However, an equity-based mortgage offers an alternative solution, allowing borrowers to leverage their property’s equity rather than their financial history.
Understanding Equity-Based Mortgages
An equity-based mortgage is a loan secured primarily by the value of your home rather than your income or credit score. Lenders assess the loan-to-value (LTV) ratio, meaning they evaluate how much equity you have in your property to determine how much they can lend.
Key Features of Equity-Based Mortgages:
- Approval Based on Property Value – Your home’s worth plays a bigger role in the approval process than your credit score.
- Flexible Credit Requirements – No credit or bad credit? No problem. As long as you have equity, you can qualify.
- Faster Approvals – Since there’s less focus on financial history, approvals can happen in as little as 48 hours.
- Short-Term and Interest-Only Options – These mortgages often come with shorter terms and may allow for interest-only payments.
How to Qualify for an Equity-Based Mortgage in Toronto
If you need financing but have been turned away by traditional lenders, here’s how you can secure an equity-based mortgage in Toronto:
1. Assess Your Home Equity
Lenders typically require that you have at least 20-30% equity in your home. To calculate your available equity:
(Current Home Value - Existing Mortgage Balance) = Available Equity
For example, if your home is worth $800,000 and you owe $300,000 on your existing mortgage, your equity is $500,000.
2. Choose a Private or Alternative Lender
Unlike banks, private lenders and mortgage investment corporations (MICs) specialize in equity-based lending. Companies like Lendworth provide flexible mortgage solutions tailored to homeowners with unique financial situations.
3. Prepare Your Documentation
While traditional lenders require income statements and credit reports, equity-based lenders focus on:
- Property appraisal to determine market value
- Proof of homeownership (title and mortgage statement)
- Existing debt obligations (to calculate LTV ratio)
4. Apply for Fast Approval
At Lendworth, we simplify the process with quick 48-hour approvals. You can apply online or consult with our mortgage specialists to find a tailored solution that meets your needs.
Who Benefits from an Equity-Based Mortgage?
This type of financing is ideal for:
- Self-Employed Individuals – Those who have difficulty proving consistent income.
- Homeowners with Bad Credit – Traditional lenders may decline applications based on past financial struggles.
- Investors Seeking Capital – Equity-based mortgages can provide funds for property renovations, investments, or debt consolidation.
- Newcomers to Canada – Individuals without an established Canadian credit history.
Equity-based mortgages offer a fast, flexible, and accessible way to secure financing, even if traditional lenders have turned you down. Whether you’re looking to consolidate debt, invest in renovations, or purchase another property, Lendworth can help you leverage your home’s equity to achieve your financial goals.
Need an Equity-Based Mortgage in Toronto?
Lendworth specializes in quick approvals and customized mortgage solutions to fit your needs. Apply today and get approved in 48 hours!
For more information, visit Lendworth.ca or contact us directly.