4 Sep

How To Consolidate Debt With Equity In Your Home

Debt Consolidation

Posted by: Vaughn Leroux

Having extreme amounts of debt is something a lot of Canadians are facing today. Reviewing your finances and talking with an Edmonton mortgage broker can help you figure out what the best way is to go about paying off your high-interest debt.

So, to provide some guidance, Vaughn Leroux with Dominion Lending Centres, has explained how you can consolidate your debt with the equity in your home.

What Is Equity?

If you are a current homeowner, chances are you have started to accumulate some equity in your home over time. Equity is the difference between your home’s appraised value and the balance you owe on your Edmonton mortgage. Therefore, the more payments you make towards your loan, the more equity you will have.

Another way you can build home equity is with time. Most homes appreciate in value, which means they become more valuable over a period of time. Thus, the longer you are in your home, the more equity you could have.

How Equity Can Help Consolidate Debt

If you have at least 20% of the equity in your home, you could obtain a second mortgage. This is where you take out another mortgage on your house, in addition to your primary mortgage.  With a second mortgage, you borrow against the value of your home that you owe, which would be your equity. So, the more equity you have, the more money you could borrow.

You could then use this money to pay off high-interest loans, such as credit card loans. Edmonton mortgage rates are significantly lower than the interest on credit cards, so if you obtain a second mortgage, you could have your loans consolidated into your second mortgage and have cheaper payments. That way you only have to worry about making payments every month for your first and second mortgage.

Second Mortgage Requirements

To qualify for a second mortgage, you need to be sure and have at least 10% equity in your home. You will not be able to qualify for a second mortgage if you owe too much money on your first mortgage. So, if this is the case for you, pay off your loan more before you begin the application process. Also, be sure and have a good credit score and a sufficient amount of savings.

Contact Us

For more information on how to consolidate your debt by using the equity in your home or to begin your Edmonton mortgage application, please contact Vaughn Leroux at 780-431-5600.

14 May

New Canadian Mortgage Rules

Edmonton Mortgage Broker

Posted by: Vaughn Leroux

 

Congratulations on making the decision to buy a home. Before you get started, you should be informed of the new Canadian mortgage rules. As of January 2018, these new rules have been enacted, which could affect your finances. To help you get a better idea of how the new rules affect Edmonton mortgage rates, Vaughn Leroux at Dominion Lending Centres has described the recent changes below.

Stress Test

The new Canadian mortgage rules include a mandatory stress test for all new and existing homeowners. The purpose is to see if you can financially handle a rise in interest rates without accruing more debt and stretching your finances too far.

Mortgage debt is a major issue throughout Canada and could greatly affect the entire financial system. To prevent and system-wide problems,  the government decided to implement a stress test to reduce the amount of mortgage debt homeowners are carrying and to help cool down the residential market.

Showing you can make payments with an increased rate will be determined in one of two ways:

  • Using the Bank of Canada five-year benchmark qualifying rate of -5.34% or
  • Using the mortgage rate you are offered by your lender plus an additional 2%

Who is Affected?

Anyone who is looking for a mortgage is affected; this includes those who already have a first mortgage and would like to change banks when their loan period is up. Even if you pay 20% or more towards your down payment, you still are required to take the stress test.  However, you are not affected by these new rules if you wish to renew or refinance your Edmonton mortgage with your original lender.

Financially, the new stress test has been affecting Canadians affordability by as much as 15%. We recommend getting a pre-approved mortgage to determine your options.

Contact Us

For more information on the new Canadian mortgage rules, or to see if the stress test affects your finances, please contact your local Edmonton mortgage broker at 780-431-5600.