Equity Over Income

Banks and other federally regulated lenders in Canada are required to follow strict guidelines when evaluating mortgage applications. Their approval process is heavily weighted toward:

• Verifiable income: Proof of steady, sufficient employment income.

• Credit score: A high credit score is often mandatory.

• Debt-to-income ratio: Your total monthly debts (including the new mortgage) shouldn’t exceed 44% of your gross income.

• Stress test: You must prove you can afford payments at a higher qualifying rate than your contract rate.

These requirements can disqualify many otherwise responsible borrowers, such as:

• Self-employed individuals with fluctuating income

• Retirees living off investments

• New immigrants without a Canadian credit history

• People recovering from bankruptcy or credit issues

Greenlight Capital Canada is a leading private lender specializing in equity-based mortgage solutions for Canadians who don’t qualify with the banks. Their approach is rooted in understanding that every borrower’s story is unique—and that your home’s value can be your greatest asset.

What Sets Greenlight Capital Canada Apart?

• No income documentation required: Approval is based on the equity in your property, not your pay stubs or tax returns.

• High loan-to-value (LTV) ratios: Up to 80–85% LTV in major cities, and competitive rates in smaller towns and rural areas.

• Flexible with credit: Past bankruptcies, tax arrears, or bruised credit are not automatic disqualifiers.

• Speedy process: Commitments and letters of intent can be issued within hours, and closings typically occur in 7–10 days.

Step 1: Assess Your Equity

Calculate your home’s equity:

Home Equity="Current" Market Value−Outstanding Mortgage Balance

Home Equity="Current" Market Value−Outstanding Mortgage Balance

For example, if your home is worth $800,000 and you owe $400,000, you have $400,000 in equity.

Step 2: Determine Your Loan-to-Value (LTV) Ratio

Lenders Greenlight Capital Canada will lend up to a certain percentage of your home’s value. For instance, with an 80% LTV cap:

Maximum Loan="Home" Value×80%

Maximum Loan="Home" Value×80%

Maximum Loan="$800,000×0.8=$640,000

Maximum Loan="$800,000×0.8=$640,000

If you already owe $400,000, you could potentially borrow up to $240,000 more.

Step 3: Application and Appraisal

• Submit a simple application and basic property documents.

• The lender arranges an appraisal to confirm your home’s value.

• If everything checks out, you receive a commitment and move to closing.

Common Scenarios Where Equity Lending Shines

• Self-Employed Borrowers: Income can be hard to verify, but strong equity can secure approval.

• Debt Consolidation: Use your equity to pay off high-interest debts and improve cash flow.

• Home Renovations or Investments: Access funds for upgrades or to invest in additional properties.

What You’ll Need to Qualify

While income and credit are less important, you’ll typically need:

• Sufficient equity in your property

• A clear exit strategy (e.g., sale, refinance, or improved income)

• Basic documents: property tax bill, mortgage statement, and appraisal

The Application Process with Greenlight Capital Canada

1. Initial Inquiry: Contact Greenlight Capital Canada directly or through your mortgage broker.

2. Submit Documents: Provide property details and basic paperwork.

3. Appraisal: The property is appraised to determine value and set the LTV.

4. Letter of Intent: Receive a preliminary offer, often within hours.

5. Legal and Closing: Once you accept, lawyers coordinate the transaction and funds are advanced—often within a week.

Pros and Cons of Equity-Based Mortgages

Pros

• Fast approvals

• Flexible with income and credit

• Access to cash for various needs

• Personalized solutions

Cons

• Higher interest rates than traditional banks

• Shorter terms (often 1–3 years)

• Fees may be higher

When Equity Lending Makes Sense

Equity-based mortgages are not for everyone. They’re best suited for:

• Borrowers who need quick access to funds

• Those who plan to resolve income or credit issues in the near future

• Homeowners with significant equity

• People who value flexibility over the lowest possible rate