Running a day care and want a loan !!!!!

[Julie]

Hello all, I live in Ottawa Ontario and run a daycare. My husband and I tried to get a loan so we can consolidate our debt as we are expecting baby #3. We were denied said is was not due to our credit !! It was because of ME running a daycare and after income tax it looks like I made nothing ! So frustrated !!!! Is there any banks that recognize me as a working human ??? We tried with Scotia bank which our Mortgage is with. And we cant re-finance yet either as we did a no down payment mortgage 6 years ago and we just started building equity and there is not enough apparently. Would like any tips or names of another bank that will look at the fact that I did make $32,000 the last 2 years. Thank you very much

[kindertime]

I won't be much help, but I do know there are new rules banks have to follow now about how much people can borrow. It is based on the equity in your home. And you can only borrow up to.... is it 60%? or maybe 75%? Depending on your net income ($16,000/year) and your husband's they probably have little room to negotiate, because of the rules. (From what I understand, the gov't is trying to prevent a disaster like what happened in 2008 in the States.)

Having a no-down-payment mortgage is also maybe a problem for the bank. You have to pay an extra amount on top of your mortgage to CMHC, don't you? Plus, your interest rate must be a bit higher than others, without having paid a down payment too, no?

All of this is not to say you shouldn't/can't get a loan. And I think it is good that you are trying to get your debt taken care of, but please be careful. There are a lot of scams and hidden costs and fees and bad deals out there just waiting for desperate people to fall for them. When you went to Scotia, did they give you any alternatives? Is there someone you could talk to? Someone they could recommend for you?

[playfelt]

There are a couple of companies that help people consolidate debt and work out payment plans. I know I have seen one here in Ottawa advertised. Don't know a lot about them but it might be worth a call. I just googled Ottawa debt consolidation and counselling and several sites came up so might want to try that.

It is very hard to get a loan when you are self employed because the income isn't steady and not guaranteed from year to year either.

[5 Little Monkeys]

Not much help but I've heard we can get loans even with being hdcp's but they like to see us be in business for at least 3 years

[Van]

I found a great way to get a loan into your chequing account and that is from the MBNA credit card as it supports a small business like daycare in our home it was easy to apply over the phone and I waited maybe 1 month before I got the okay . it also asks for payments of only 1.99% interest per month , and they give you 12 to 15 months to pay back the loan in full so you have to arrange to have the money in that time or the interest rate jumps up to 29% as a regular credit card, but it sure frees up your money for the 12 months to fix money worries when you need it :) but you have to pay it all back in 12 months and it allowed $15,000 on my first loan

[kindertime]

the interest rate jumps up to 29% as a regular credit
card, but it sure frees up your money for the 12 months to fix money worries when you need it :) but you have to pay it all back in 12 months and it allowed $15,000 on my first loan

REALLY, REALLY, REALLY be careful of this kind of loan! At 29%, if you owe as little as $1,000, your interest will be $290. It is very hard to get out from under a debt like this. Please, be very certain you can pay off the balance at 1.99% in the 12 months or else you are going to be thrown into the deep end. These kinds of loans are the ones I was talking about that pray on desperate people. And from the CBC Marketplace shows they have done, we know they will lie to you too!

[Suzie_Homemaker]

This something some local providers facing. One lady want mortgage but she has to close her day home, work in centre for few year, and then once get mortgage, can open up again.

Self-employment is always harder to finance because less secure than employment. Plus sometime carer think the earn day care fees x number children but that gross business income before expenses. It the profit that is real income level for everything - CRA, loan and everything. Some whol write off lot of expenses end with income of under $20k for tax which not good for loan.

Be aware - re-financing. The rules changed. If re-finance, it like new application if any change. So if want to add money to mortgage when re-finance, it be treated like brand-new mortgage application now. If just renewing as one term end and new one begin, and accepting renewal offer send, then no change and it just automatically accepted. This mean, if you want to re-refinance, you need to qualify for loan criteria. Your income as say on line 150 of tax return will be what used to see if new mortgage/refinance mortgage go through.

There is calculation used to any loan or mortgage. It connected to household income but it does consider household debt, expenses and sometime asset/equity.

Best option would be to try find a debt consolidation company in your area. Then focus on reducing debt level by paying off as much as possible as quick as possible so this situation not keep arising. With no payment down mortgage, likely most of permitted percent of income for debt repayment already allocated to that, so not much room to secure additional debt from new loan.

[Julie]

Thanks everyone. yes our no down payment percent was pretty steep we were paying 5.9% . ALmost $1000 bi-weekly !! FUN that was. But we now are at 2.8% so that's great. We had to renew last June so we only have a year in of equity. and have to get our mortgage down to $240,000 or something like that which we are close. We will just have to keep doing it on our own I guess we have come this far from owing over $20.000 in credit cards to only $13,000 and that was in a year it's just hard to keep throwing bunches of money and still scrapping by. Thank for all the advice everyone.

[Lee-Bee]

REALLY, REALLY, REALLY be careful of this kind of loan! At 29%, if you owe as little as $1,000, your interest will be $290. It is very hard to get out from under a debt like this. Please, be very certain you can pay off the balance at 1.99% in the 12 months or else you are going to be thrown into the deep end. These kinds of loans are the ones I was talking about that pray on desperate people. And from the CBC Marketplace shows they have done, we know they will lie to you too!

I agree with this. Frankly, anyone that CAN pay off their debt in 12months time doesn't need to switch to this kind of agreement. The risks are too high.

[kindertime]

from owing over $20.000 in credit cards to only $13,000 and that was in a year

Wow, $7,000 in a year! That is really good progress. If your current debt level remains the same, you will have that paid off in only two more years. I know that it must seem like an eternity right now, especially with baby #3 on the way, but it will be worth it in the end.