16 Sep

How Business Financing Works in Canada: A Beginner’s Guide

Mortgage Tips

Posted by: Gavin Toor

If you’re planning to buy a business, expand operations, or improve cash flow, understanding how business financing in Canada works is essential. Unlike residential mortgages, business loans are customized to the company’s financials, industry, and growth plans.

In this guide, we’ll cover the basics of how business financing works, the types of loans available, and what lenders look for when approving funding.

🔹 What Is Business Financing?

Business financing refers to borrowing or raising capital to fund operations, acquisitions, or expansion. Financing can be debt (loans you repay) or equity (investors who take ownership).

👉 The right structure depends on your business goals, industry, and stage of growth.

🔹 Types of Business Financing in Canada

1. Term Loans

  • Work like a mortgage: a lump sum borrowed, repaid in installments with interest.

  • Common for equipment, acquisitions, or property purchases.

  • Learn more: BDC Business Loans.

2. Business Lines of Credit

  • Flexible borrowing for short-term needs such as payroll, inventory, or receivables.

  • Interest only on the portion used.

  • Great for managing cash flow financing.

3. Government-Backed Programs

  • Canada Small Business Financing Program (CSBFP) helps finance:

    • Real estate purchases

    • Equipment

    • Leasehold improvements

  • ⚠️ Does not cover goodwill or shares.

  • Resource: Government of Canada – CSBFP.

4. BDC (Business Development Bank of Canada)

  • Specializes in business acquisition financing and growth loans.

  • Can finance goodwill and intangibles that banks won’t touch.

  • Higher rates, but more flexible than traditional lenders.

5. Vendor Take-Back (VTB) Financing

  • In acquisitions, the seller finances part of the price.

  • Reduces upfront cash requirements and complements bank or BDC financing.

6. Private Lenders & Investors

  • Short-term, higher-cost funding (often 10%+).

  • Useful as a bridge until long-term financing is secured.

🔹 How Lenders Evaluate Business Loan Applications

When you apply for business financing in Canada, lenders focus on five key factors:

  1. Cash Flow – Measured by EBITDA (earnings before interest, taxes, depreciation, and amortization) or NIAT (net income after tax).

  2. Collateral – Equipment, property, or personal assets.

  3. Industry Risk – Certain industries (e.g., restaurants, trucking) are harder to finance than stable ones (healthcare, professional services).

  4. Management Experience – Your track record in running or scaling businesses.

  5. Equity Injection – Most lenders require 25–50% down on acquisitions.

🔹 Key Ratios Lenders Use

  • Debt Service Coverage Ratio (DSCR): Cash flow ÷ debt payments. Lenders usually want 1.25x or higher.

  • Leverage Ratios: Debt compared to EBITDA or equity.

  • Liquidity Ratios: Ability to meet short-term obligations (e.g., current ratio).

🔹 Final Thoughts

Business financing in Canada is about more than just interest rates. The right structure balances affordability, flexibility, and long-term growth potential.

✅ Remember:

  • Banks provide lower-cost financing but are conservative.

  • BDC and government programs offer flexibility.

  • Vendor take-back financing can bridge gaps.

Whether you’re looking to buy a business in Canada, expand an existing one, or improve cash flow, the right financing plan can help you grow with confidence.

📚 Helpful Resources

🚀 Ready to Explore Business Financing Options?

Every business is unique — and so are its financing needs. As a mortgage broker with accounting expertise, I help entrepreneurs structure deals that balance cash flow, tax efficiency, and lender requirements.

📞 Call me directly at 604-835-4999
📧 Email me at gavintoormortgages@gmail.com
🌐 Visit gavintoormortgages.com

Let’s discuss how to structure financing that supports your business goals — whether you’re buying, expanding, or restructuring.

20 Aug

What is a CMHC-Insured Mortgage in Canada

General

Posted by: Gavin Toor

Quick Overview

A CMHC-insured mortgage is a type of home loan in Canada that lets you buy with as little as 5% down. Backed by the Canada Mortgage and Housing Corporation, it protects lenders against default, which often means better mortgage rates for buyers. While it helps first-time buyers enter the market sooner, it comes with strict qualification rules and added insurance premiums.

For many first-time home buyers in Canada, one of the biggest hurdles to owning a home is saving up the down payment. If you’re buying a property with less than 20% down, you’ll likely need a CMHC-insured mortgage. This type of mortgage allows you to purchase with as little as 5% down — but it also comes with strict qualification rules and added insurance costs.

In this article, we’ll break down what a CMHC-insured mortgage is, the pros and cons, and how to know if it’s the right choice for your home purchase.

What is a CMHC-Insured Mortgage?

CMHC stands for the Canada Mortgage and Housing Corporation, one of three national mortgage insurers (alongside Sagen and Canada Guaranty). Mortgage insurance protects the lender if you default on your loan.

Because the lender takes less risk, they’re often willing to offer better mortgage rates. For first-time buyers who don’t yet have a large down payment saved, this can make homeownership much more accessible.

👉 If you’re brand new to the process, I recommend checking out my guide: First-Time Home Buyer Guide: Step-by-Step to Owning Your First Home. It walks you through the full buying journey and pairs well with understanding how CMHC fits into the picture.

Benefits of a CMHC-Insured Mortgage

✅ Lower Down Payments

  • Buy a home with as little as 5% down on the first $500,000, and 10% on the portion between $500,000–$999,999.

  • This makes entering the housing market more realistic for new buyers.

✅ Access to Competitive Rates

  • Since lenders are protected, they often pass on lower interest rates compared to uninsured options.

✅ Get Into the Market Sooner

  • You don’t have to wait years to save 20%. Instead, you can start building equity right away.

✅ Widely Accepted

  • CMHC-backed mortgages are available through all major banks, credit unions, and alternative lenders in Canada.

Drawbacks of a CMHC-Insured Mortgage

❌ Strict Qualification Rules

  • CMHC uses tight debt service ratios: 39% Gross Debt Service (GDS) and 44% Total Debt Service (TDS).

  • This can make approval harder if you have variable income or existing debts.

❌ Mortgage Insurance Premiums

  • The CMHC insurance premium ranges from 2.8% to 4.0% of your mortgage amount, depending on your down payment.

  • The cost is rolled into your mortgage, increasing the total amount you’ll repay.

❌ Purchase Price Limit

  • Only available for homes under $1 million. Anything above requires a 20% down payment.

❌ Owner-Occupied Requirement

  • CMHC-insured mortgages are for owner-occupied properties only. Rental and investment properties don’t qualify.

Is a CMHC-Insured Mortgage Right for You?

For many first-time buyers in Canada, CMHC insurance is the tool that makes buying possible. It allows for a smaller down payment, often with more competitive rates.

However, the strict qualification rules and extra premium cost mean it’s not always the best choice for every buyer. That’s why it’s so important to prepare early.

One of the best steps you can take is to start planning well before your completion date. My post on The 90-Day Pre-Completion Mortgage Checklist explains exactly what to review in the months leading up to closing so you’re not caught off guard.

Final Thoughts

Buying your first home is exciting, but it comes with a learning curve. A CMHC-insured mortgage can be a powerful option if you don’t have 20% down, but understanding the pros and cons is key to making the right decision.

👉 As a licensed mortgage broker, I work with multiple banks and lenders to help first-time buyers find the right fit. If you’re considering a CMHC-insured mortgage, let’s talk about your options.

📞 Call me at 604-835-4999 or visit gavintoormortgages.com to get started.

15 Aug

First-Time Home Buyer Guide: Step-by-Step to Owning Your First Home

Mortgage Tips

Posted by: Gavin Toor

First-Time Home Buyer Guide: Step-by-Step to Owning Your First Home in Surrey, Langley & Burnaby

By Gavin Toor — Mortgage Broker, Volterra Capital Corp.

Why First-Time Buyers Need a Step-by-Step Plan

Buying your first home in Surrey, Langley, or Burnaby is exciting — but it can also feel overwhelming. There are new terms to learn, financial requirements to meet, and multiple steps before you get the keys.

This guide walks you through exactly what to do as a first-time home buyer in BC, from your initial planning to move-in day, so you can avoid costly mistakes and feel confident every step of the way.

Step 1: Decide You’re Ready to Buy

Before starting your home search, ask yourself:

  • Can you commit to living in one place for 3–5 years?

  • Is your income stable and your debt manageable?

  • Do you have enough saved for a down payment and closing costs?

💡 Tip: Even if you’re not ready yet, talking to a mortgage broker early helps you create a timeline and savings plan.

Step 2: Understand How Much You Can Afford

Your home budget depends on three factors:

  1. Income — Annual gross income for employees or adjusted net income for self-employed buyers.

  2. Debts — Monthly obligations like car loans, credit cards, or student loans.

  3. Down Payment — At least 5% for homes under $500,000, with higher requirements for more expensive properties.

💡 Tip: Online affordability calculators are a starting point, but a full mortgage pre-approval from a broker is the most accurate way to know your limit.

Step 3: Save for Your Down Payment & Closing Costs

  • Minimum down payment in Canada:

    • 5% on the first $500,000 of the purchase price.

    • 10% on the portion between $500,000 and $1,000,000.

  • Closing costs: 1.5–4% of the purchase price for legal fees, property transfer tax, inspections, and moving costs.

💡 First-Time Buyer Programs:

  • First Home Savings Account (FHSA) — Save tax-free for your first home.

  • Home Buyers’ Plan (HBP) — Withdraw from your RRSP without tax penalty.

  • BC First-Time Home Buyers’ Program — Property transfer tax exemption for eligible buyers.

Step 4: Get Pre-Approved for a Mortgage

A pre-approval:

  • Confirms your budget.

  • Locks in your interest rate for 90–120 days.

  • Shows sellers you’re a serious buyer.

💡 Pro Tip: Get a full pre-approval (credit & income verified), not just a quick online rate quote.

Step 5: Work With a Local Realtor

Choose a realtor who knows the Surrey, Langley, or Burnaby market and has experience with first-time buyers. They will:

  • Help you find homes in your budget.

  • Guide you through the offer process.

  • Negotiate on your behalf.

Step 6: Make an Offer & Pay Your Deposit

When you find the right property:

  • Your realtor prepares the offer.

  • You can include conditions like financing and home inspection.

  • If accepted, you’ll pay a deposit (often 5% of the purchase price).

Step 7: Finalize Your Mortgage Approval

  • Provide updated documents to your broker.

  • The lender completes their final review.

  • A home appraisal may be required.

Step 8: Close on Your New Home

  • Meet with your lawyer or notary to sign legal documents.

  • Pay your closing costs.

  • Funds are transferred, and you receive your keys on completion day. 🎉

Step 9: Move In & Settle

  • Set up utilities, internet, and insurance.

  • Change your address.

  • Celebrate becoming a homeowner!

Why Work With Me for Your First Home

I help first-time buyers in Surrey, Langley, and Burnaby understand their options, avoid pitfalls, and secure competitive mortgage terms. My approach combines expert mortgage advice with a clear, step-by-step process so you can buy with confidence.

📞 Book Your Free First-Time Buyer Consultation
Gavin Toor — Mortgage Broker, Volterra Capital Corp.
📱 604-835-4999 | ✉️ gavintoormortgages@gmail.com
🌐 gavintoormortgages.com

12 Aug

The 90-Day Pre-Completion Mortgage Checklist

Mortgage Tips

Posted by: Gavin Toor

The 90-Day Pre-Completion Mortgage Checklist

How to Secure Your Mortgage Before Your Presale Condo or Townhouse Completes in Surrey, Langley, or Burnaby

What Is a Pre-Completion Mortgage and Why It Matters

If you purchased a presale condo or townhouse in Surrey, Langley, or Burnaby 1–3 years ago, your completion date might be approaching soon. This means you’ll need to secure a mortgage so you can take possession of your home.

A pre-completion mortgage is the financing you arrange in the months before your presale unit is ready. Many buyers mistakenly believe that because they were approved when they signed the contract, they’re automatically approved at completion. Unfortunately, lender rules, interest rates, and even your personal finances may have changed — and this can cause last-minute stress.

Starting your mortgage process 90 days before completion gives you:

  • More lender options

  • Time to get the best rate

  • A buffer in case your situation has changed

  • Peace of mind leading up to possession day

The 90-Day Pre-Completion Mortgage Timeline

Here’s exactly what to do in the three months before your presale completion to avoid costly delays or surprises.

90 Days Before Completion — Get Mortgage Ready

  • Contact your mortgage broker (I work with buyers across Surrey, Langley, Burnaby, and the Lower Mainland) to start your application and review your options.

  • Gather updated income documents — pay stubs, employment letter, and T4 slips for employees; tax returns and financial statements for self-employed buyers.

  • Confirm your down payment source — make sure funds are liquid and ready for transfer by completion day.

  • Check your credit score — avoid taking on new loans, credit cards, or financing big purchases like cars or furniture.

60 Days Before Completion — Secure Your Mortgage Approval

  • Review your rate options — consider locking in if rates are expected to rise before your completion date.

  • If self-employed, provide up-to-date year-to-date income statements.

  • Submit updated builder documents to your broker — including strata details, amendments, or final floor plans.

  • Arrange an appraisal if your lender requires it.

30 Days Before Completion — Finalize the Details

  • Sign your mortgage commitment with your lender.

  • Confirm closing costs — property transfer tax, legal fees, GST (if applicable), and adjustments.

  • Book your lawyer or notary appointment to sign the final documents.

  • Follow your broker’s final instructions to ensure funds are ready for transfer.

Common Mistakes to Avoid Before Presale Completion

These are the most common issues I see with buyers — and they can be deal breakers if not avoided:

  • Changing jobs or reducing work hours before completion.

  • Financing large purchases before mortgage funding.

  • Ignoring lender requests or sending documents late.

  • Letting your pre-approval expire without checking in with your broker.

Pro Tip: Rate Holds Aren’t Permanent

One of the biggest misconceptions about pre-completion mortgages is that once you lock in a rate, you’re stuck with it — even if rates drop. That’s not true. If market rates improve before completion, I can revisit your file and try to secure a better deal.

Why Work With a Mortgage Broker for Your Pre-Completion Mortgage

Not all lenders treat presale completions the same way. Some may require updated income verification closer to completion, while others have different timelines for appraisals or rate holds.

As a mortgage broker with strong relationships across major banks, credit unions, and alternative lenders, I can:

  • Find the right lender for your timeline and situation

  • Get a second or third approval in place if needed

  • Negotiate competitive rates

  • Help you navigate last-minute changes from the builder or lender

Serving Surrey, Langley, Burnaby & Beyond

I work with clients across the Lower Mainland, but I focus on markets like Surrey City Centre, Langley Willoughby, and Burnaby Metrotown/Brentwood, where many new developments are completing in 2025–2026.

Whether your completion is in 90 days or 6 months, starting early can save you money, stress, and potential financing issues.

Get Your Free 90-Day Pre-Completion Mortgage Plan

If your presale condo or townhouse is completing soon, don’t wait until the last minute. Let’s secure your financing now so you can enjoy your move-in day without worrying about your mortgage approval.

📞 Gavin Toor — Mortgage Broker, Volterra Capital Corp.
📱 604-835-4999 | ✉️ gavintoormortgages@gmail.com
🌐 gavintoormortgages.com