Knowing Your Options For A Home Equity Line Of Credit (HELOC)

Home equity line of credit

When it comes to understanding how to consolidate your debt, knowing all of your options is a good start. Many Canadians struggle with debt, be it credit card, car payments, student loans, and especially mortgage payments. We understand how difficult it can be to manage all of this all while taking care of yourself and your family.


credit debt

The first step in understanding how to get back on track by organizing your life to make your debt payments manageable. For this a mortgage advisor is the best place to start. If the option is right for you, they can help you obtain your home equity in order to help pay off your debt. They can also help you restructure your spending habits to make sure you can stay out of debt and make your home equity line of credit (HELOC) count.

Your HELOC will still need to be repaid; however, when you are only paying one payment, with one interest rate, it can drastically reduce stress. Causing things to be less overwhelming, not having multiple bill payments with various interest rates coming in.

What is a Home Equity Line of Credit (HELOC)?

  • Maximum loan-to-value (LTV) = 65% of appraised value
  • It is a line of credit secured by way of a collateral mortgage on the title to your home/property. The interest rate is set by the Prime Rate and is much lower than a personal unsecured line of credit. Maximum Loan-to-Value (LTV) is 65% of appraised value.

Determining Your Equity

Your home Equity is based on the difference between your home’s value and the unpaid balance of your existing mortgage. Home equity has the potential to raise in worth by one of two ways, either you pay your mortgage down and the difference grows, or the value of your home increases.

A stand-alone HELOC has a maximum Loan-to-Value (LTV) of 65%, and a mortgage has a maximum LTV of 80%. You can have a mortgage and HELOC under one charge on a title, going to an LTV of 80%. Just remember, you will need to subtract the amount still owing on your mortgage!

How to Qualify For a Home Equity Line Of Credit


According to the Financial Consumer Agency of Canada, in order to qualify for a home equity line of credit you will require:

A minimum down payment or equity of 35% if you want to use a stand-alone home equity line of credit as a substitute for your mortgage.

Lender Requirements

Your lender will have requirements before you can be approved for a home equity line of credit which include:

  •  A Satisfactory Credit Score
  • Proof Of An Appropriate & Stable Income
  • A Suitable Level Of Debt Compared To Your Income

In order to qualify for a Home Equity Line Of Credit, you will need to pass a stress test. This is to ensure that you can afford payments at a higher rate than the rate of your contact to avoid problems if rates increase. The lender wants to be sure you can pay it off.


HELOC’s are not necessarily subject to the same rate fluctuations as mortgages. HELOC’s are always set with a prime, which means that they fluctuate, but your mortgage can either have a fixed or variable rate.

Potential Benefits Of A HELOC:

Mortgage relief

One of the main benefits of debt consolidation is that it will buy you time and emotional release from current debt pressures. Studies have shown that the stress of too much debt can impact more than your mental health, and it can also be affecting other parts of your life.

HELOC Requirements:

  • Minimum Payments Required = Interest Only. Can Be Paid In Full At Anytime With No Penalties.
  • Readvanceable – The HELOC Can Be Paid In Full & Used Again At
  • Anytime As Needed- Maximum Flexibility
  • Low Interest Rate

A HELOC only has a minimum payment requirement of the interest and will allow you to address your budget and free up your cash flow before making principal payments. By refinancing and being serious about making and keeping to your budget, you can achieve a debt-free lifestyle! While refinancing can extend your mortgage’s life, it can get you onto the path of being debt-free a lot sooner.

home equity, money in your pocket

For more information on a home equity line of credit (HELOC), talk to a mortgage professional. They can help way your options to determine the best course of action for getting your bills and various payments under control with a HELOC. Here at The Mortgage Group, we are here to help you with all of your mortgage questions and concerns. Including, those regarding home equity. Contact us today to better understand how we can help you obtain your home equity line of credit.

Is A Mortgage Deferral Right For You?

mortgage deferral

Mortgage Deferrals During COVID-19

With the recent federal business closure directives and layoffs, many people are looking for ways to adjust their budgets to decreased income the closures have caused.

The federal government CERB program and the EI coverage may help. You can check their website to see what funding will help your family in this trying time.

If, after crunching the numbers, you still come up short, what actions can help you get by until life returns to normal?

Financial consultants are suggesting, if it is possible, you should still make your payments. Use savings and available credit lines before deferring your mortgage.

Many banks are deferring credit card payments and interest on credit cards and credit lines or allowing clients just to pay interest payments. The deferred payments will still have to be paid. Be aware if you defer the interest, you might need to pay all the deferred interest with your first payment when the deferral ends.

Mortgage Deferral Considerations

Mortgage expenses

It is crucial to get all of the facts from your lender before you agree to a mortgage deferral.

If you can’t afford to pay your mortgage payment, lenders are offering people the ability to defer their mortgage payments due to the current financial conditions.

What Is A Mortgage Deferral?

The team at The Mortgage Group Calgary explains that mortgage deferrals allow you to take a break from your scheduled principal and interest payments for an agreed-upon time. The interest continues to accrue and will become part of your mortgage balance.

First Steps

If you have been affected by COVID-19 and can’t make your mortgage payments, the first step is to contact your mortgage provider to discuss options. Most institutions have an email address as well as an online deferral request, as the phone lines have been hectic.

You must take a copy of that first email contact explaining you need assistance because of the COVID-19 crisis. In the email, include the mortgage ID information and the reason you cannot pay. For example, if you were laid off from work, fell ill with the virus and are in isolation, you are looking after children, or your business was forced to close. Then if the bank does not get back immediately, you have a record to the date of your notice.

Banks and Financial Relief

financial support

Most institutions will not be reporting to the credit bureau(s) at this time and understand that this is a challenging time for their customers. They will probably waive or refund the non-sufficient funds [NSF] fee for missed or stopped payments at this time. Meanwhile they are also taking time to assist customers individually.

“Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and three other large lenders announced plans on March 17 to provide financial relief to Canadians impacted by the economic consequences of COVID-19.  Mortgage deferrals are among the measures introduced.

Customers in good standing who have been impacted by the pandemic can apply, with deferrals available for an indefinite period and no deadline to apply,” said Mathieu Labreche, a spokesman for the Canadian Bankers Association, stated in a Bloomberg news interview.

Term Choices

So discussing the arrangements for the deferral, ask how the payments and insurance fees. Be sure to get the terms in writing.

Some choices of terms to consider are:

  • To make your monthly mortgage & interest payments on a different timeline
  • Pay just the interest & move the mortgage payment to the end of the policy. Add them to the amount of the overall mortgage and extend the mortgage term.
  • Defer both, where the payments and insurance attach to the back of the mortgage. This again increases the amount of the mortgage and interest you will pay & extends the time it takes to pay it off.
  • Some banks will average the deferred interest increases into the mortgage payments over the term of the mortgage when the deferral ends.

Case By Case


Rules for each bank are changing as the crisis lingers. Most mortgage companies are offering deferrals based on a case by case basis.

Labreche said that banks have processed over 213,000 requests in the last week, so they are moving quickly through applications. Still, you may need patience and persistence with the process.

There is stress on both sides of the phone line, so ask what suggestions they have to help your situation, or schedule a phone appointment to discuss your options. Sometimes it is frustrating because the agents are unaware of new developments offered by the bank. Some banks will refuse a deferral due to delinquent payments in the past and others are asking for a full credit check.

Monitor Your Credit Rating

credit report

Your credit rating might be affected, so it is good to check to see if it has gone down. Credit rating notices are a computerized process. A deferral might automatically flag your credit rating. Equifax wrote about the impact on credit ratings and the COV19 crisis. If your score goes down, the credit bureaus suggest that it is due to COV19. It will help you in future banking/lending discussions.

Working Together

teamwork financial support

It is important to note that everyone is struggling with recent events. Still, Canadians are good at supporting one another in crisis. Seek out the community and charitable resources in this time of need if you need them. Keep in contact with friends and family.

Alberta Health Services has phone resources and online material on its website for non-financial issues.

Talking to a money manager might give you other financial survival information. The Credit Counselling Society offers some excellent emergency budget management tips and online workshops.

The Mortgage Group Calgary team is an essential service and are adhering to social distancing requirements for the protection of their clients and staff. We cannot work directly with the bank on your mortgage deferral process. However, our brokers can help you if you are considering remortgaging or refinancing your mortgage. Give us a call at 403 571-8142 or email us at [email protected] to arrange a phone consultation.

Why You Need A Good Credit Report To Buy A Home

credit history report

There are a lot of terms to understand when you are applying for a home mortgage. One of those terms is a credit report.

What Is A Credit Report?

A credit report is a summary of data involving your spending and credit history. It is more important than some people think. Potential landlords, employers, utility companies, and government agencies sometimes use this information, too.

What Information Does It Contain?

checking credit

Your credit report contains personal information such as your name and pseudonyms, birth date, social insurance number, recent and previous addresses, and phone numbers.

It also includes financial information like current and historical credit account types, balances, limits, payments, and the name of the lender. Public information like liens, bankruptcies, foreclosures, court proceedings, and child support payments may also appear on your credit report.

Who Compiles A Credit Report For Your Lenders?

Equifax and TransUnion are the two major companies that gather information on your spending habits. They use all of the collected information to compile reports used by banks and lenders so that they can give you a mortgage approval.

How Are Credit Ratings Scored?

A Person Holding Phone - rating

Credit rating scores are rated 280 to 850, with a 300 rating the poorest and 850 considered an excellent credit score.
About 35% of the rating considers payments and whether you have made late payments. Another 30% looks at credit card use and the balance vs. your credit limit. The remaining 35% of the credit score is based on your credit history, public records, and any inquiries into your credit file.

Inquiries within a short period are usually allowed because they know you may shop various mortgage lenders to secure your homeowner mortgage. Inquiries can affect your rating when you shop around for multiple credit card lenders (called hard hits). It can also happen because you are financially stretched, or perhaps because you have too many maxed-out credit cards.

How Can I See My Credit Rating?

You can ask for your free credit score at Credit Karma, or  though your bank. Even some online companies have a notification service for changes to your score to help you keep track. One thing to keep in mind is that the owing debt that you see, and the score may be off a bit.

In some cases, an account could owe a few hundred more than what the report shows. However, tools like this are still great to give you a base to work with and begin understanding your credit score.

Is My Information Safe?

safe, vault

There is a discussion about whether credit bureaus should have access to this information, but llenders state it is necessary to protect their investments.There are security features in place for online registrations, and they are regulated regarding the release of information complying with provincial legislation.

Why I Need A Good Credit Rating?

A better credit rating makes securing a home mortgage easier. Lenders like to see applicants have a mix of car loans, personal loans, and credit cards to indicate they can handle different kinds of credit. A good credit rating can also act as a reliability meter for signing a lease, securing a utility contract, or sometimes even works as a job character reference.

How To Improve Your Credit Rating

improvement graph

Some people have never borrowed money or signed up for a credit card, leaving them with no credit rating. This can negatively impact you when you do go to apply for credit. Without credit, it can be hard to build credit. Often, secured credit cards are your best first step to establishing a credit history.

Loans or mortgages are not approved until they establish a good rating.
What seems odd is you are required to go into debt to get approval for further financing. By taking out a small loan or credit card and making regular payments to build trust, they will pay off subsequent loans. A poor credit score does not mean denial of a home loan. However, you may have to pay a higher rate of interest on the mortgage.

It is also a good idea to review your credit reports yearly. Sometimes companies make errors about late payments or unpaid bills that can affect your rating. Maybe you are in mediation with that company over mistakes. You have the chance to contact the credit rating bureaus  and get them to investigate the error on your report and change the reason on your credit report itself.

The Alberta MoneyMentors organization offers many financial education and improvement courses and financial counseling. Money Mentors offers for online classes and some great info.

Watch Out For Credit Rating Repair Scams

Some companies will help you improve your credit ratings for a fee. However, not all of these offers are legitimate, and it is up to you to do your homework to see they are reputable for use.

Here Are Some Signs The Service May Be A Scam:
  • They Don’t Provide A Consumer Credit File Outlining Rights & The Credit Repair Process
  • A Business Name & Address Aren’t Provided On The Contract
  • They Don’t Offer Your Copy Of The Contract For Reading Before Signing
  • Costs, Actions To Be Taken & Completion Date Are Not Clearly Outlined
  • They Ask For Payment Before Services Rendered
  • The ‘Agency’ States They Will Remove The Errors From Your Report
  • They State You Need A New Social Insurance Number To Change Your Rating

Sometimes understanding everything about credit ratings can be confusing, so contacting a professional mortgage broker like The Mortgage Group is a good idea. Our Calgary mortgage brokers can explain the mortgage process and credit reports. We will help you gather the information you need to secure a home mortgage.

At The Mortgage Group Calgary, we are committed to providing the best experience to our clients. Call now to book an appointment with one of our brokers, (403) 571-8142.

How To Tell If You’re Ready For A Mortgage

how to tell if you're ready for a home mortgage

You may be at a stage in your life that buying a home looks like a good idea. According to recent realty statistics, 78% of Albertans own their own homes. The fact that your peers and the majority of the province have committed to a buying a home may not be the best way to determine if you are ready for a home mortgage loan.

How To Know If I Am Ready For A Home Mortgage Loan?

Make a list of financial factors to give yourself a good snapshot of your financial readiness for a mortgage. The New Year is an excellent time to assess your finances. This is when people begin collecting their yearly financial data to complete income tax.

Look At Your Gross & Net Income

Lenders want to know that as they base how much of a mortgage they will lend you on your yearly income. They like you to have a steady income but will factor in your average income based on your tax return record. You can book an appointment with a bank manager or mortgage broker to determine how much they will lend out based on that yearly income. You can also do a quick evaluation is using an online mortgage calculator

Assess your savings before applying for a mortgage
It is important to assess your savings before applying for a mortgage

Look At Any Savings You Have

Lenders require a down payment on the mortgage loan. Most lenders require at least 5% of the home price for a down payment and up to 20% on higher-value homes. The legal and realty costs are also extra costs related to the buying process. The lenders may figure those costs into the amount of the mortgage they lend you.

How Much Debt Are You Carrying?

Lenders look at debt along with what you currently spend on monthly on housing and utilities. These factors help the lender ensure you can afford the mortgage payments of the new loan. Those two costs shouldn’t exceed 25% to 36% of your gross monthly income. You can get a credit rating report that banks use to look at your debt by following the instructions from the federal government site under ordering your credit report and score. Make sure to go through it to be sure it is correct. Sometimes companies don’t clear debts you may have paid, or you might appeal scores and mediate a better rating.

Take A Look At Your Current Monthly Budget

Do you have room to include the extra things that come with homeownership? You may need to factor in more money for increased utility costs, home and mortgage insurance, taxes, HOA fees, home development, and maintenance costs.

Other Factors To Consider

Finances are not the only thing to consider in being ready to commit to a home mortgage loan. You want that financial commitment to give you the quality of life you will enjoy.

Do You Know What Kind Of Home You Want To Buy?

There are a lot of choices out there. There are condos, apartments, townhouses, duplexes, single-family homes, acreages, and farms. If you list the features of where you are currently living and note the things you dislike, those points can help you evaluate what type of home would suit you best.

Where Do You Want To Live?

Is it an area closer to your work? Maybe you want to move your family to a community with good schools and lots of other children. You may have certain values that play into your choices. You may want a sustainable living situation with community planning and lots of green space. Cultural factors and entertainment may also be important to your lifestyle. Can you afford the house prices in your ideal spot? Some areas are going to be more expensive than others depending on the availability of housing in those areas. You may have to adjust your ideals to meet your lifestyle goals.

Will You Need To Move Repeatedly Or Can You Settle In One Place?

It takes five years to start to begin to get any equity in your home purchase. If you need to move and sell, you may not gain a profit from homeownership. Some people keep their homes and rent them out when they have to move. If this is the case, rework your budget to ensure you have enough to meet the mortgage and your new living accommodations. Renters can bring a higher maintenance cost than expected as tenants may damage the home.

What Are Your Life Goals?

Some people want to downsize to spend more time traveling. Maybe you want a larger home to raise a family. Perhaps you are buying several properties for investment gains, or you want an additional vacation home. You should examine if the mortgage you are considering fits into those life goals. Again, a good mortgage banker or mortgage broker will be able to help you forecast some factors and present options in achieving those goals, so you can determine if you are ready for the mortgage type that supports your life goals.

Seek Outside Advice

Once you have answers to some of these questions and have factored in your finances, you should have some concrete facts to weigh the pros and cons of taking out a home mortgage loan. You can ask for advice, but it is best to get several opinions from people who know you best, other homeowners, and professional mortgage specialists. 

Ultimately, it comes down to you to decide. If the answers point to the negative, but you still have a goal to purchase a home or investment property, talk to your mortgage banker or broker. They have many suggestions that can improve your ability to qualify for a home mortgage loan in the future.

For any questions or information you need, the brokers at The Mortgage Group will be happy to help. Give us a call anytime, or fill out our online application. 

The Difference Between Mortgage Specialists

Mortgage broker

Navigating how to apply for a home or commercial mortgage can be confusing and overwhelming. It’s why you need useful information to pick a trustworthy person to lead you through the process of acquiring your financing.

When you buy a home, you have the choice of applying for a mortgage through a Canadian banking institution or mortgage broker. But what is the difference between the two?

Bank Mortgage Manager

The bank mortgage manager works for the bank. Given they are a bank employee, they will be representing the bank’s interests first when extending you a mortgage contract. They may require you to be a customer of their bank. The bank’s mortgage manager only accesses products and mortgage funds available from that bank for your mortgage application. They can offer a range of interest rates and terms under the parameters dictated by the bank. 

Having a mortgage with a regular banking institution may make it easier to refinance to one of their products or change terms of the loan in the future. The bank’s rates and penalties for a bank mortgage may be higher than other lenders. Bank mortgage managers may deny residential and commercial mortgages if the applicant doesn’t meet criteria under their lending terms. For example, bad credit scores or unusual payment arrangements.

Various banks have different terms and interest rates. So, it is up to the customers applying for mortgages to get information to make an informed decision. 

Your bank mortgage manager will rarely refer you to another lender unless you don’t meet any of their conditions.

The majority of Canadians are still using banks as their primary mortgage lenders. The reason may be that they have already established a working relationship with their bank. Sometimes the process can be smoother, as the bank has access to all the financial data for the applicant.

Some people who have built a relationship with their bank may opt to go that route. They feel confident because the main banks have a long-standing history of lending, backed by government assurances.

Mortgage broker

A mortgage broker is a licensed professional who works with many banks and other lenders to obtain the best mortgage for you. They can get you into a mortgage agreement with a bank, but also have other lending options available. Because of the options to choose from, they may get you approved even if other lenders deny you. 

Mortgage brokers usually take a 1 or 2% commission on the mortgage from the lender on finalized contracts. This payment generally comes from the lender and is not an out of pocket fee for an applicant. If fees in the contract are too pricey, terms can often be negotiated to lower them. 

The mortgage broker’s search scope includes a wide range of financial institutions and lenders, like credit unions and independent lenders. They collect information from you and try to find the lender that best fits your mortgage needs and terms.

Looking outside the traditional lenders can be very helpful to people with poor credit, or other reasons banks declined their application. Mortgage brokers do the legwork of sifting through various lenders’ terms and interest rates and present options to you. 

They may include established banks in the line-up of lender choices. A mortgage broker will go over all the information so that you can make an informed choice. Often a broker will work flexible hours and adjust schedules after banking hours to meet client needs. 

They will negotiate the terms of your final choice with the lender, possibly saving you money. A mortgage broker’s expertise in the field helps them help you with terminology and negotiating tactics. 

Be aware that the final mortgage contract is just between you and the lender.

Helpful resources

As with all legal documents, clients should read the final negotiated contracts carefully before they sign.

Anyone dealing with mortgages, whether it is your bank or mortgage broker, has to be licensed with the Real Estate Council of Alberta. It is important to check into this before you retain their services. Some fraudulent mortgages have left people with a severe financial loss. Financial lenders are also regulated and monitored by the federal government. 

The Alberta government licenses financial lenders and a list of licensed lenders can be obtained at your local registry office, or checked on the Alberta government website.


If you would like a free consultation with a Calgary mortgage broker, our licensed and professional staff at The Mortgage Group will be happy to answer any questions.


An Upside To Calgary’s Falling House Prices

Real Estate - Buying a home mortgages

Written by Robson Fletcher · CBC News · 

Based on income and benchmark prices, report finds most people here could afford a single-family home

For nearly five years now, Calgary’s real estate market has been described as slow, flat, listless.

Compared with long-term averages, fewer homes are being bought and sold these days. And those that do sell are often going for well under the asking price.

By one common measure, prices for single-family homes are now about seven per cent lower than they were back in October 2014. When you factor in inflation, the losses are even greater — on paper, at least — for those who bought at the peak, in real-dollar terms.

This is often framed in the media, by real estate agents, and in casual conversation as bad news. And indeed it is, if you are like most Calgarians and own a home. (This city has one of the highest home-ownership rates in the country.) It’s especially bad if you’re currently looking to sell.

But the flip side of the equation is that home ownership — including the idealized detached home with a yard and garage — is attainable for far more people here than in other major cities.

“If you’re a first-time buyer and you want your first home to be a detached house, based on our numbers, you’ll have a better chance of accomplishing that in a market like Calgary,” said Penelope Graham with Zoocasa, a Toronto-based real estate firm.

That’s according to a recent report from the firm, which, based on income data from Statistics Canada and sales data from various real estate boards, estimates that more than 50 per cent of income earners in Calgary could afford a typical, detached home at current prices.

Compare that with Toronto, where only the top 10 per cent of income earners are in the same boat. Or Vancouver, where it’s a mere 2.5 per cent.

So, especially for a first-time buyer in Calgary, the recent real estate news might not seem so bad.

'Seeing Value'

Alim Charania has been working as a mortgage broker for nearly 20 years in Calgary, and while business may have been brisker in the past, he says there’s still plenty of interest from first-time buyers these days.

Many “are seeing value” in the market, he said, which he personally believes is now one of the best for affordability among major cities.

“Pricing-wise, versus the rest of Canada, for a great city to live in? You probably can’t beat it, to be honest,” he said.

Still, many would-be buyers are in no hurry to pull the trigger.

“They’re still scared,” Charania said. “There is still some uncertainty in the market. They don’t know where Alberta’s going to go; they don’t know if this is the bottom. So that’s usually top of mind.”

Looking over the Zoocasa report, he raised an eyebrow at some of its assumptions when it comes to determining what’s affordable. The firm assumed people would be making a 20-per-cent down payment, and paying a 3.75-per-cent mortgage rate over a 30-year amortization.

Charania said most clients he meets aren’t putting that much money down, and the relatively new mortgage “stress-test” rules would require them to prove they could pay a higher interest rate in order to qualify for a loan.

But, all those assumptions being equal across the various markets being compared, he said the report does highlight how much more attainable home ownership is in Calgary compared with other major centres.

“Affordability-wise, definitely we rank quite high, for sure,” he said.

Buyer's Market — If You Can Get A Loan

Lori Grill, an associate with The Mortgage Group Inc., says it remains a “buyer’s market” in Calgary.

And while the decline in house prices over the past several years may be appealing for first-time buyers, in particular, she said home ownership is still unattainable for many Calgarians.

That’s in large part due to the stricter lending rules, but Grill said more and more of her clients seem aware of the new mortgage environment.

“They do come to us saying, ‘Oh, I don’t know if I can qualify,'” she said.

“And some of them are pleasantly surprised and they leave my office feeling quite happy … and then others go, ‘OK, well, I guess I have some work to do. I need to get some credit cards paid off. I didn’t realize that was going to have the impact that it does.'”

The data in the report, Graham noted, is aggregated from real estate boards in each local market and the typical home price is based on the “benchmark” in each region. That means many houses will cost more than that — and many will cost less.

“We don’t want to put out the message that some of these markets are completely unaffordable for everyone,” she said. “There’s always going to be options that are below the average in these markets. So it’s important to keep that in mind — that we’re looking at aggregate data.”