Investment Loans

Your clients are looking for opportunities to build their wealth and savings. At B2B Bank, we help you connect clients to a lending program that could help them achieve their financial goals.

 

 

Benefits

 

 

Application checklist

 


Calculators

Rates

Program overview

Clients usually borrow for one of two reasons, either:

  • To buy a big ticket item, like a car, which generally decreases in value over time or,
  • To purchase a big-ticket that has the potential to increase in value over time, like a home or RSP.

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

 

An investment loan has the potential to generate greater returns for your client than a traditional investment strategy. Here’s why:

  • Accelerates 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 produced by the investment are capital gains, interest paid cannot be claimed. Additional restrictions apply for residents of Quebec. Please consult with a tax specialist for information on deducting interest.

Loan type Investment loan variable interest rate
Loans up to and including $99,999.99		 Investment Loan variable interest rate
Loans $100,000 and above
3:1, 2:1, 1:1 2.95% (Prime7 + 0.50%)
100% 3.20% (Prime7 + 0.75%) 2.95% (Prime7 + 0.50%)
 

Review our Loan Program Overview to learn more.

In general, investors who may benefit from from investment loans will have:

  • A long investment horizon 
  • Available cash flow
  • A high risk tolerance

What are the benefits for your clients?

  • Investment gains have the potential to reach financial goals faster.
  • A lump sum investment starts compounding right away, rather than waiting to build your savings with a traditional strategy.
  • There are potential opportunities to reduce overall cost of an investment lending strategy through tax deductions.

What are the risks for your clients?

  • 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. (specifically access to other credit products, e.g. mortgages, HELOC, etc)

Form checklist

For all Investment Loans

  1. Investment Loan application
  2. Letter of Direction 
  3. Proof of assets (where required)
  4. Proof of income (where required)
  5. Investment Account Application
  6. Securities Control Agreement (Schedule A)

For all Segregated Fund Investment Loans

  1. Movable Hypothec on Insurance Policy or an Annuity Contract transacted by an Insurer (Quebec residents only)
  2. Assignment, Hypothecation, Acknowledgement and Direction 
  3. Application for an Insurance policy/contract
  4. Notice of Investments and/or cheque payable to B2B Bank

For all Mutual Fund Investment Loans

  1. Movable Hypothec on Investment Securities (Quebec residents only)
  2. Letter of Privilege
  3. Pledge Letter and/or cheque payable to B2B Bank Financial Services Inc., B2B Bank Securities Services Inc., or B2B Bank Intermediary Services Inc.
  1. Investment Loan application
  2. Void cheque
  3. Letter of Direction 
  4. Proof of assets (where required)
  5. Proof of income (where required)
  6. Investment Account Application
  7. Securities Control Agreement (Schedule A)
  8. Movable Hypothec on Investment Securities (Quebec residents only)
  9. Letter of Privilege
  10. Pledge Letter and/or cheque payable to B2B Bank Financial Services Inc., B2B Bank Securities Services Inc., or B2B Bank Intermediary Services Inc.

For all Investment Loans

  1. Original, completed and signed Investment Loan application
  2. Void cheque
  3. Letter of Direction if paying out another financial institution
  4. Proof of assets (where required)
  5. Proof of income (where required)
  6. Investment Account Application
  7. Securities Control Agreement (Schedule A)
  8. Movable Hypothec on Investment Securities (Quebec residents only)
  9. Pledge Letter and/or cheque payable to B2B Bank Financial Services Inc., B2B Bank Securities Services Inc., or B2B Bank Intermediary Services Inc.

Document requirements

To assist the investment loan process, below is a chart that outlines the proof of income and proof of asset document requirements. Select the income or asset type below to ensure you obtain the appropriate documentation from your clients.

Proof of income

One of the following is required:

  • Recent pay stub (within past 30 days)
  • Most recent T4
  • Most recent Notice of Assessment (NOA)

TIP: You may also be required to provide a letter of employment from your client. Ensure that it is dated within the past 30 days.

Required to provide:

  • Two most recent years of Notice of Assessment (NOA)

TIP: Ensure that the declared income on the loan application matches the net income on line 150 of the NOA.

Required to provide:

  • Two most recent years of Notice of Assessment (NOA)

TIP: You may also be required to provide one or more of the following documents from your client:

  • The two most recent years of financial statements
  • Confirmation of business ownership
  • Business bank statements

Ensure that the declared income on the loan application matches the net income on line 150 of the NOA.


Required to provide:

  • The most recent Notice of Assessment (NOA)

TIP: When your client is retired for less than one year, provide both of the following documents:

  • T4A  – Statement of pension and other income
  • T5 – Investment income

Required to provide:

  • The two most recent years of T1 Generals

TIP: You may also be required to provide your client’s lease agreement.

Ineligible income

The following income types and documentation will NOT be accepted:

  • Students and unemployed clients without income
  • Child tax benefits
  • Spousal support
  • Disability income

Proof of assets

Provide one of the following for each property:

  • Realty tax assessment (within one year)
  • Municipal property assessment (most recent)

TIP: Your client may also be required to provide one of the following documents:

  • Copy of land registration confirming home ownership and/or no mortgage outstanding
  • Purchase and Sale agreement


If applicable, provide statements for each investment account (dated within 6 months):

  • RSP statements
  • TFSA statements
  • Non-registered funds statements
  • GIC statements


Provide statements for each account (dated within 30 days):

  • Chequing account
  • Saving account
 

Ineligible assets

The following asset types will NOT be accepted:

  • Real estate outside of Canada
  • Mobile homes
  • Home furniture/household goods
  • Art work
  • Jewelery and gold
  • Vehicles
  • Pension plans
  • Trucks/boats/snowmobiles
  • Insurance policy
  • Accounts receivable
  • Business value

Ineligible documents

The following documentation types will NOT be accepted:

  • Screenshots from online banking
  • Incomplete investment and bank statements

The Benefits for you and your clients

Feature Benefits
Loan amounts up to $300,0001 You can consolidate all your clients' investments with a single loan provider
Highly competitive rates Loans with lower borrowing rates have a higher market appeal
Broad fund eligibility A majority of Canadian investment industry assets qualify as eligible collateral for all loan types
Streamlined loan application process Apply quickly online for all your loans, including Distribution Alliance loans, using our Electronic Application Submission Entry (EASE) or on paper, by fax and mail – the choice is yours

Advisor Tools

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Admin Tips:

1Loan applications for amounts greater than $300,000 are welcome, however, credit qualification criteria, documentation requirements and processing time may vary.

2The LTV ratio of the loan must remain below the values shown after excess collateral is released. A credit bureau may be obtained prior to excess collateral release.

3GMWB funds can only be selected for pledge or purchase if the funds meet B2B Bank's collateral eligibility criteria and a Distribution Alliance agreement is in place with the life insurance company.

4Will occur once the LTV ratio is equal to or greater than 125% for 100% Loans or 100% for 3 For 1, 2 For 1 or 1 For 1 Loans. If after 3 months, the LTV ratios fall below 125% for 100% Loans and 100% for 3 For 1, 2 For 1 and 1 For 1 Loans, the borrower may request in writing to resume the Interest Only payments.

5Documentation for loans ≤ $100,000 may be requested at the discretion of B2B Bank.

6Certain criteria apply, such as funds must be traded electronically, valued at least weekly and in Canadian dollars. Retail Venture Capital, Alternative Strategies and Specialty (including Principal Protected Notes) are not eligible as loan collateral.

7B2B Bank Prime Rate means the annual interest rate announced by B2B Bank from time to time as being its reference prime rate then in effect (the "Prime Rate"). The rate shown is as of March 31, 2020.

While investment loans have the ability to magnify gains, they also have the potential to magnify market losses. Work with your advisor to understand both the benefits and risks of this strategy.

B2B Bank does not provide investment advice to individuals or advisors and does not endorse or promote any investment products. 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 is sole discretion. The B2B Bank Investment Loan Program is available exclusively through licensed financial advisors.

This information is intended for financial intermediaries only.