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Differences Between Home Equity Loan & Home Equity Line of Credit

If you’re a homeowner, you may be considering taking out a loan using your home equity. But what exactly is home equity, and what are the different types of loans you can take out against it?

In this article, we’ll break down everything you need to know about a home equity loan and a home equity line of credit, including how they work and how much you can borrow.

What Is a Home Equity Loan?

A home equity loan is a loan in which you use your home equity as collateral. This means that if you default on the loan, the lender can foreclose on your home.

Home equity loans are typically fixed-rate loans, meaning the interest rate stays the same for the life of the loan. They are also usually for a shorter term than a traditional mortgage, lasting anywhere from 5 to 15 years.

Because your home secures home equity loans, they usually have lower interest rates than unsecured loans. And because they have shorter terms, they also have lower total interest costs over the life of the loan.

How Much Can You Borrow in a Home Equity Loan?

The amount you can borrow in a home equity loan depends on how much equity you have in your home. As we mentioned, you can usually borrow up to 80% of your home equity. So if your home is worth $300,000 and you have $200,000 left to pay on your mortgage, you could potentially borrow $80,000.

Of course, the amount you end up borrowing will also depend on your credit score and income. Lenders will want to make sure you can afford the loan payments, so they may require a higher income if you have a lower credit score.

What Is a Home Equity Line of Credit Loan?

A home equity line of credit (HELOC) is a revolving line of credit that you can draw from as needed. HELOCs typically have a lower interest rate than home equity loans, but they also have a variable interest rate that can increase over time. The repayment terms generally are shorter, ranging from five to 10 years.

One of the most significant advantages of a HELOC is that you only pay interest on the amount of money you actually borrow. So, if you only need to borrow a small amount, you won’t end up paying interest on the entire line of credit.

However, because the interest rate is variable, it’s important to know that your monthly payments could increase over time. Additionally, if you don’t repay the loan within the specified time frame, you may be required to pay back the entire loan all at once, which could be difficult.

How Much Can You Borrow in a Home Equity Line of Credit Loan?

The amount you can borrow in a home equity line of credit loan depends on a few factors, including the value of your home and your outstanding mortgage balance.

Typically, you can borrow up to 85% of the value of your home, minus any outstanding mortgage balance. So, if your home is worth $200,000 and you have an outstanding mortgage balance of $100,000, you could potentially borrow up to $85,000 through a HELOC.

Final Thoughts

Both home equity loans and home equity lines of credit can be a great way to access the equity in your home. Your best option will depend on your specific needs and financial situation. Be sure to speak with a financial advisor to get more information and to see which option is right for you.

If you want to apply for a home equity loan in Ottawa, don’t hesitate to contact us at Ottawa Mortgage Services. We provide mortgage services for first-time home buyers, self-employed people, and commercial clients. Send us a message today for more information.

commercial building

Tips before Buying Commercial Real Estate Property in Canada

There are many reasons to invest in commercial real estate in Canada. It’s a stable and developed country with a strong economy, so it’s an attractive destination for businesses and investors alike. It offers a variety of commercial real estate opportunities and a high quality of life. All these make it an ideal location for businesses of all types. 

Commercial real estate in Canada is an excellent option if you want a stable and profitable investment. Here are the tips that you need to do before you develop your commercial real estate.

1. Understand the Local Real Estate Market

Commercial real estate is a huge investment, and it’s essential to understand the local market before making a purchase. There are a few things to consider when evaluating a market:

  • The current state of the market. Is it in a buyer’s or seller’s market?
  • The types of properties that are selling
  • The price point of properties
  • The investment potential for the market
  • The growth potential for the market
  • The demographics of the market
  • The economic conditions of the market
  • The political climate of the market

These factors will give you a better idea of what to expect when investing in commercial real estate in a particular market. 

2. Local or Urban: Which Do You Prefer?

When it comes to commercial real estate, there are two main options: rural and urban. Both have advantages and disadvantages, so it’s important to consider which is right for you.

So, which one is right for you? It really depends on your needs and budget. Overall, if you’re looking for a property in a prime location with high foot traffic and more significant returns, urban commercial real estate may be a better option. Rural areas, although cheaper, may have more conservative returns.

3. Where to Get Your Funding

Commercial real estate is a major investment requiring a significant amount of funding. Before you begin shopping for a property, you must secure your financing.

Several ways to finance a commercial real estate purchase include traditional bank loans, private loans, and investment crowdfunding. Each option has its benefits and drawbacks, so it’s vital to do your research and choose the best option for you and your situation.

4. Which Builder to Work With

Choosing the right builders when you’re looking to purchase commercial real estate is an important decision. Here are a few factors to consider when making your choice:

  • Experience: Make sure you choose a builder with significant commercial construction experience. They will have a better understanding of the unique challenges that come with this type of project.
  • References: Ask for references from previous clients and follow up with them. Find out if they were happy with the final product and if the project was completed on time and within budget.
  • Financing: Ensure you understand the builder’s financing options and that they fit within your budget.
  • Location: Choose a builder who is familiar with the area where your commercial property is located. They will be familiar with the zoning regulations and other construction-related issues.
  • Schedule: Find out how long the builder anticipates the project will take to complete. Make sure their timeline works with your schedule and needs.

By taking the time to find the right builder, you can be confident that your commercial construction project will be a success.


There are many reasons to buy commercial real estate in Canada. The country has a strong economy and is a stable place to invest. The real estate market is also growing, which means there is potential for appreciation. You only need to consider numerous factors before jumping into the big decision. That will help you make the best decision for your business.

Once you have your finances in order and are ready to start looking for a home, it is important to find a mortgage agent who can help you find the best pre-approval loan in Ottawa that fits your unique situation. Ottawa Mortgage Services can assist you in finding lenders that match your needs. Contact us to learn how we can help.


What Is the Acceptable Credit Score When Applying for a Mortgage in Canada?

When applying for a mortgage in Canada, the lender will pull your credit score to assess your financial health. They will also look at several other factors, such as your employment history, income, and debts. If your credit score is high, it can show the lender that you are a low-risk borrower, and they may be more likely to approve your mortgage and offer you lower interest rates. If your credit score is low, the lender may view you as a high-risk borrower, and you may be less likely to be approved for a mortgage or offered good rates.

Here, Ottawa Mortgage Services shares what you need to know regarding credit score requirements for mortgages in Canada:

What Credit Score Will Get You Approved for a Mortgage in Canada?

In Canada, credit scores range from 300 to 900. A score of 660 or higher is deemed good, meaning that the risk of defaulting on a mortgage is low, and the person is a safe candidate for a loan.

To be approved for a mortgage, you will need a credit score of at least 680. Some lenders may be willing to approve a lower score, but a higher score is always better. A credit score of 700 is optimal.

Factors That Impact Your Credit Score

Here are some of the factors that have an effect on your credit score:

  • Payment History
  • Credit Utilization
  • Credit History
  • New Credit Requests
  • Types of Credit

How Does Your Credit Score Affect Mortgage Application?

Your credit score affects your mortgage in a few ways. First, it will determine the interest rate you qualify for. A higher score means you’re seen as a lower-risk borrower, leading to a lower interest rate on your loan.

A lower score could lead to a higher interest rate and could mean you won’t qualify for a loan at all. Many lenders prefer an applicant’s credit score of 680 or higher. But there are programs available for borrowers with lower scores.

Your credit score will also affect the size of your down payment. Lenders typically require a higher down payment from borrowers with lower credit scores.

Can One Get a Mortgage With a Bad Credit?

Everyone knows having poor credit can make it challenging to get a mortgage.

Lenders are typically unwilling to work with borrowers with poor credit histories, viewing them as higher risk. That said, it is still possible for someone to get a mortgage with bad credit. There are a number of specialized lenders who work with borrowers with less-than-perfect credit. These lenders are typically willing to take on more risk and, as such, may be more expensive than traditional lenders.

It’s important to note that getting a mortgage with bad credit will likely come with some challenges. For one, you may be required to make a larger down payment than you would with good credit. You may also be subject to higher interest rates and fees.

If you’re willing to work with a specialized lender and are prepared to make some compromises, getting a mortgage even with bad credit is possible.


Your credit score is one of the most important factors in getting approved for a mortgage in Canada. A high credit score shows you’re a low-risk borrower, one that is attractive to lenders. A low credit score could lead to a higher interest rate and could mean you’ll have to put down a larger down payment. So it’s certainly in your best interest to keep your credit score as high as possible. If you need more information on this, you can consult a mortgage specialist in Ottawa who can help you. 

Ottawa Mortgage Services is a mortgage agent in Ottawa that can provide you with the assistance you need when you apply for a home loan. Get in touch with us to set up an appointment!

man looking at paper

What You Must Know About Getting a Mortgage in Canada

Anyone buying a property will almost certainly require a mortgage. What is the process of getting a mortgage in Canada? It’s a basic financial instrument, but its many alternatives and interest rates might be perplexing. Because buying a home will most likely be the most significant investment of your life, you’ll want to be sure you understand how mortgages work.

How Does a Mortgage Work?

A mortgage is a loan that you take out to finance the purchase of a home. It’s a product that you’ll pay back for the duration of your home ownership, which means that you’ll be paying an interest rate for the use of your money. The principal of your mortgage is the amount of money you actually borrowed, while the interest is the fee you need to pay back to the bank to use your money.

What are the Qualification Criteria to Get a Mortgage in Canada?

Before you apply for a mortgage, it’s important to consider these five requirements for your application to run smoothly with any lender in Canada.

1. Down Payment

In Canada, buyers are required to have a minimum down payment of 5%. The minimum down payment can differ from lender to lender, with the average being 10%.

2. Credit Score

A good credit score is an important part of the application process when getting a mortgage in Canada. Your lender will look at your credit score, which is a reflection of your entire credit history. This score poses a minimum of at least 600 to 680, with a higher number reflecting a better credit history.

3. Secured Income

The lender will also look for proof of income and a steady job. This can be done with a letter from an employer, or by providing your most recently filed tax return.

Types of Mortgages

Do you intend to make additional payments to pay off your mortgage as soon as possible? Then you should try to acquire an open mortgage, which is more flexible in terms of prepayments. This sort of mortgage, however, normally has a higher interest rate.

On the other hand, a closed mortgage has a lower interest rate but limits the amount of extra money you may put down to pay off your mortgage faster. If you try to make prepayments that exceed the maximum specified by your lender or if you want to breach the mortgage arrangement, you will normally be charged a penalty fee.

Amortization Period and Term

It’s important to remember that both the amortization period and the term of the mortgage refer to the length of the loan that you will pay off. This length differs between mortgages, and it’s important to understand that the shorter the amortization period, the lower the interest rate is. The term refers to the number of years you will be paying off your mortgage loan. Depending on the lender, the maximum term of a mortgage loan is 30 years. You can, however, choose to pay it off in a shorter period.


There are many different mortgage options available, and it’s important to know how every one of them works. However, with a good understanding of your finances and of your finances, you can mortgage with confidence.

Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, commercial clients, and more. We also help clients with refinancing, pre-approvals, and debt consolidation. If you’re a first-time home buyer in Ottawa, we can help you find the right mortgage in the right neighbourhood. Get in touch with us today and let us know how we can help!

signing papers

Commercial Mortgages and Their Qualification Criteria

A commercial mortgage is basically a loan taken out to cover the cost of the property in case you default. The borrower is generally a business, though partnerships and incorporated companies may also take out commercial mortgages. The type of business operating on the property must also be identified in the mortgage application since this will affect your credit score and commercial mortgage rates.

The Different Types of Commercial Properties

When considering a commercial mortgage, one should first identify the type of commercial property they are looking to finance. If a residential real estate property is purchased as an investment property, it can be financed by a commercial bank; there are three categories that are considered. The first is a residential property comprising between one and four residential units. The second is a residential property comprising between five and ten residential units. The third is a residential property that already contains one or more commercial properties.

The Qualification Criteria to Pursue a Commercial Mortgage

You will have to meet certain requirements to pursue a commercial mortgage. The bar is set quite high, as loans for commercial properties are considerably more valuable than those for residential properties.

Below are the usual criteria that you may have to acquire.

1. A Good Credit History

Most lenders will not loan money to applicants with poor credit scores or little business experience, or startup capital. However, there may be lenders willing to accept applicants with a less-than-perfect credit history. The requirements for getting a good credit score will depend on the lender’s standards. You will have to get a little used to the different lenders’ requirements while shopping for the best commercial mortgage rates.

2. A Profitable Business

If you own a successful business, commercial lenders expect you to be profitable and able to provide steady payments. You will likely provide them with your business plan and financial projections to prove that you have the money on hand to make your payments on time. Some lenders may have a minimum net worth requirement of about $100,000 to show that you are able to handle the loan. The money should be liquid, not in equity, so that you will use personal finances, cash, stocks, or other assets.

3. A Good Down Payment

Commercial property typically requires a larger down payment than a residential property due to the larger risk. A down payment on a mixed residential and commercial property usually falls between 20 and 35 percent of the purchase price, while a purely commercial property has a higher down payment requirement, usually near 50 percent.

4. A Debt Service Coverage Ratio

The loan-to-value ratio is the most important criterion lenders will look at when you apply for a loan. It is a way of determining the amount of money you need to borrow. Lenders will consider how much cash you have available to make your monthly house payments. The ratio tells them how much debt you can handle.


Overall, a commercial mortgage is another type of mortgage loan that can be obtained to purchase commercial property, and it is somewhat of a greater value than residential property.

Finding the right lender, the right down payment and the right type of loan will help you get the most out of your loan. These tips should help you navigate your way through the commercial mortgage process and ensure that you get the best possible rate and terms on the mortgage you require.

If you are looking for a reliable company that provides mortgage services in Ottawa, look no further than our expertise here at Ottawa Mortgage Services. We offer mortgage agent services for first-time home buyers, self-employed individuals, and commercial clients. We also help with refinancing, pre-approvals, and debt consolidation. Call us today and let us discuss all your viable mortgage options.