Hello, everyone!
I’m in my mid-30s, currently earn $70K/year and have no debt. My savings and investments total $249K, of which $84K is invested in $CASH.TO and a high-interest savings account earning approximately 5.25%. The rest is invested through maxed-out TFSA and RRSP accounts. I recently started an FHSA and aim to maximize contributions this year.
With a credit score of 805, I possess four credit cards with a combined credit limit of $36K. I maintain preauthorized payments and have a history of timely payments. Additionally, I was approved for a $20K Line of Credit at 10.45%, which I don’t plan on actively utilizing. However, I believe it could diversify my limited credit history.
Given the high property prices in BC, even a small apartment is currently beyond my reach. I’m wondering if there are any steps, besides working on getting a better job or increasing my salary, that I could take to diversify my credit further and potentially enhance my chances of securing a mortgage in the future.
Your insights on alternative strategies, financial adjustments, or any other creative suggestions would be greatly appreciated.
Thank you!
I’m unsure what your looking for ? Improving your credit score ? With 805, it’s going to be hard as this would already qualify you for a mortgage, and you won’t gain any lower rate or higher mortgage amount in Canada with a better score.
There are ways to borrow more based on your current investments though:
With your recently or soon to be achieved net worth, you could also have a look at a high net worth mortgage: some lenders will happily lend you some money on a 1=1 basis above a certain threshold, which can be a great help if you don’t qualify on income alone. Most lenders require a minimum net worth in the 250k-500k range, but some like B2B currently have lower requirements.
Otherwise, borrowing using your investments as collateral may also be possible, albeit riskier in case of margin call. I know Mr. Money Mustache mentioned doing so using IBKR, which would also be my broker of choice for this kind of things: depending on your investments, they will allow you to borrow between 30-70% of their value with a good interest rate. This is however high risk, as IBKR is known not to make margin calls but to auto-liquidate positions, so things may get very ugly if the market sank quickly.
Thank you for your input! I didn’t realize that net worth in stocks, GICs, HISA & registered accounts could be considered eligible assets for borrowing in Canada, which is fantastic. I’m definitely going to look into this further.
Regarding Interactive Brokers, I have some reservations about their management style, especially after their chairman, who is also their largest shareholder, criticized retail investors during the GME short squeeze, suggesting that normal people buying and holding a stock and causing a squeeze is manipulation. It makes me question their trustworthiness.
I truly appreciate your insights and find them enlightening.
Thanks for sharing!
No problem, I’d just not discard IBKR completely based on principle. Currently, they offer margin rates 2 percentage points lower than the lowest rate I can get with my other brokers, so for 100k borrowed, that’s $10k less in interests over 10 years, and 21k less over 20 years. There is also no additional hidden requirement, paperwork, or other administrative bs requirement: earlier this year, I was able to take out a ±50k loan to manage an unplanned business emergency and the money was in my account on the next business day, without even a call from them, while my bank was requiring me to visit them in person for a 15k LOC.
While you may not like them, there is a good reason why they’re so big.
For anyone curious, here is what my current investment portfolio looks like,
