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Borrowing to Invest
Loans for Investment
In today’s record-low interest rate environment, getting a mortgage loan for investment may be an advantageous financial strategy. Unlocking your home’s equity to invest can help diversify your portfolio and grow your wealth. A mortgage loan for investment lets you leverage current market conditions to accelerate financial freedom.
Square Capital offers innovative mortgage solutions working with banks and private lenders to provide borrowers with fast 24-hour mortgage funding options (subject to terms and conditions).
Mortgage Solutions in Toronto, GTA, and across Ontario
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Loans for Investment
Interest rates have never been lower, and property values have continued an upward trend. With the Bank of Canada* announcement maintaining lower rates for the near future, loans to investment might be the right strategy. As always, assessing this strategy should be considered.
Advantages of Mortgage Loans for Investment
- Low interest rates – With ultra-low interest rates, borrowers have more opportunity to benefit from anticipated higher returns on investments.
- Tax-deductible – In Canada there are tax-friendly benefits when you get a loan for investment.
- Accelerates wealth accumulation – Homeowners who may not have access to capital can take advantage of home equity and start investing today.
- Portfolio diversification – Enables borrowers to have their eggs in more than one basket.
Disadvantages of Mortgage Loans for Investment
- Heightens losses – Since the money is borrowed, it may add extra risk if you are unable to make repayments for the loan for investment.
- Reduces access to home equity – As a mortgage loan for investment leverages your home’s equity, borrowers will not have access to remaining equity until the mortgage loan is paid down.
Factors to Consider
There are many factors to consider when deciding if loans for investment mortgage will work as part of your overall financial strategy. These factors include, but are not limited to;
- Type of investment
- Risk tolerance of investment vehicle
- Time horizon
- Home Equity
- Tax implications
There are several types of mortgage products borrowers can choose for loans to investment:
- Mortgage Refinance: The lowest rate option is a mortgage refinance. Homeowners can tap into their home’s equity and quickly have access to cash for investment. As home equity increases in Toronto and cities across Ontario, along with low interest rates, homeowners may want to consider this option.
- Home Equity Line of Credit – The home equity line of credit or HELOC enables access to the home’s equity, just in a different way. Instead of a single (or lump sum) payment, a HELOC provides on-going access to certain amount of money, similar to a credit card, but with a much lower rate. The amount of the HELOC depends on the value of the home.
The benefit of a line of credit is that payments are interest only payments and homeowners can access it when needed. Downsides include variable interest rates and access to the total amount of the HELOC, that could lead to more unwanted mortgage debt. That being said, there are opportunities to lock in rates to protect monthly mortgage payments. -
Second Mortgage – An alternative option for homeowners to access their home’s value to obtain a loan for investment, without paying penalties. While interest rates for second mortgages tend to be higher, it may be a viable option for investing. Speak to a mortgage broker to understand the costs associated with a second mortgage.
Questions about Loans for Investment
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Other Mortgage Options
Other mortgage options
Homeowners have choices and can consider options to leverage their home equity. Depending on the product, these options may have slightly higher interest rates.
Private Mortgage
When homeowners cannot qualify a mortgage refinance through a bank mortgage debt consolidation or a home equity line of credit (HELOC), private mortgages may be an alternative. Since private mortgage lenders will secure a mortgage debt consolidation against a home, the interest is usually lower than high interest debts like credit cards.
Private lenders usually charge a higher interest rate and fees than a bank, given the higher level of risk, however this option still reduces interest costs over time. This is because these lenders understand that situations exist such as quick turnaround for financing, bad credit, non-stated income and non-conventional properties.
Typically, private mortgages are shorter term products and only require the interest portion to be repaid. Private lenders evaluate risk differently than traditional lenders and will consider the borrower’s ability to repay that is beneficial to self-employed and people with bad credit. Private lenders can also provide debt
Reverse Mortgage
An option available to homeowners 55 and older are reverse mortgages that provide access to the home’s equity without having to sell. Reverse mortgages allow homeowners to borrow up to 55% of the value of the home. The concept of this mortgage is essentially a reverse loan that means there are no payments required. Payments will be made either in monthly payments or in a lump sum payment to homeowners. Homeowners will pay the reverse mortgage loan when they move, sell or the last borrower dies. Typically, the interest rate is higher, and there are fees additional associated with reverse mortgages.
Debt Consolidation Mortgage
To understand if a debt consolidation mortgage or a HELOC could be suitable options to consolidate debts, and help get your life back on track, contact Square Capital Mortgage Brokerage. We understand each case is unique and there are many factors to consider including homeowners with bad credit or low income. Unlike traditional lenders like banks and financial institutions, with very strict lending terms, Square Capital works with over 50 lenders, including private lenders, to find the right solution for our clients. Our expert mortgage brokers and agents will help to find solutions to lower your monthly payment and reduce or stop the interest on your debt. Lower monthly payments every month reduces the chances of financial default while improving your credit and managing your money wisely.
Learn more about leveraging home equity for products such as mortgage refinance, home equity lines of credit (HELOC) and second mortgages.
Budget Planning and Expense Tracking
While products like debt consolidation mortgages, HELOCs and private mortgages are tools to financial freedom, managing debt is the key to success. Practicing better money management in daily life like budgeting, monitoring spending, and saving. There are many free online apps that can support homeowners to achieve financial freedom and get better at managing money.
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Square Capital can help you to take advantage of the next investment opportunity with a mortgage loan for investment. We can help you determine exactly how much you can afford. Start your mortgage online.
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