lenders are basically expecting the mortgage to fall behind and are prepared to immediate take foreclosure action to get their money back if required.
In order to increase your chance of getting a Toronto bad credit debt consolidation loan at a reasonable rate, I suggest that you give me a call so I can quickly go through your situation and provide relevant private lending options from the extensive list of private mortgage lenders I work with.
A Toronto Debt consolidation loan will most likely come from refinancing an existing mortgage, securing an additional mortgage, or placing a first mortgage on a piece of unencumbered residential real estate.
Most consumer debt consolidation is done through mortgages due to the fact that consolidation speaks to new higher loan value and in many cases is accompanied by strained credit or repayment.
With higher loan amounts comes a greater demand for security which is where mortgage financing comes in. And with solid repayment and credit, bank or institutional refinancing can be secured for up to 80% of the appraised value of the property through an insured mortgage.
For more challenging credit, lower financing amounts can be secured by what we would call B institutional lenders and if credit or repayment is further limiting, private mortgage financing can be obtained.
Most Toronto debt consolidation loans involving mortgage financing will require a new mortgage to replace the existing mortgage plus other debts you would like to consolidate into the new mortgage. One of the keys to this process is to make sure that you determine, if possible, the best point in time to perform the consolidation in order to minimize any prepayment penalties you may incur to payout the first mortgage.
Its also going to be important to weigh the net cost benefit between redoing a first mortgage or getting a second mortgage and if the second charge position should be a term loan or line of credit.
The best way to make sure you’re taking a debt consolidation approach that is going to benefit you going forward and can be put into place for the least amount of cost is to work with an experienced Toronto mortgage broker or mortgage specialist.
For most bank and institutional mortgage deals, the cost of the broker is paid by the lender, so you get all the value of their service for no cost. If you credit is constrained, you may need to acquire a private mortgage which will likely require the assistance of a mortgage broker to gain access to a relevant private mortgage lender.
If you need a Toronto debt consolidation loan or are looking into different debt consolidation strategies, I suggest you give me a call so I can quickly assess your situation and provide you with relevant Toronto debt consolidation loan options to consider.
In this age of high consumer debt, debt consolidation strategies for Mississauga based properties are not only popular but plentiful.
The basic premise with consolidating debt through mortgage, is to use the existing equity in your home to acquire additional funds that will be utilized to pay down short term, potentially high cost debts that aren’t coming down on their own.
At the present time, with real estate values at or near peak levels and interest rates staying at near historical lows, this is potentially the best time to be undertaking a debt consolidation action.
There are basically two different debt consolidation strategies that can be employed with different variations to each. The first and most common strategy is to refinance your existing mortgage into a new mortgage with a higher approved amount to allow for the pay down of other debts.
The new mortgage can have a longer amortization term than the original mortgage, allowing for a longer repayment terms which will help reduce the monthly payment requirements.
There are many different options and programs to consider in the Mississauga area for debt consolidation through bank and institutional lending sources due to the strength of the overall local real estate market. And even for cases with weaker credit, the area boasts of a number of private mortgage lenders that are able to refinance an existing mortgage if required.
To maximize the amount of borrowing that can be obtained via a bank or institutional mortgage lender, mortgage insurance allows refinancing for the purpose of debt consolidation to go up to as high as 90% of the appraised value of the property. For private mortgages, the max borrowing level is more in the 70% to 85% of appraised value.
The second debt consolidation loan strategy involves placing an additional mortgage behind what you already have registered and owing against the property. Depending once again on the borrower’s credit profile, the additional mortgage can be an amortized payment program or a line of credit.
The rationale typically for securing a second mortgage is to either protect the interest rate of the first mortgage which may be lost through refinancing, or to allow for fast mortgage repayment if the borrower expects their short term financing need to be retired in the short term.
Private second mortgages are very common for debt consolidation, but typically offer only a one or two year term, requiring a future solution to be arranged to pay off the consolidated debt.
If you want to know more about Mississauga Debt Consolidation Strategies, please give me a call so I can quickly go over your requirements and provide relevant debt consolidation options for your consideration.
In the past, I’ve talked about private mortgages, institutional second mortgages, and mortgage refinancing as strategies you can take to secure additional capital for a variety of purposes including personal debt consolidation and business capital injection.
One of the draw backs to all these options is that you’re getting a lump sum of funds that you may not need all at once and the prepayment options can be fairly rigid or non existent for many of these types of mortgage programs.
Especially in the case of small business owners where the flow of money is not necessarily consistent, the need for more flexible sources of capital are required or preferred.
In the current market, many small businesses are experiencing strained credit with suppliers and cut backs in credit from banks and trade accounts. Longer outstanding payables and delays on making loan and credit card payments create a vicious circle that feeds on itself making the situation worse.
Business financing solutions of any type when you get into a strained credit scenario are almost always going to be more expensive than any type of home equity, many cases by more than double the interest rate. So if you’re committed to the business long term, it makes sense to seriously consider debt consolidation and incremental capital procurement options that can come from the equity in your home.
The one form of home mortgage equity financing we haven’t discussed very much is equity lines of credit that are available for those with fair to poor credit and are self employed. These programs can range in interest rate from 9% to 13%, which can be considerably lower than the asset based lender’s offer to finance your equipment from 2% to 3% a month.
These lines of credit tend to be secured by a second mortgage against the property and allow you to increase or decrease your outstanding balance as funds are required or funds become available.
Now there aren’t many of these programs on the market, and they tend to look at self employed applications on a case by case basis when assessing debt servicing ability, so the eligibility rules will vary from scenario to scenario.
But if you’re self employed, and have a bunch of short term debt squeezing the life out of your business, then this could be a great option to stem the ebb and flow of your cash flow.
If you’re self employed and would like to learn more about the different types of mortgage products that would allow you to consolidate business or personal debt, please give me a call and we can go through your situation together.
There is no question in my mind that one of the best ways to escape the clutches of run away consumer debt and save your credit score in the process is by taking advantage of the equity in your home and refinancing your mortgage in order to payout or pay down your consumer debt.
This has long been a solid strategy to consider and undertake and will remain as such into the future. The challenge is that the road to accomplishing this is getting a bit more tangled and some of the benefit it slowly eroding.
On the benefit side, if you have been delaying a debt consolidation action through mortgage refinancing, the longer you delay, for whatever reason, the less interest rate savings you’re going to achieve due to the current trend of long term mortgage interest rates rising.
A one or two percent increase in mortgage rates may not seem like much when you’re consolidating a 19% credit card balance, but keep in mind that the higher rate is going to apply to the existing mortgage balance being paid out by the new mortgage as well as the consolidated funds. When you consider that many mortgage holders will also increase the amortization period on the new mortgage to make their cash flow work, small changes in interest rates can translate into tens of thousands, even hundreds of thousands of additional interest over time, depending on the amount of the new mortgage.
In terms of getting a debt consolidation loan approved and in place, the recent changes in the mortgage insurance rules have not only reduced the amount of the home value that can be refinanced from 95% to 90%, but the overall impact of the changes have made mortgage lenders more cautious overall and the process of getting mortgages approved has become more complex with lenders asking for more information to assess the application which takes more time to complete and doesn’t always result in the rates and terms you may be looking for.
For those with excessive levels of consumer debt that are not getting paid down, it still makes a great deal of sense to consider mortgage refinancing as a solution, but it makes even more sense get the debt consolidation process completed before more rate changes and mortgage rule changes come into play.
This is also one of the many instances where working with a mortgage broker can provide tremendous value working through all the twists and turns in the market right now.
If you’ve been reading the papers or watching the news lately, you may have noticed that the financial experts out there are starting to talk about interest rates going back up.
Many economists feel that the interest rate is lower than it should be, but has stayed at current levels for close to a year to protect the economy from slipping into a deeper recession.
Now that things are starting to turn around, there is a good chance we will start to see interest rate increases before the end of the year.
And while even an increase of one percent doesn’t seem like much, it can make a big difference to your annual interest expense when you’re starting at floating rates close to two percent.
For debt consolidation activities, the goal is to combine various outstanding debt together into a new mortgage which will carry a far lower average interest rate. While this will still be possible to achieve regardless of whether or not rates increase, there is the chance that you’ll be cutting into your cash flow longer term by not consolidating sooner than later.
For example, if a family has a $300,000 debt consolidation mortgage today locked in for 3.5%, the annual interest costs, using simple interest math with no principal repayment would be $10,500.
If the consolidation occurred after a one percentage point increase in the three year rate, the increase itself would equate to a 29% increase in your interest payments, or an additional $3,000 which would work out to $250 a month.
So even though rates are still going to be low no matter how much potential increases may be this year, the result is still going to cost you money.
Debt consolidations can involve large mortgage balances which will produce significant interest costs even with small rate increases as the example shows.
The key point here is to not be putting your consolidation plans off. At the same time, debt consolidation is largely about the number and if you can afford to wait and avoid repayment penalties, you may be further ahead by delaying a bit longer.
Just make sure you redo the math every couple of months, and if the benefit is there, you may want to take advantage of it before it gets eroded by any rate increases, or disappears all together.
If you want to review debt consolidation scenarios with me, please give me a call and we’ll crunch through the math together to see what makes the most sense for your situation.
Let me explain.
While its not all that common of a practice, lenders that grant debt consolidation loans can require the borrower to close all the accounts being paid out, perhaps leaving the individual with no credit cards at all.
If the credit score was already low due to the debt being consolidated, the reduction in all available credit will likely make it even worse. And without any active credit cards of any sort, it will be basically impossible to rebuild your credit score.
This is where utilizing the skills of an experienced mortgage broker can come in handy.
While the lender may come back with the requirements to payout and close off all credit card and line of credit accounts, an experienced mortgage broker has the ability to try (and I do say try) to negotiate keeping a couple of credit cards and one line of credit open. If the broker is successful, then the borrower will have truly received the full benefit from debt consolidation.
The reason why this is even possible is due to relationships mortgage brokers can develop with the credit departments for various mortgage lenders. This provides some what of a platform for the broker to make a case on the borrowers behalf for a reduction in the severity of the payout requirements.
While an individual may try to attempt this on their own, its unlikely they will get very far as credit decisions tend to be very difficult to change.
And when you’re dealing with a mortgage broker that has a focus on debt consolidation, its very likely he or she will be proactively positioning for a positive outcome during their discussions with the mortgage lender prior to a commitment even being issued.
If you’re considering taking advantage of the current mortgage rates to perform some debt consolidation of your own, I would recommend that you give me a call so that we can go over your situation together and develop a plan to get you the best overall results.
When you have a high utilization of credit cards and lines of credit, the credit scoring system utilized by Equifax and Trans Union will reduce your credit score to reflect what they believe to a higher level of credit risk.
If you go through a debt consolidation process whereby your credit card and lines of credit balances are paid down or paid off completely, you will likely see a significant jump up in your credit score over the next 30 to 60 days after consolidation is complete.
The challenge here is that the impact of your unsecured debt on your credit score may impact the types of mortgage refinancing programs you can entertain, ergo the chicken and the egg…. if I refinance, my score will go up, but because my score is too low right now, its going to cost me more to refinance.
But a higher credit score may have other significant benefits to you as well that need to be factored in.
As an example, say you’re a small business owner that utilizes personal credit cards to fund your business. This can be a pretty common occurrence, and in many cases, the only way the business could have started up in the first place.
But over time, as the business grows, the ability to seek business credit will indirectly be impacted by personal credit.
Put another way, almost any type of small business financing takes into consideration both the business credit profile and the personal credit profile. If the personal credit card debt is pulling down the personal credit score, a business owner could be declined for a business loan that has minimum personal credit score requirements.
A personal debt consolidation that removes the balances owing on the short term unsecured debt will allow the credit score to jump up and now potentially allow the business owner to get the additional financing the business is seeking.
The point here is that a good credit score can benefit you in many ways, most of which will result in greater access to capital and lower cost of borrowing. So even if you’ve never missed a payment on anything and have excellent cash management skills for juggling a number of unsecured debt balances, make sure that the overall impact on your credit score will not hamper your ability to secure capital in the future or even to make debt consolidation less beneficial over time.
If you are considering debt consolidation, I would recommend you give me a call so I can quickly assess your options and answer any questions you may have.
With the presence of lower interest rates and the development of insured and uninsured mortgage programs that will allow funds to be used for debt consolidation purposes, consumers are now utilizing their home equity to get their debt under control.
There are a few different mortgage approaches that can be taken when considering debt consolidation. In order to determine which approach is the best for a given situation, the borrower must first determine the time line over which the consolidated debt will be repaid.
Debt for consolidation is typically for built up credit card, term loan, and line of credit balances for unsecured credit facilities. Debt consolidation is considered because the borrower has found that repayment is either not happening fast enough or not at all, and whatever money is put towards the debt is being eaten up by interest payments.
If the intention of the borrower is to repay the “to be consolidated” debt off in say five years or less, then there are a few different mortgage approaches to consider.
First, if it makes sense to refinance the existing mortgage without incurring significant repayment penalties, then this would be a solid option to get the lowest possible interest rate available to the applicant, provided that the related mortgage had fairly generous prepayment privileges written into it to allow for faster repayment of the consolidated debt. Its not uncommon to see mortgages today that allow you to pay down the principal by up to 25% of the outstanding balance each year.
Second, if refinancing does not make sense for whatever reason, then a second mortgage or line of credit could be taken out. For an amortized second mortgage, the amortization period could be set up according to the projected repayment period, which in the example being used was 5 years.
If a secured line of credit was taken out, the line of credit would effectively be open and would allow principal repayment at any time.
And if a borrower’s credit could not support either of the first two options discussed, then a private second mortgage could be considered. Keep in mind, however, that private mortgages are typically for no greater than one year and receive interest only payments during the term for the most part. That being said, there are private mortgage lenders that will allow you to make monthly principal payments and can provide interest terms of two to three years.
So if you’re considering a private mortgage for your debt consolidation strategy, make sure you’re working with a residential mortgage broker who has access to private lending sources that can provide you with the debt repayment flexibility you need.
For help with a debt consolidation scenario, I suggest you give me a call so that I can quickly assess your situation and go over the most relevant options with you.
Home equity is calculated by subtracting the outstanding balances of your existing mortgage(s) registered against your home from the current market value of your home.
With refinancing programs providing as high as 95% lending value against home equity, debt consolidation through mortgage refinancing is not only a viable option to consider, but the best option in most cases.
And if you’ve managed to maintain a solid credit rating despite having an excess of short term debt, the home equity loan options will increase with many programs providing highly competitive interest rates.
Even if your credit has been damaged by your overall debt position, there are still likely going to be options to consider for consolidating debt that are superior to anything else you may come across.
High ratio mortgages will likely require mortgage insurance which will be an added cost to you, but when you compare it to the high interest cost debt you may be getting rid of, the cost is extremely minor.
There are programs that will promote debt reduction through consumer proposals or even bankruptcy, but those strategies will destroy your credit and leave you in a poor borrowing position for years to come.
If you have the means to repay your debts over time, then the most effective strategy available on the market today is debt consolidation through mortgage refinancing.
Sometime home buyers don’t even realize this is an option to them due to the fact that they are not aware of how much their home may have gone up in value since it was purchased. Combine that with the amount the mortgage has been paid down, and the resulting home equity available to secure incremental financing can be significant.
To get the most value out of this approach, its better to consolidate your debt sooner than later due to the fact that your credit is more likely to erode the longer a difficult to manage debt situation exists. And every time your credit is reduced, the more it will be that your refinancing options are going to be more expensive.
While some homeowners are concerned about paying the refinanced debt back over a longer period of time, the reality is that most mortgage programs can allow for lump sum payments during the loan term, still allowing the borrower to retire the debt sooner if that opportunity presents itself.
If you’d like to try and use your home equity for debt consolidation or just want to know more about the process and your options, then I suggest you give me a call and we can work through everything together.
Construction financing for house and home construction loans are the most common form of construction finance in Ontario. With the large numbers of new houses that get built each year, it only stands to reason that there would be considerably more construction mortgages for residential construction than for anything else.
The actual borrowers for home construction projects can range from the builder, the new home buyer, and existing property owners.
The builder can purchase residential lots and acquire a construction loan against their equity in the property. A builder construction mortgage is really no different from other types of construction loans, other than, based on a previous track record, a builder may be able to acquire high leverage ratios and better terms from lender they are giving repeat business to.
A builder may secure construction financing on speculation of selling the house in the future as well or after a buyer contract has been secured whereby a prospective home owner enters into a contract to purchase the house at the completion of construction. The buyer down payment and purchase contract can provide the builder with additional leverage for securing construction loans with more optimal terms.
New home buyers can also acquire a home building mortgage.
In this scenario, while there is likely going to be a third party builder involved, the ownership of the actual property and the responsibility of securing and managing the construction financing capital is that of the home buyer.
This may perhaps be the most risky form of a home building loan in that the new home owner has to either do the construction project management themselves or pay someone else to do it.
In most cases, the new home purchasers will fill this role in order to minimize costs.
Project management can be very challenging for any type of construction and even more so for individuals who likely have never done it before. So its always a good idea for these types of borrowers to have a contingency allowance available for costs that are missed or unexpected as well as a detailed construction budget and construction timeline.
The third type of borrower is one who owns a house and is looking to expand or renovate and requires a house construction loan to fund the project. The scope of these types of projects don’t tend to be as large as the first two scenarios (although they can be) so the related project management and construction loan requirements are also likely to be less extensive as well.
For home renovation loans, the dollar amount may be low enough for the financing to be done via an existing home line of credit eliminating the need for a new construction loan to be put in place.
Depending on your lending profile and the specifics of your construction project, there may be several home construction loan options to consider.
These options can range from low cost institutional lending sources to slightly more closely and potentially higher leverage private lenders.
Because there can be several construction loan sources to choose from, its important that you spend you time only considering the most relevant sources so that you can get your project started on time and have comfort in knowing you’re going to be dealing with a lender that is easy to work with.
To get the best construction mortgage advise as to how to approach lenders, how to secure Ontario home construction loans, and manage the overall cash flow of the project, I would recommend that you give me a call and I’ll quickly assess your situation for free and provide you with relevant options for you to consider.