FREQUENTLY ASKED QUESTIONS
Income Property Credit Line - Frequently Asked Questions
What Is the Income Property Credit Line?
The bank told me that if consolidate all my Credit Card debt into my HELOC that I will have to cancel my credit cards once they are paid off. Does it work the same way with the Income Property Credit Line?
NO. Unlike the Bank, you will not be required to close any Credit Card or Line of Credit facility once it has been paid off using the IPCL.
WHO CAN APPLY FOR THE INCOME PROPERTY CREDIT LINE?
Anyone that owns their own home OR also owns a Rental or Income Property can apply for the IPCL.
If you have Equity in your Home or Your Rental Property, you qualify for this product.
“I DON’T NEED THE VISA CREDIT CARD - I JUST NEED A LINE OF CREDIT. CAN I APPLY FOR ONLY ONE PRODUCT?”
The Income Property Credit Line is a Home Equity Line of Credit AND a Visa Credit Card, so you get access to BOTH products. This means that you can access the funds in the following ways:
Use the VISA Credit Card to make all of your Purchases & access cash at any ATM or Retail store displaying the Visa or Plus logos
Transfer the funds from the IPP ELV into your Bank Account
Write Cheques from your IPP ELV account for any amount.
How long does it take to get approved for The Income Property Credit Line?
It takes about 10 business days from the time we receive your application to the day your Income Property Credit Line Card is issued. However, that may change slightly based on appraiser availability.
Before I send you my application and personal documents, how do I know that your company is real and that my information is protected?
Great Question. The Income Property Credit Line is an exclusive Lending Product issued from our Brokerage. We are registered Mortgage Brokers and are Licenced under the FSCO (FINANCIAL SERVICE COMMISION OF ONTARIO).
We are required to provide our Mortgage Broker and Brokerage Licence Number on our Website, Marketing, and email communication. You can verify our Licence number by going to the FSCO website: www.fsco.gov.on.ca/en/
The IPCL is a product issued and managed by Home Trust Canada. Their Website is www.Hometrust.ca
Do you work for the Credit Card Company or the Bank?
WE REPRESENT YOU, THE CLIENT and have a fidiciury responsibility to work in your best interests. Banks do not necessarity work in your best interests. They hide important clauses in the fine print, advertise short-term promo rates only to jack up the rate later...
We are Licenced Mortgage Brokers in Canada and are licenced under the FSCO.
The Realtor® ELV is an exclusive product that our brokerage is offering, but make no mistake, we are representing you when we submit your application for the Realtor® ELV.
How is my Monthly Payment Calculated when I draw money or make purchases using my Income Property Credit Line
The Monthly Payment for charges on the IPCL is dependent on the Interest Rate that you qualified for. The breakdown is as follows:
For Rates Between 4.99% to 5.99% the Monthly Payment is 0.75% of the Balance.
For Rates Between 6.99% to 9.99% the Monthly Payment is 1.00% of the Balance.
WHAT IS THE INCOME PROPERTY CREDIT LINE?
The Income Property ELV is the only Home Equity Line that you can register on a Residential Rental Property.
It is a combination of a Home Equity Line of Credit with the added convenience and perks of a Platinum Visa Card.
Applicants can secure up to $500,000 by registering the IPCL against the equity in their home just like a Home Equity Line; and access the funds using a convenient VISA card.
WHAT IS THE DIFFERENCE BETWEEN THE INCOME PROPERTY VERSUS A REGULAR HOME EQUITY LINE OF CREDIT (HELOC)?
There are quite a few differences that make the Income Property Credit Line more attractive to Rental Property Owners. The two major differences between an IPP ELV and a HELOC are:
The Home Equity Line is attached to a VISA Card;
Applicants are Approved using 100% of the Rental Income collected on Investment Properties rather than their Personal Income or Business Financial Statements reported to the Canadian Revenue Agency.
Rental Property Owners can take advantage of all the perks that come with a Visa Card including a 21-Day Interest Free Period and 1% Cashback on all Purchases. If you pay the balance back within the 21 Day Interest Free period ---you won’t pay any interest and VISA will pay YOU 1% for the purchase.
You don’t get those Perks with a HELOC!
WHAT CAN I USE THE INCOME PROPERTY CREDIT LINE FOR?
The majority of our Clients use the IPP Credit Line to build their Rental Property book by leveraging existing Rental Properties. Some other examples of how our Clients use their IPP ELV are:
Renovate the Units in their Rental Properties
Consolidate Credit Card debt
Purchase an additional Rental Property
Access the funds for a deposit on a Pre-Construction Condominium
Pay off the Mortgage on their Home using the Equity on their Rental Properties
Pay off any Private Mortgages
WHAT PROPERTY TYPES ARE ELIGIBLE TO QUALIFY FOR AN INCOME PROPERTY CREDIT LINE?
Essentially, all properties that are Registered with the Municipality as RESIDENTIAL are eligible for the IPP Credit Line as well as some properties that are considered AGRICULTURE.
However, homes that are outside a major urban city centre in a rural area will be reviewed on a case-by-case basis. We will advise the applicant before they order an Appraisal if the property is in the Lending Area.
The following property types do not qualify for the IPP Credit Line:
Rental Properties that exceed 5 units
CAN I USE THE INCOME PROPERTY ELV TO PAYOFF MY CREDIT CARDS AND OTHER DEBT?
Yes. And it’s probably a good idea. Because the Interest Rates for the Income Property ELV are so low compared to other credit facilities, Clients often use it to consolidate all their debt.
By doing so, it saves you thousands of dollars in interest, simplifies your Rental Property Expenses and allows you to only have to make one payment a month.
Is there anything else I should know about this Credit Line VISA?
Registered trademark of Home Trust Company. *Visa Int./Home Trust Company, Licensed user of mark. Each mortgage application is subject to approval based on its own merits in accordance with Home Trust’s policies and guidelines. The rate used to calculate the GDS and TDS ratios for all mortgages will be the greater of the contractual mortgage rate or ELV rate (offer rate) plus 2% or the five year benchmark rate published weekly by the Bank of Canada. Product may differ or may not be available in Quebec. You can qualify for up to 80%1 of the value of the property, minus the balance registered mortgages. Total Home Equity Line of Credit on Residential Real Estate cannot exceed 65% of the value of the property.
Visa Auto Rental Collision/Loss Damage Insurance: The Visa Collision/Loss Damage Insurance program is underwritten by Royal and Sun Alliance Insurance Company of Canada and is provided by a group policy issued to Visa Canada Association. Complete terms and conditions, including exclusions and limitations, are outlined in the Certificate of Insurance provided with your card.
2 The Visa Zero Liability Policy for protection against fraud: Certain restrictions, limitations and exclusions apply. The Visa Zero Liability policy protects Visa cardholders who have a Canadian issued Visa card and experience fraud through unauthorized use of their card. Visit www.visa.ca for more information.
3 Purchase Security Insurance, so you can shop at ease: Purchase Security insurance is underwritten by Royal Sun & Alliance Company of Canada. Complete terms and conditions, are outlined in the Certificate of Insurance provided with your card.
Do you need to request a copy of my Credit Bureau?
Yes. Pulling a Credit Bureau on every applicant is part of the approval process.
HOW MANY YEARS DO I NEED TO OWN MY RENTAL PROPERTIES BEFORE I CAN QUALIFY FOR THE CREDIT LINE?
Apply immediately – as long as the Unit is Tenanted, the Rental Income can be used to qualify. If the unit is vacant, we can use your Personal Income to qualify.
I don’t own a home, can I apply for the Income Property Credit Line?
No. The Income Property Credit Line Visa must be secured against a residential property - either your own home or an income property.
I CURRENTLY DO NOT OWN ANY RENTAL PROPERTIES &I NEED FINANCING TO PURCHASE A NEW RENTAL PROPERTY, CAN I APPLY FOR THE INCOME PROPERTY CREDIT LINE?
Absolutely. As long as you own a Home that has Equity available, we can approve you for upto a $500,000 CREDIT LINE.
The Income Property Credit Line is designed for all types of Investors - whether you are new to the Investment game or a Sophisticated Investor.
I understand that the Income Property Credit Line but can I use it at the ATM?
And if I wanted to withdraw a large amount of cash like $10,000, how would I do so?
Yes. You can definitely use the IP Credit Line at the ATM and use it to make purchases at any business that accepts VISA or DEBIT.
You will also be issued Cheques with your IPCL, so you can write a cheque to anyone. If you need to access to a large sum of funds (like $10,000 in cash), just write a cheque to yourself and cash it at your bank.
“I HAVE A RENTAL PROPERTY THAT HAS 6 UNITS. CAN I APPLY FOR THE INCOME PROPERTY CREDIT LINE?”
The Income Property Credit Line can be registered against the Equity of a Residential Rental Property that has 1 to 4 units.
Any Rental Properties with 5+ Units is considered a Commercial Property – Although we may not be able to qualify you for the IPCL we have other commercial financing available for you!
I am behind in paying my Property Taxes. Do I have to pay my outstanding Property Taxes before I apply for the Income Property Credit Line?
No. You can apply and be approved for the IPCL if you have not paid you Property Taxes.
However, before the IPCL can be issued, all Property Taxes must be paid and be up to date. But you can use the IPCL to pay the taxes - which solves both problems.
“I SAW THE 4 -STEP PROCESS FOR GETTING THE INCOME PROPERTY ELV ON YOUR WEBSITE. CAN YOU EXPLAIN THE STEPS IN DETAIL?”
We understand that Clients can be very busy and that your time is limited, so we have tried to simplify and streamline the process as much as possible to provide an Approval within 3 to 5 Business Days of submitting all the requested documents.
First, we'll start with a brief 5-minute phone call before you send us any paperwork. It's important that you understand the process and the IPP in detail before we start your Application.
We also let you know what documentation we need to process your Application. Applicants do not have to physically drop off their documents to our office; they can be sent via email or fax.
Typically, we will have an Approval for you within 3 to 5 Business days. Within those 5 days we might have a few additional discussions as questions may arise while we prepare your application for submission.
Your Approval will include a Credit Limit amount and an Interest Rate range. If you are satisfied with those terms, we move forward by ordering the Appraisal which generally takes 3 days to be completed after the inspection date. When the Appraisal is complete, we will issue you a Formal IPP Credit Line Commitment to review and sign. If you don’t like the terms, you can cancel the application without paying a Cancellation Fee.
One of our Mortgage Agents will review the IPP Credit Line Commitment page by page with you over the phone or in person.
It is important to note that we do not work for the Lender, and that as Mortgage Agents we represent you in this transaction and have a fiduciary responsibility to work in your best interest and to disclose all material items mentioned in the commitment.
After you sign the Commitment, we submit it to the Lender with any additional documents needed to activate the Credit Line. Once the Commitment and Loan conditions have been validated, the Lender instructs the Lawyer representing you, along with the Final Mortgage Documents to be signed.
When you meet with your Lawyer and the Income Property Credit Line is Registered, you will receive Cheques as well as the VISA Card within 10 Business Days.
CAN I USE THE EQUITY IN A COMMERCIAL PROPERTY THAT I OWN TO REGISTER THE INCOME PROPERTY CREDIT LINE?
We can only register the Credit Line against a Residential Property. However, as mentioned above, we provide many solutions for Commercial Properties so don’t hesitate to give us a call! 416.461.9800 X300
WHAT DOCUMENTS DO I NEED TO PROVIDE TO BE APPROVED FOR THE INCOME PROPERTY CREDIT LINE? HOW ARE THESE DIFFERENT FROM THE DOCUMENTS A BANK WOULD REQUIRE?
The Income Property ELV is the only Credit Line that accepts 100% of Rents as Income. This is good news for Rental Property Owners because that means your Approval is based on the Lease Agreements you have in place for each Unit you own.
Other Banks and Lenders will only accept 50% of the Rental Income and will request Personal Income Tax Documents for a Credit Line.
The problem with only accepting 50% of the Rental Income is that it is not an accurate reflection of the profitability of your Rental Property.
WHAT DOCUMENTS DO I NEED APPLY FOR THE INCOME PROPERTY CREDIT LINE?
In order to apply for the Income Property Credit Line, we will need the following documents:
INCOME PROPERTY APPLICATION
PROPERTY TAX BILL
If you own additional properties under your personal name, we will also need:
PROPERTY TAX BILL(S)
Once you are Approved, we need to order an Appraisal on your home to verify its value.
After the property is appraised, we will need a VOID CHEQUE to arrange automatic minimum payments.
WHAT FACTORS DETERMINE IF I AM APPROVED FOR AN IPP CREDIT LINE, FOR HOW MUCH, AND AT WHAT INTEREST RATE?
The major factors that determine your Limit Amount and Interest Rate are:
The strength of your Rental Income
Your Personal Credit Score
The Equity Available on your Rental Property
Property location & condition
If there is not enough rental income to qualify/maximize the credit limit, we can then use your Personal Income to qualify for more.
The Interest Rate is mainly determined by your Credit Score and the Loan to Value of the total mortgages registered against you’re the Appraised Value of your Home.
Simply put, a Client that owns a Home in a major city, has a Credit Score over 700 and a low LTV of 50% would qualify for a better Interest rate than a client with a Credit who owns a home in a Rural Area, has a score under 700 and higher LTV of 80%.
WHAT DOES LOAN-TO-VALUE RATIO (LTV) MEAN?
The Term Loan-To-Value Ratio is simply the total value of Mortgages against the Appraised Value of your home stated in a percentage. For example, if your property was Appraised at $100,000 and your 1st Mortgage amount was $60,000, your Loan-To-Value would be 60%.
To calculate the LTV, you would do the following:
- Divide 60,000 into 100,000, which would equal: 0.60
- Multiple 0.60 by 100 which would be 60.00 or 60%
WHAT IS THE MAXIMUM LOAN TO VALUE (LTV) ON MY HOME THAT I CAN BE APPROVED FOR WITH THE INCOME PROPERTY CREDIT LINE?
Canadian Mortgage Law states that all Credit Lines or HELOCS cannot exceed 65% Loan-To-Value of the Appraised Value of your Home.
For example, if your home was worth $100,000 and was Mortgage Free, then you could be Approved for up to $65,000 or 65% LTV.
If you have a 1st Mortgage already registered against your home, then the total of the 1st Mortgage Balance and Income Property Credit Line cannot exceed 80% Loan-to-Value of the Appraised Value of your home.
For example, if your home was worth $100,000 and there was a 1st Mortgage Balance of $65,000 (65% LTV), then you could be Approved for a Credit Limit up to $15,000 (15% LTV).
If you add the 1st Mortgage Balance and the Credit Limit the total LTV would be $80,000 or 80% LTV
“MY WIFE IS ON TITLE ON OUR RENTAL PROPERTY. DOES SHE HAVE TO BE A CO-BORROW ON THE CREDIT LINE?”
Since the IPP ELV is secured against the Equity of your home like a HELOC, any person who is on Title on the Home must be registered as a CO-BORROWER on the CREDIT LINE.
“MY RESIDENTIAL RENTAL PROPERTY IS HELD UNDER A HOLDING COMPANY; DO I STILL QUALIFY FOR THE IPP CREDIT LINE.”
Unfortunately, no – since the Rental Property is under a Corporation it is considered a Business and does not qualify for this product.
“I WANT TO QUALIFY FOR THE FULL $500,000 CREDIT LINE LIMIT, BUT I DON’T THINK THE RENTAL INCOME WILL BE ENOUGH TO QUALIFY. I ALSO WORK FULL-TIME; CAN I USE MY PERSONAL INCOME TO QUALIFY FOR A HIGHER CREDIT LIMIT?”
Yes! We can use the Income of any Person who is on TITLE of the Home to maximize the Credit Limit you are Approved for.
We will not require your Personal Tax Information. We will only need the following income documents from the list below to apply for a Higher Credit Limit:
- SALARIED EMPLOYEE: JOB LETTER / PAYSTUB
- HOURLY EMPLOYEE: JOB LETTER / PAYSTUB / T4: 2-YEARS
- SALARY & COMMISION: JOB LETTER / PAYSTUB / T4: 2-YEARS
MY RENTAL INCOME IS ENOUGH TO QUALIFY. DO I NEED STILL NEED TO PROVIDE MY PERSONAL INCOME DOCUMENTS?
If we can Approve you for the IPP Credit Line amount you require by only using your Rental Income, then we will not request any of your Personal Income documents.
I THINK MY HOME IS WORTH $100,000 AND I AM MORTGAGE FREE. BASED ON THAT VALUE, I WAS APPROVED A $65,000 INCOME PROPERTY CREDIT LINE. I AM TOLD I NOW NEED TO ORDER AN APPRAISAL, WHY DO I NEED TO ORDER THAT AND WHO PAYS FOR IT?
An official Appraisal needs to be ordered so the value of the home can be verified as well as to ensure that the property is in good condition to qualify for the Credit Line.
The Cost of the Appraisal is always paid for upfront by the Client. For Credit Lines over $300,000, the Appraisal Fee (up to $500) will be reimbursed to the client within 5 Business days after the IPP Credit Line is registered.
I WAS PRE-APPROVED FOR A $65,000 (65% LTV) INCOME PROPERTY CREDIT LINE. WHAT HAPPENS IF THE APPRAISED VALUE OF ME MY HOME COMES IN HIGHER AT $120,000 OR LOWER AT $80,000?
If the Appraised Value of your home is higher at $120,000 then we can increase your Credit Line upto 65% LTV or to $78,000. If the Appraised Value of your home comes lower at $80,000, then we would decrease your Credit Limit to 65% of the lower value, or to $42,000.
WHY DO I NEED A LAWYER TO ISSUE MY INCOME PROPERTY CREDIT LINE?
Since the Income Property Credit Line is secured against the equity of your home like a HELOC, the security needs to be registered as a Mortgage by a Lawyer.
We work with a number of reputable Law Firms & have negotiated a reduced fee for West Liberty clients. The Law firm also provides Mobile Signing Services for your convenience and will meet you at your Work or Home to sign the legal documents.
CAN I WITHDRAW MONEY FROM THE CREDIT LINE WHEN I MEET WITH MY LAWYER OR DO I HAVE TO WAIT FOR VISA CARD TO BE SENT TO ME?
You can request to withdraw any amount by the Lender. Those funds can to be issued to you via BANK DRAFT by your Lawyer on closing.
HOW LONG DOES IT TAKE TO GET APPROVED AND GET THE INCOME PROPERTY ELV ACTIVATED?
It takes about 10 business days from the time we receive your application to the day your INCOME PROPERTY ELV Card is issued. However, that time may vary based on Appraiser availability.
“I HAVE A CREDIT SCORE UNDER 650 AND HAD SOME LATE PAYMENTS LAST YEAR. DO I STILL QUALIFY?”
Yes! Your Credit Score is just one of the components that are used to qualify you for the Income Property ELV. We do not turn down applications based on a low score alone. We encourage you to apply!
“I DON’T WANT TO GET A MORTGAGE ON MY RENTAL PROPERTY, CAN I GET THE IPP CREDTI LINE ON MY HOME?”
Yes, of course! Although the IPP ELV is a Special Product we offer for Rental Property Investors to access the Equity in their Rental Properties - we can also leverage the Equity in your Home and provide you with our Classic Equity Line Visa.
As for documents, we would need the same paperwork on your Home: Mortgage Statement/Property Tax Bill, along with Personal Income Documents listed below (documents may vary):
- SALARIED EMPLOYEE: JOB LETTER / PAYSTUB
- HOURLY EMPLOYEE: JOB LETTER / PAYSTUB / T4: 2-YEARS
- SALARY & COMMISION: JOB LETTER / PAYSTUB / T4: 2-YEARS
Fees & Costs
Will I be charged any Fees to apply for the Income Property Credit Line?
No. There are no upfront Fees to submit your application for the Credit Line.
I have been approved for $100,000 Credit Line. What are the costs to activate the IPCL?
After you have accepted the approval, we then order an appraisal to confirm the value of your property. The cost of the appraisal ranges from $250 to $400 depending on the location of your property and its value. We will order the appraisal for you, and you can pay the appraiser directly online.
After the appraisal is completed the only remaining costs are Legal Fees which are approx. $700 and the Processing Fee (2.99% of the Credit Limit). You do not have to pay for the Legal and Processing Fees out of pocket, they will be charged to your ELV card.
Can I use my own Lawyer to register the Income Property Credit Line?
Yes. You can use your own lawyer to register the Credit Line or we can send a Lawyer to your home/office to sign the documents and issue you the IPCL onsite.
Why are the interest rates on the IPCL higher than the HELOC at the Bank?
The interest rates offered by the IPCL start at 4.99% which are very similar to the rates the Banks are typically offering for their HELOCs.
However, the IPCL has all the benefits of a HIGH END Credit Card such as 1% Cashback, Travel Protection, Roadside Assistance and the ability to add the IPCL to your Rental Property - which no Bank in Canada offers.
Ultimately, the benefits you receive with the IPCL by far exceed a HELOC from the bank.
Do I need to order an appraisal for my property? How much does it cost?
Yes. An appraisal is always required when a property is being used as security for a Credit Line. But we only order an appraisal after we approved you for the IPCL and you accept the rate and credit limit.
The appraisal is mandatory to advise the lender of the value of your home. Note: The credit limit on your card may increase / decrease depending on the value reported by the appraiser.
How are the monthly payments calculated when I use the Income Property Credit Line?
You only pay interest on the credit you've used.
The monthly payment is 1% of your balance. For example, if you had a balance of $50,000 on your card, your monthly payment would be $500. Which is quite low compared to other lending products on the market.
Are there any Monthly or Annual Fees?
No. There are NO MONTHLY OR ANNUAL FEES.
The interest rates offered range from 4.99% - 9.99%. How is my interest rate determined?
Determining what Interest rate you are approved for depends on numerous factors.
The main considerations are: Credit Score and History, the Loan to Value of the IPCL, and the marketability of the Property. It's our job to get every client the lowest interest rate and the largest Credit Limit amount possible.
DOES THE INTEREST RATE INCREASE IF THE INCOME PROPERTY CREDIT LIMIT IS REGISTERED IN THE 2nd MORTGAGE POSITION BEHIND MY 1ST MORTGAGE?
Unlike Private and Bank Mortgages whose Interest Rates significantly increase between 8% to 20% when they are in 2nd Mortgage Position - We are proud to say that the Mortgage position of the IPP Credit Line does not affect the Interest Rate.
DOES THE IPP CREDIT LINE INTEREST RATE FLUCTUATE WITH THE VARIABLE BANK PRIME RATE LIKE THEY DO FOR REGULAR HELOCS?
NO! This is another attractive feature of the IPP Credit Line.
Unlike a regular HELOC, the Interest Rate for the IPP ELV is a Fixed Rate -not a Variable rate- and never fluctuates with the changes made by the Banks to the PRIME RATE.
I HAVE BEEN APPROVED FOR A $300,000 IPP CREDIT LINE, WHAT ARE THE COSTS ASSOCIATED WITH ACTIVATING IT?
There are no Upfront Fees to Apply or to be Approved for the IPP Credit Line. After the Approval is issued to the client the following are the costs associated to activate the Credit Line Visa.
- Home Appraisal
- Legal Fees – Can be charged to the Credit Line
- Processing Fees – 2.99% of the Limit - Can be charged to the Credit Line