Have you been rejected by the banks? Need help financing the purchase of your home, consolidating your debts, or investing in a new property, and you don't know where to turn? We built Rateco to help you!
Rateco is a mortgage brokerage - but then again, we're not your typical brokerage. Rateco's 'reverse auction' encourages lenders to bid against each other to win your business, with full transparency. And as this reverse auction unfold in real-time, you can literally watch yourself save money as rates get pushed down!
A home equity loan that allows homeowners to borrow money from the equity in their home, without refinancing their current mortgage. Second Mortgages carry higher interest rates than first mortgages. There are many reasons why you might need a second mortgage - maybe you want to buy an investment property? Refinance your other debts to a lower interest rate? A second mortgage borrows against the equity tied up in your home, allowing you to use the funds for other purposes.
A HELOC (Home Equity Line of Credit) is sometimes referred to as a second mortgage because it is secured by your property, just like your original (first) mortgage. HELOC's are offered by many financial institutions, including chartered banks, and you can use the funds on offer to accomplish the same goals as you would with a second mortgage (such as investments, debt consolidation, renovations, etc). If you have applied for a HELOC from a chartered Canadian bank, and been denied, Rateco.ca can help you secure competitive rates on a HELOC from reputable Canadian private lenders.
Most banks offer a second mortgage product for suitable clients. However, most banks also want to ensure that a home has significant equity before they'll consider approving a second mortgage. Before the market crash of 2008, a borrower could get a second mortgage exceeding 100% of their home's market value; today, banks want tangible security, appraised and backed by solid equity for such loans. As these loans have become harder to secure and more expensive to pay back, more and more borrowers are finding that their banks do not provide an adequate loan amount, or a reasonable rate or terms. All the more reason to work with Rateco.ca, where lenders compete to offer you the lowest possible rate on private, non-bank mortgages.
There are definitely higher risks associated with private lending for both lender and borrowers; it is important for borrowers to understand who they are securing a loan from, precisely what terms are associated with the loan, and whether the lender is reputable and/or regulated (and if regulated, by what entity). Private lending can come from:
a) an individual with capital that they want to invest to earn interest, or
b) organizations such as Mortgage Investment Corporations (MIC's), essentially pools of capital invested by private individuals to be deployed by professional underwriters. Neither private individuals or MIC's are regulated in Canada in the way that a bank is; while various government entities regulate banks, credit unions and 'alternative' lenders, private individuals are self-regulated and seek to ensure only that they manage default risk on the loans they issue. MIC's are regulated by provincial regulatory bodies and must consider the needs and financial capacity of their borrowers when issuing a loan. Having professional management and large pools of capital to draw on, an MIC is, by nature, a safer source of financing than a private individual; but the onus is always on the borrower, and brokers like Rateco.ca, to ensure that the borrowers' needs are being appropriately considered before a source of funds is secured.
Private mortgage lenders are generally a small company or individual who provides mortgages to borrowers for their own personal benefit. They view high risk borrowers/properties as investment opportunities, and may provide capital to borrowers that have no access to credit through more traditional lending institutions. As a result, a relationship between a borrower and a private lender can be beneficial for both parties. At Rateco.ca, we partner with Mortgage Investment Corporations, small investment firms that take capital from high-net-worth investors and seek to fund mortgages on Canadian properties, creating a solid return for their investors.
Like your first mortgage the second mortgage is secured by your property. The reason the mortgage is known as a second mortgage is that the lender's security is actually behind the first mortgage. If you were to default on the conditions of your mortgage, for example, you didn't make a payment, then the lender will typically work with you to bring your mortgage up to date. Failing to do so would then result in the mortgagee (the bank/lender) taking action to act on their security. This is a process, and typically will only happen after multiple attempts to resolve the issue. Keep in mind, the mortgagee is interested in making return from the money they have loaned out, they are not in the business of taking over your property and selling it. In such situations, the lender incurs a lot of additional costs and paperwork. They want to avoid this scenario. It is always important to read the commitment letter and mortgage documents prior to signing them, to fully understand your rights.
Hidden costs do exist in this industry and may include processing fees, underwriting fees and base origination fees. These fees alone can add up to 2% to your cost of borrowing and are often negotiable. Further, your private mortgage is all but certain to include a Broker Fee (Rateco.ca's standard Broker Fee is 1.5%, which is intentionally set below the rate charged by our competitors); a Lender Fee, and legal and appraisal fees. Non-negotiable fees can include; property taxes, insurance, other property related charges, transfer taxes and government recording charges.
In a word, transparency. When we tell you that we have asked multiple lenders to bid on your deal, we mean it, and better yet, you can watch it happen, in real-time. We work hard to ensure you're never surprised and our CSR's are trained to be straight-up-honest with you throughout your time working with us.
Always do your own research and compare brokers. Compare their interest rates, fees and always ask questions. We're confident that, when you compare offers received from other Brokers, with all of the affiliated fees considered, Rateco.ca's reverse auction model makes us very, very competitive!.
They might be right! Rateco.ca is not for everyone - borrowers that are able to secure funds from Chartered Banks and other regulated financial institutions might very well be able to secure less expensive first- and second-mortgages. For those borrowers that, for a variety of reasons, are unable to secure a loan from a regulated lender, and must solicit funds from a private lender or MIC, Rateco.ca's reverse-auction model puts you in position to get the lowest fully-loaded rate, and most attractive terms, of any source in Canada.
Generally speaking, second mortgages arranged by Rateco.ca are interest-only loans; that is, the borrower is only expected to service the interest charges on the loan during the term, and not to repay any of the principal until the end of the term (and even then, only if they haven't extended the term or rolled the expiring loan into a new loan). That said, some interest-only loans have 'open' repayment terms, wherein the principal can be partially- or fully-repaid before the end of the term, with or without a penalty. Your Rateco.ca-appointed mortgage agent will walk you through this and other aspects of your loan options to ensure you get a product that is customized to your needs.
How does my credit get impacted because of a private loan? While going through the RateCo.ca application process you will authorize RateCo to pull a credit report from Equifax. This credit report will be used by our lenders to provide you the best interest rate for a mortgage, and any 'hard' credit request may have negative implications on your credit score.
There is no reason why a second mortgage should make the sale of your property any more difficult; the net proceeds of the sale would be used to repay the principal of the second mortgage, after the first mortgage has been repaid.
As with any mortgage, a lender may restrict the borrower from making significant renovations (generally, tear-downs of all or part of the residence, such that structural elements of the home are impacted) unless they have issued formal approval. Such restrictions would be set out as terms in the loan, and would be addressed between the borrower and their Rateco.ca - assigned mortgage agent.
ABSOLUTELY NOT! Whether a mortgage is issued by a bank or a private lender, your lenders never have the rights to access your home without your consent. Further, unless there is some reason for a lender to believe that your property has been impaired or is not being adequately maintained, it would be highly unusual for the lender to visit the physical premises at any time.
Once an auction has closed and you have selected your preferred lender, that lender will move into a formal due diligence process. While this timeline can vary, generally speaking, the faster you provide the list of documents that the lender is seeking, the faster the process can move. Once the lender receives all of your documentation and a formal appraisal of your property, you will sign the loan agreement, and will typically receive your funds within 5 business days thereafter. The only difference between Rateco.ca's process and that of other brokers is that with Rateco.ca, instead of getting a soft commitment immediately, you must wait 24 hours while lenders ACTUALLY bid for your business.
Once you have received the funds, unless there are specific restrictions on the use of your funds explicitly written into your loan agreement, you are free to use the funds for whatever you like!
If you are seeking funds from a private lender or MIC, you have likely approached chartered banks, credit unions or larger alternative lenders, and were unable to secure the funds you require. These institutions are not able to provide the funds for a variety of reasons - government legislation, the risk profile of their loan portfolio, etc. As private lenders, our lender partners are able to be more flexible with their lending, but have a higher cost of capital, and higher risk that their loans will not be repaid. Consequently, they must charge significantly higher interest rates. If you have NOT already sought funds from an established bank or credit union, you are advised to do so before using the Rateco.ca reverse auction service.
Essentially, an MIC is a collection of private lenders, whose assets have been pooled together to be invested into mortgages. Pooling assets has a number of advantages for these investors - they can afford to hire professional underwriters to manage the loans and find borrowers; and they take on less individual risk by investing into a broader portfolio of loans. For the borrower, seeking funds from an MIC instead of a private lender is advantageous as well - with a large pool of capital, there is a much lower risk that the lender will need to 'call' the loan and force you to repay before you're able.
Most lenders have standard diligence requirements for all potential borrowers; this typically includes:
1.Last two pay stubs for each borrower
2.IDs for each borrower (Drivers License / Passport / Etc)
3.Property Tax Statement
4.Proof of Home Insurance
5.Confirmation of employment letter
6.Listing on the Property (if it was purchased within the last year)
8.The Notice of Assessment, or NOA, for the most recent 1 - 2 years; your NOA is your composite tax filing with Revenue Canada
9.Your Credit Report; Rateco arranges for this to be pulled automatically from Equifax at the time of your submission
Depending on the lender and the specific terms or situation of your loan, you may be asked for additional items. A Rateco.ca Customer Service Representative will help you to compile these documents and to pass them through to your selected Lender so that they can conduct due diligence on your loan.
With reports of data breaches emerging almost daily, your skepticism and concern for your data protection is well-placed and can not be understated. The Rateco.ca platform has been built, from the ground up, with data protection at its core. Our Product team has built enterprise-level platforms to be acceptable to Canada's big-5 banks, and uses industry-leading encryption, secure components and on-site privacy policies to ensure we treat your personal information with the utmost care and concern. Feel free to email our team if you have any specific questions in respect of the site's architecture and we will be happy to reply.
Absolutely not! None of your personal information will ever be shared with anyone, other than our approved set of lender partners. Further, none of your personal or anonymized data will ever be used for purposes outside getting you the loan you are seeking through us, except with your explicit permission.
Once Rateco.ca has introduced you to your lender partner, and helped you through the process of securing your loan, your payments will be sent directly to your lender partner. All of this will be arranged for you, and you can continue to call or email us here ar Rateco if you need any support.
In a private mortgage, the Borrower pays a 'Broker Fee' once their deal has been funded, so you are effectively paying us for the help we provided in finding you a source of financing. We want to stress that, in the private mortgage world, this is STANDARD - you can work with us, or another Broker, but you will be paying a Broker fee to somebody! When you work with Rateco.ca, you can be assured of the following:
1. FULL TRANSPARENCY. No tricks, no hidden fees, and no discounts or side-deals. You find out upfront what Rateco is going to earn from your deal, and it is worked in to your APR and monthly payment calculations.
2. A BETTER RATE THAN ANYONE ELSE! All of our borrowers pay us 1.5% of the gross amount of their mortgage. This is well below standard industry rates, which typically range from 2% to 5%.
3. A BETTER PRIVATE MORTGAGE. Let's not forget that when you work with Rateco.ca, our Lenders actually bid against each other, in real time, to provide you with the best possible terms on your loan. So you get a lower Broker Fee from us, AND a lower interest rate then you're likely to get anywhere else.
When you actually get an approval and receive your funds will depend on a number of variables - how straightforward is your application, how accurate were you when you self-reported your earnings, etc. This is true whether you work with Rateco, or another Broker; most approvals should be formalized within 5 business days. In order to expedite your mortgage funding as much as possible, you should work closely with your Rateco Customer Service Representative to gather all requested due diligence materials quickly (and even before a Lender has asked for them) so that they can make a funding decision as quickly as possible.
There are a number of ways that you will be alerted that your deal is being funded. Our Lenders will update the status of your loan application in the platform; you will receive an email and may also receive a phone call from a Rateco CSR; or your lawyer will advise you.
Your bank may find out about a second mortgage at various times, though typically only when you are seeking to renew or refinance your mortgage with them, or in seeking additional credit products. Unless there is language in the first mortgage that prevents the addition of a second, your bank likely will not care about the presence of a second mortgage, as they remain ahead of the second mortgage in the repayment prioritization.
Absolutely. Your Lender may inquire as to the use of the proceeds of the mortgage (and they may not); as long as you are not breaking any of the terms set out in your commitment letter, you are free to use the proceeds as you wish.
Yes; when you apply to Rateco.ca for a loan, and it is determined that a private second mortgage is not the right product for you, Rateco can work with you to establish how best to address your needs, including a first mortgage, a refinance, or shorter-term / intermediate options
No. Rateco will work with international borrowers but only in respect of Canadian properties.
Your lender is offering you a second mortgage, and using the value of your property as collateral. As a result, the value of your home is of the utmost importance to the Lender, and they will want to make sure that your home is adequately insured against loss.
A second mortgage does not require you to co-sign with any other party. If your personal financial situation is such that you do not qualify for the mortgage, your Lender may suggest adding a co-signer to the loan to improve the financial health of the application.
Rateco.ca works with many borrowers who are self-employed and unemployed. Traditional banks will likely penalize potential borrowers who can not demonstrate gainful employment; the private lending market focuses largely on the value of your home as collateral against the loan, meaning you may be able to receive funds without traditional employment.
Absolutely! At Rateco, we often work with homeowners who just don't fit with a bank's lending model. While banks are most comfortable lending to individuals with good jobs and income, private lenders base their lending decisions on the value of your home, making them more willing to consider applications from other types of borrowers, including senior citizens on fixed income with ample equity tied up in their homes.
Absolutely! At Rateco, we often work with homeowners who just don't fit with a bank's lending model. While banks are most comfortable lending to individuals with strong incomes, private lenders base their lending decisions on the value of your home, making them more willing to consider applications from other types of borrowers. If you're new to Canada but already own property, Rateco should be able to help you get a mortgage.