Investment Loans | B2B Bank
B2B Bank
Value of an Advisor

We believe that investment lending, with the guidance of your financial advisor, has the power to help you achieve your financial goals.

What is an investment loan?

Typically, we borrow for two reasons. We want to either:

  • Buy a big ticket item, such as a car, which generally decreases in value over time or,
  • Purchase an asset that has the potential to grow in value over time, like a home or RSP.

With an investment loan, you are borrowing to make a lump sum investment purchase that has the potential to grow in value over time.

To determine if an investment loan is right for you, speak with your advisor.

Read the facts about investment loans

How does an investment loan work?

With a traditional investment strategy you set aside a portion of your income to make regular contributions and your investment savings slowly build over time. With an investment loan you borrow a lump sum of money up front and set aside a monthly portion of your income to meet the loan requirements.

In consultation with your advisor, an investment loan has the potential to generate greater returns than a traditional investment strategy. Here’s why:

  • Accelerates your savings through a larger initial upfront investment and compound returns.
  • Compound returns on an investment means that returns are calculated not only on the initial investment, but also on the accumulated growth from year-to-year.
  • Generally speaking, interest paid to borrow money to earn investment income is tax deductible. When the interest is deducted, it can be an effective way of reducing the overall cost of an investment lending strategy.

Interest is not deductible in all circumstances. For example, if the only earnings your investment can produce are capital gains, you cannot claim the interest you paid. Additional restrictions apply for residents of Quebec. Please consult with a tax specialist for information on deducting interest.

Leveraging involves greater risk than purchasing investments using only your own cash resources because it has the potential to magnify investment losses.

Your advisor will help you determine what type of investment loan may be right for you.

Read stories on how investment loans work

What types of loans are there?

Depending on what you and your advisor determine is right for you; there are several loan types available with a range of features.

Loan types are usually determined by whether or not you want to put up any of your own money – and if so, how much.

  • 100% loans are where 100% of the investments are financed by the lending institution.
  • Loan types — 1 for 1, 2 for 1 and 3 for 1 — require you to pledge some of your own money and/or investments as collateral.

Investment loans have two margin call options to consider.

  • A margin call loan will require you to pledge additional collateral or pay down the loan should the loan-to-value (LTV) ratio exceed pre-determined levels set by the lender. If you do not take action, the investments may be sold by the lender and you will be responsible for the full amount remaining on the loan.
  • A no margin call loan does not require additional collateral to be pledged or paying down the loan should the LTV ratio exceed the pre-determined level. A no margin call option gives you the control so that you can sell your investments when you are ready, rather than being driven by market forces.

Investment loans have two payment options.

  • An interest only payment option is where your payment only goes towards the interest portion of the loan. The principal loan amount does not decrease.
  • A payment that is a blend of both principal and interest. This type of payment option helps reduce the principal loan amount and helps you pay down the debt faster.

100% 3 For 1 2 For 1 1 For 1
How they work Borrow 100% of the investment with no money down. Borrow up to three times the amount you pledged. Borrow up to two times the amount you pledged. Loan amount matches one for one the amount you pledged.
Margin call options All loans are available with a margin call or no margin call option.
Payment options All loans come with an interest only or principal plus interest monthly payment option.

Contact your advisor to see which option is best for you.

What are the benefits and risks?

Only your advisor can help you determine if an investment loan is right for you. In general, investors who may benefit from
this strategy will have:

  • A long investment horizon
  • Available cash flow
  • A high risk tolerance
What are the benefits? What are the risks?
  • Investment loans complement traditional investment strategies.
  • Investment gains have the potential to accelerate to reach financial goals faster.
  • A lump sum investment starts compounding right away, rather than waiting to build your savings with a traditional strategy.
  • Generally speaking, interest paid to borrow money to earn investment income is tax deductible. When the interest is deducted, it can be an effective way of reducing the overall cost of an investment lending strategy.
  • Leveraging involves greater risk than purchasing investments using only your own cash resources because it has the potential to magnify investment losses.
  • You are required to repay the loan, including interest, regardless of the investment return.
  • An investment loan may limit your access to credit due to the outstanding debt of the loan.

Work with your advisor to understand both the benefits and risks of a borrowing to invest strategy.

More questions? Read our FAQs on investment loans

Investment Loan Calculator

Find out how much money you need to invest today, to achieve your financial goal.
Estimate how much your initial investment will be worth in the future.
Financial Goal
$
Initial Investment
$
Rate of Return
%
Time Frame

Your Results

To achieve your financial goal of $1,000,000.00 in 25 years, based on an estimated return rate of 10.00%, you would need to make an investment of $92,296.00.

Money
Time (Years)

The calculations shown are for illustration purposes only. Actual rates and amounts may differ.
B2B Bank cannot be held responsible for the accuracy of the calculation performed or the amounts indicated.

Understanding Investment Loans

For over 20 years, B2B Bank has been working with advisors to offer investment loans to Canadians.

Want to learn more about borrowing to invest? Watch our video about how investment loans can help you build wealth and make your financial goals a reality.

Investment Loan Stories

About B2B Bank

It’s important for Canadians to have independent financial advice.

Independent financial advice

B2B Bank is proudly 100% Canadian, and we have an independent spirit – much like the advisors we work with.

We’re dedicated to you and your advisor because we strongly believe that all Canadians should have access to independent financial advice.

Simple lending philosophy

We believe in investment lending and the power it has to help build wealth and achieve your financial goals. As a responsible lender, we acknowledge that investment lending is not for everyone.

Advisors and B2B Bank

One of the main reasons why your advisor has chosen to work with us is because we value the relationship that they have with you.

We give Canadians a choice. Where other banks have their own advisors, we serve independent advisors who are able to offer you unbiased advice and financial solutions that are appropriate for your individual needs.

We believe in the power of independent financial advice and the benefits of working with an advisor. That’s why we’ve based our business model on supporting the needs of financial professionals and one of the reasons why you may not know our name. We are ‘behind-the-scenes’ intentionally because we encourage and respect the advisor-client relationship.

Headquartered in Toronto with regional representation from coast to coast, B2B Bank is a Schedule I Canadian bank that serves a network of some 27,000 financial professionals, including financial advisors and representatives, mortgage brokers and insurance agents.

Over the years and through all the changes, B2B Bank has always remained fiercely dedicated to helping financial professionals fulfill their clients’ financial needs through a suite of high quality, integrated financial services and solutions.

View our about B2B Bank brochure to learn more

© 2014 B2B Bank. All rights reserved.

B2B Bank does not provide investment advice to individuals or advisors and does not endorse or promote any investment products. While investment loans have the ability to magnify gains, they also have the potential to magnify market losses. Leveraging involves greater risk than purchasing investments using only your own cash resources because it has the potential to magnify investment losses. The dealer and advisor, not B2B Bank, are responsible for determining the suitability of investments for their clients and for informing them of the risks associated with borrowing to invest. B2B Bank acts solely in the capacity of lender and loan account administrator. Any loan approval from B2B Bank should not be construed as an endorsement of any investment choice, program or strategy. All loans are subject to credit approval and borrowed monies are due and payable regardless of the performance of the investments purchased. B2B Bank reserves the right to request additional information or documentation at its sole discretion. The B2B Bank Investment Loan Program is available exclusively through licensed financial advisors. ®B2B BANK is a registered trademark of B2B Bank.