Frequently Asked Questions
Browse FAQs below, or contact our team for extra support.
Personal Loan FAQ
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A personal loan, also referred to as an instalment loan, is repaid over a set period of time, or term, through regular, affordable payments. It can be used to cover unexpected expenses like car or home repairs, replacing appliances, or planned expenses like a home renovation or vacation.
Are you wondering what the difference is between our loan products? Read more about secured vs. unsecured loans, or contact us to find out which one is right for you.
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First, let's take a look at what affects your interest rate:
Personal factors like your credit score and the type of loan you choose
Economic factors like inflation and Canada’s prime lending rate
You can’t control economic conditions, but you can control the personal factors that a lender considers when determining the interest rate on your loan.
Here are three tips that can rebuild your credit score and lower the interest rate on your next personal loan:
Use less than 25% of your credit card balance – staying under this threshold can help improve your credit score
Limit credit inquiries – by doing so, this will reflect positively on your credit score
Choose a secured loan if you’re a homeowner. Contact us to speak to your Lending Specialist about your options.
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Apply for a secured loan from The Source Financial in three steps:
Apply online
Enter how much you’re looking to borrow and complete a few simple details.
Connect with a lending specialist
A lending specialist will be in touch to customize your loan details.
Receive funding
Receive direct funding as early as same day for most loans.
Interested in a secured loan? Apply now in minutes to find out how much money you could borrow.
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There are several types of lenders available to Canadians. The lender you choose will depend on your financial situation. The Source Financial focuses on lending to Canadians in the fair to good credit score range. Often, people come to us as an alternative solution if they don’t meet the lending criteria at their bank.
Since we’re mainly focused on lending money, we’re able to service customers quickly – most of our customers receive their money the same day they apply. Our quick and personalized service makes us a convenient option for anyone facing an urgent or unexpected expense.
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The Source Financial can lend you money quickly to cover an urgent or unexpected expense like a car or home repair, with a personal loan up to $100,000. Get started with an online loan quote to find out how much money you could qualify for, and what your payments might be (the entire process only takes a few minutes). If you’re happy with your loan quote, complete the loan process online or at your local branch – you could have your money the same day you apply.
Once the loan is approved, we can direct deposit the money into your bank account.
Secured Loan FAQ
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A secured personal loan, also referred to as a home equity loan, is backed by equity in an asset – typically a house. Secured loans differ from unsecured loans, which are only backed by a signed contract or agreement. Some other differences between a secured loan and an unsecured loan include:
Lower Interest rate: Since a lender has more confidence that you’ll pay back a loan, they often offer you a lower interest rate on a secured loan
Lower loan payments: A lower interest rate leads to lower loan payments
Longer loan term: You can often choose a longer loan term with a secured personal loan, which can lower your monthly payments
A secured personal loan is a great option for homeowners interested in consolidating debt, covering the cost of home repairs and more.
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Low rate secured loans help you pay less interest over the duration of your loan.
The Source Financial’s secured loans offer a lower interest rate and lower loan payments compared to our unsecured personal loans. Homeowners can take advantage of these benefits by choosing to secure their loan against equity in their home.
Are you a current The Source Financial customer who is a homeowner, and interested in changing your unsecured loan to a secured loan? Contact us to speak to your Lending Specialist about your options.
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Apply for a secured loan from The Source Financial in three steps:
Apply online
Enter how much you’re looking to borrow and complete a few simple details.
Connect with a lending specialist
A lending specialist will be in touch to customize your loan details.
Receive funding
Receive direct funding as early as same day for most loans.
Interested in a secured loan? Apply now in minutes to find out how much money you could borrow.
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Yes – a secured loan is sometimes used to describe the following borrowing options:
Home equity loan: An installment loan is secured against equity in the home. The loan amount is based on the difference between the home’s current market value and the mortgage balance due. For this reason, a home equity loan is also typically considered a second mortgage. Once the loan is paid off, the borrower cannot access funds unless they apply for a new loan or renew their loan.
Home equity line of credit (HELOC): A home equity line of credit is a revolving source of funds, similar to a credit card, that can be accesssed as needed. It is secured against equity in a home and the amount available is also based on the difference between the home’s current market value and the outstanding mortgage balance.
Car and auto loan: A used car loan is secured against the vehicle you intend to purchase, which means the vehicle serves as collateral for the loan.
Mortgage: A mortgage is used to purchase a home or property. The property serves as collateral for the loan.
Unsecured Loan FAQ
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An unsecured personal loan is a loan that doesn’t require any type of collateral and is backed by a borrower’s creditworthiness and a signed contract or agreement. Unsecured loans differ from secured loans, which are backed by the equity in an asset – typically a house. Some other differences between an unsecured debt and a secured debt include:
Pre-payment penalties: On an unsecured loan from The Source Financial, you can make extra loan payments or pay it off early and you won’t be charged any penalties
Same-day: Since there is less paperwork involved with an unsecured loan, you could have access to your money the same day you apply
No fees: You won’t be charged any application fees when you apply for an unsecured loan
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An unsecured loan can be used to consolidate bills and debt, including credit card balances and loans. You can use it to pay off all your outstanding balances and combine your debt into one manageable payment. Since you can access your money in as little as one day with an unsecured loan, you can use it to pay for emergency expenses like home or car repairs.
Aside from these reasons, you can use an unsecured personal loan to cover any of life’s expenses, like managing home or family expenses, travel, weddings or something else altogether.
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Yes – an unsecured loan may be used to describe the following borrowing options:
Payday loan: A short-term loan intended to cover an immediate gap in your cashflow. People typically only borrow a few hundred or a few thousand dollars through a payday lender. If the debt is not paid back in the timeframe outlined in your contract, interest charges can accumulate quickly.
Instalment loan: An unsecured loan that is paid back through regular payments, or instalments, on a set repayment schedule. The predictability of payments is helpful for anyone who benefits from a structured plan to pay back their debt.
Line of credit: A type of revolving credit whereby borrowers can withdraw cash as needed and interest is charged until the balance is completely paid off. Typically, a minimum payment is required each month. If only the minimum payment is being made consistently, interest can build over time. A line of credit does not offer a set or pre-determined payment schedule aside from the minimum monthly payment.
The Source Financial’s unsecured instalment loans allow borrowers in the fair to good credit score range to access up to $25,000 at rates starting from 26.99% with no proof of homeownership required.
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Apply for an unsecured loan from The Source Financial in three steps:
Apply online
Enter how much you’re looking to borrow and complete a few simple details.
Connect with a lending specialist
A lending specialist will be in touch to customize your loan details.
Receive funding
Receive direct funding as early as same day for most loans.
Interested in an unsecured loan? Apply now in minutes to find out how much money you could borrow.
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An unsecured loan is backed by a written agreement or contract. Lenders take on greater risk when lending out unsecured funds – if you fail to make payments on an unsecured loan and default on your loan, your lender is left with the loss. As a result, unsecured loans typically max out at lower loan amounts and have higher interest rates compared to secured loans.
A secured loan is backed by an asset, like your house, giving your lender greater confidence that you’ll make loan payments on time. If you fail to make payments on a secured loan, your lender can technically assume ownership of your house. As a result, secured loans typically allow borrowers to access more money, and lower interest rates.
The Source Financial offers secured and unsecured personal loans that fit your needs and budget. Compare our loan products to find out which one is right for you.
Debt Consolidation FAQ
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To complete your consolidation loan with The Source Financial, you’ll need to verify your personal identification, employment and income, and housing information.
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We recommend these 5 steps to consolidate debt:
Make a list of your debts: Write down all the balances of bills, loans, or other debts you need to pay off and add up the total debt you owe. This will let you know much money you’ll need to borrow to consolidate all your debts.
Get an online loan quote: Try The Source Financial’s online loan quote to find out how much money you could qualify for, and what your payments might be. No obligation, no impact to your credit score.
Speak with a Lending Specialist: After you receive your quote, a Lending Specialist will be in touch over the phone. They’ll ask a few questions about your debt repayment goals so they can recommend the right loan consolidation options for you.
Choose a payment frequency: Your Lending Specialist will help you select a monthly, semi-monthly, bi-weekly or weekly payment frequency.
Finalize the application online or in branch and consolidate debt as soon as today: Once your application is complete, you could have your loan the same day you apply. Use your consolidation loan to pay off balances and experience relief with a simplified debt repayment schedule.
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If you’re a homeowner, a secured personal loan may be your best borrowing solution. You can access more money (up to $100,000), than an unsecured personal loan (a maximum of $25,000). A larger loan could be ideal if you’re consolidating high credit card or loan balances. Plus, secured loans offer lower interest rates and lower loan payments.
If you’re not a homeowner or want the flexibility of paying off your loan at any time, an unsecured loan is a right option for you. You can borrow up to $25,000 with an unsecured loan, and will still benefit from affordable payments that fit your budget.
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If you’re regularly making minimum payments on your credit card, you should consider credit card consolidation.
Take a look at your credit card statement; there should be a section that tells you how long it will take to pay down your balance if you continue to make minimum payments - most people are surprised by how long this is. Interest charges will accrue throughout this entire period.
Consistently carrying a high credit card balance can also negatively impact your credit score, as you’ll have high credit utilization. To improve your credit score, you’ll want to keep your credit utilization (the balance of your account vs. the limit) to less than 25% of your available balance.
When you consolidate your credit card debt with a personal loan, your credit card balance will be cleared and you can focus on repaying the loan instead. Unlike a credit card, which has revolving credit (meaning you can borrow against the balance again and again, with no fixed end-date), your consolidation loan is an instalment product with a fixed loan term. You’ll centralize your debt with a set repayment schedule, and know the date that your loan will be paid off.
Online Loan FAQ
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If you have access to a computer or mobile device and a camera, you can borrow $500-$25,000 in as little as 24 hours from The Source Financial, all without leaving home.
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Online loan applicants must be Canadian citizens who meet our current credit standards and have valid personal identification, and verifiable employment and income information.
An email address and access to a camera is required to provide photos of either a valid piece of government-issued Canadian ID or two pieces of secondary IDs.
Having the required documents prepared when you meet with your Lending Specialist online will ensure the application process goes smoothly and you get your funds as soon as possible.
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An unsecured personal loan is quick and easy to apply for online. During the application, a Lending Specialist will be in touch over the phone to walk you through the loan details and explain what documents are required. Once the application is complete, your loan will be deposited directly into your account in as little as 24 hours.
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Online loan options range from traditional financial institutions like banks, credit unions, and financing companies to alternative lenders; and from peer-to-peer lending platforms to payday lenders. When researching lenders for online loans across Canada, beware of fraudulent lenders.
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Apply for an unsecured loan from The Source Financial in three steps:
Apply online
Enter how much you’re looking to borrow and complete a few simple details.
Connect with a lending specialist
A lending specialist will be in touch to customize your loan details.
Receive funding
Receive direct funding as early as same day for most loans.
Interested in an unsecured loan? Apply now in minutes to find out how much money you could borrow.
Credit Building Loan FAQ
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Yes, paying back a personal loan can help you build credit. How does this work? Paying back your loan through on-time, regular payments can positively impact the five main factors that make up your credit report, and ultimately determine your credit score:
Payment history: Making your loan payments on time and making extra loan payments establishes a track record of responsible borrowing.
Credit utilization: Using a personal loan to pay off revolving credit (such as a credit card) could lower your credit utilization ratio – 30% or less is recommended.
Length of credit history: Paying back your loan over the full loan term shows your ability to manage credit over time.
Credit mix: Having a credit mix – credit cards, loans, mortgages etc. – shows lenders and creditors that you’ve been able to manage different types of credit accounts.
Credit inquiries: When you apply for a personal loan, your lender will do a hard credit check. This can affect your score, but only in the short-term.
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If you have little to no credit history, it could be hard for you to qualify for common borrowing products such as credit cards, auto loans or retail financing, since most lenders require a credit history to open an account.
Taking out a personal loan can help you establish a credit history and demonstrate good money management skills. Doing so will help you prepare for other borrowing products in the future, such as a mortgage. Additionally, having good or excellent credit will expand your borrowing options and give you access to the best interest rates on future borrowing products.
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There is no set or average number of points your credit score will improve each month when you take out a credit building loan. When rebuilding credit, the path to improvement depends on the reason your credit score is low:
If your credit score is low because of poor payment history and/or debt collections, then it will take months of on-time payments to see any improvement and a few years or more to reestablish good credit.
If your credit score was negatively impacted by a high credit utilization ratio, and you pay off your balances in full, credit repair can happen quite quickly.
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You can start building credit from scratch with a credit card or a credit building loan. With on-time payments, responsible loan management and some patience, you’ll begin to establish a positive credit history.
Generally, building credit for the first time takes six months and at least one creditor reporting activity to Canada’s two credit bureaus. But remember, it’s important not to apply for numerous borrowing products in a short period of time, because too many applications – also known as hard inquiries – in a short time frame can damage your credit score. Try to space out credit applications by at least 6 months.
Once you have established credit, you can increase your credit score by continuing to demonstrate positive payment behaviours, keeping your credit utilization under 30% of available credit, managing a mix of borrowing products (credit card, car loan, personal loan, etc.) and monitoring your credit report regularly.
Home Equity Loan FAQ
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The advantages of home equity loans are that they typically have lower interest rates and higher borrowing limits than credit cards or unsecured personal loans because the loan is secured by the value of your home. This makes them a more affordable option for borrowing a large sum of money.
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Homeowners have four options for tapping into home equity:
Secured personal loan: A loan that requires some type of collateral, typically your house, to secure the loan. The collateral serves as a guarantee to the lender that they will be able to recover their money if you are unable to repay the loan. This option may be preferable if you’re looking to borrow a smaller sum of money quickly but want a lower interest rate than offered on an unsecured personal loan.
Second mortgage: A lump-sum loan based on the amount of equity you have in your home. The loan is paid back over a set period of time, with fixed monthly payments. A second mortgage may be preferable if you need to borrow a large sum of money, such as for home renovations or debt consolidation, but don’t want to adjust your existing mortgage.
Home equity loan of credit (HELOC): A revolving line of credit that allows you to borrow up to a certain limit, pay back the borrowed amount and then borrow again as needed. This option may be preferable if you need to access money on an ongoing basis for home repairs or unexpected expenses.
Cash-out refinance: A type of mortgage refinancing that allows you to refinance your existing mortgage and take out additional cash in the process. This option may be preferable if you want to lower your interest rate or change the terms of your existing mortgage while accessing home equity, but you only want one mortgage.
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Yes, one way to do this is by taking out a home equity loan – either a secured personal loan or a second mortgage. These types of loans are based on the amount of equity you have in your home and can be used for a variety of purposes, such as home improvements, debt consolidation or other expenses.
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The biggest disadvantage of a home equity line of credit (HELOC) is that it is a variable rate credit product, which means the interest rate can change over time. This means that monthly payments on the line of credit can fluctuate, which can make budgeting and planning difficult. Additionally, if interest rates rise, payments on the loan can become difficult to manage.
Another disadvantage of a HELOC is that it is a revolving line of credit, which means that you can borrow up to a certain limit, pay back the borrowed amount, and then borrow again as needed. This can make it easy to borrow more money than you can afford to pay back, or to get caught in a pattern of making minimum payments, leading to a cycle of debt.
Second Mortgage FAQ
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A second mortgage is a loan that is taken out using the equity in your home as collateral. The loan is in the second lien position to the primary mortgage, meaning that if you default on the loan, the lender of the second mortgage will only be able to collect the remaining value of the property after the primary mortgage lender has been repaid.
A second mortgage works by using the equity you have built up in your home as collateral for the loan. The equity is the difference between the current market value of the property and the outstanding balance on the primary mortgage.
To apply for a second mortgage in Canada, you will need to provide documentation such as proof of income and proof of property ownership. Your second mortgage lender will review your credit history, value of your home and more to assess your creditworthiness and determine the loan amount, interest rate and terms of the loan.
The funds from a second mortgage can be used for a variety of purposes including home renovation, debt consolidation, educational expenses and more.
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The purpose of a second mortgage is to allow homeowners to access the equity they have built up in their home and use it for various purposes. Common uses of a second mortgage include:
Home renovations
Debt consolidation
Large expenses that require money upfront
Education expenses
Emergency funds
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The amount of equity you can borrow from your home depends on several factors, including the current value of your home, the outstanding balance on your primary mortgage and the lender’s loan-to-value (LVT) guidelines.
The LTV ratio is calculated by dividing the amount of the loan by the value of the property. Generally, the higher the LTV, the less equity you will have in your home. For example, if your home is worth $500,000 and you have a primary mortgage balance of $300,000, the LTV would be 60% ($300,000/$500,000).
Typically, most lenders will allow you to borrow up to 80% of your home’s value.
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A HELOC, or home equity line of credit, is a revolving line of credit with a variable interest rate and, as a result, variable minimum payment amounts. With a HELOC, you can withdraw money as needed, up to a certain limit, and pay the interest only on the amount you borrow.
A second mortgage is a separate loan taken out in addition to your primary mortgage. The loan comes with fixed payments and a fixed interest rate for the term of the loan. The funds are disbursed in a lump sum, and you must start making monthly instalment payments on the loan immediately until the loan is paid off.
Mortgage Refinancing FAQ
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By refinancing your mortgage, you replace your current mortgage with a new mortgage that has different terms. The new mortgage might be a different type (fixed-rate or variable), have a shorter or longer loan term and/or amortization period, a different interest rate (lower or higher) and a different payment amount and frequency.
Typically, the benefit of refinancing your mortgage is to leverage the equity you’ve built up in your home to access extra money. You might use the extra money for a home repair or planned renovation. Alternatively, you can use the money to consolidate debt – when you do this, you eliminate multiple bill payments and only have to focus on paying back your mortgage.
Mortgage refinancing works similar to applying for a first mortgage. Your lender will review your credit history, income, value of your home and more to assess your level of risk and determine the interest rate and mortgage amount.
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The decision to refinance your mortgage depends on many factors, including the length of time you plan to live in your home, interest rates and how long it will take to recoup the cost of refinancing.
Reasons to consider refinancing your home include:
Leveraging home equity so you can access funds to cover a home renovation or repair, manage an emergency, finance a large purchase, or consolidate high-interest debt
Lowering your mortgage payments by taking advantage of lower mortgage refinance rates
Lowering your mortgage payments or interest rate
Reducing the mortgage term to pay off your debt faster
Switching from a fixed-rate mortgage to an adjustable-rate mortgage, or vice versa
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While refinancing your mortgage can be a great way to free up cash, lower your monthly payment or interest rate, it can impact your credit score. Typically, your lender will have to do a hard credit check when you refinance. Anytime a hard credit check is done, it has the potential to decrease your credit score. However, some benefits can outweigh any negative effects, such as the ability to free up cash or the savings you may find as a result of refinancing your home. And, as you pay off your balance over time, your credit score will likely improve as the result of a positive payment history.
Before you begin the refinancing process, keep these considerations in mind:
When you apply, lenders will check your credit score and history, also known as a hard inquiry on your credit report
If you’re shopping lenders, multiple credit inquiries will appear on your credit report (unless they provide you a quote first with no impact to your credit) – be mindful that multiple inquires in a short timeframe (6 months) can have a significant impact on your credit than just one inquiry.
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If you have a second mortgage or secured loan (HEL or HELOC), your lender may require you pay it off before applying for mortgage refinancing.
If you have enough equity in your home, consider refinancing that consolidates both the first mortgage and second mortgage into one mortgage.
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