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Your how-to guide to borrowing
The more you know about borrowing, the more confident you’ll feel when you’re applying. This step-by-step guide will help you understand the application process.
What to know when you’re applying for a Loan or Line of Credit
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Do you need a loan or a line of credit? This section explains the differences and helps you decide.
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Learn about the approval process, and what to consider before applying.
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See what you’ll need to get your application started and find out what happens next.
Step 1: Research
See which TD product works best for you
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A loan lets you borrow a specific amount of money in one lump sum. It’s ideal for single transactions, such as major purchases, home renovations or paying off old debts. Your loan plus interest gets repaid over an agreed-upon length of time. |
A line of credit gives you ongoing access to funds that you can use and re-use as needed. You’re charged interest only on the amount you use. A line of credit is ideal when your cash needs can increase suddenly, such as with home renovations or education. |
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Types of Loans:
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Credit Limit:
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Credit limit:
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Interest rates: |
Interest rates: |
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Fees: |
Fees: |
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Repayment: |
Repayment: |
Step 2: Prepare
What factors go into an application decision?
When reviewing your application, lenders would typically want to know about your ability to repay the amount borrowed. This involves looking at several types of information:
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Income: Consider all sources of income, such as wages/salary, return on investments, pension income, and other sources
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Expenses: Common living expenses include, mortgage or rent payments, utility bills, taxes, and other obligations
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Debts: Typical debts include, balance owing on credit cards or other lines of credit and other existing loans
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Assets: This can include your home (if you own), savings or investments
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Credit score: A measure to help assess your eligibility and creditworthiness
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Income: Consider all sources of income, such as wages/salary, return on investments, pension income, and other sources
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Expenses: Common living expenses include, mortgage or rent payments, utility bills, taxes, and other obligations
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Debts: Typical debts include, balance owing on credit cards or other lines of credit and other existing loans
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Assets: This can include your home (if you own), savings or investments
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Credit score: A measure to help assess your eligibility and creditworthiness
- Income: Consider all sources of income, such as wages/salary, return on investments, pension income, and other sources.
- Expenses: Common living expenses include, mortgage or rent payments, utility bills, taxes, and other obligations.
- Debts: Typical debts include, balance owing on credit cards or other lines of credit and other existing loans.
- Assets: This can include your home (if you own), savings or investments.
- Credit score: A measure to help assess your eligibility and creditworthiness.
Will you need a co-signer?
A co-signer is someone whose own credit rating qualifies all by itself for the loan. Typically, the co-signer is a family member or family friend. By co-signing your loan, that person is demonstrating trust and confidence in you, all while giving you a way to build a strong credit rating of your own.
Co-signers are very common among borrowers who don’t yet have a long-term financial track record. For example, if you’re young or new to Canada, your credit history might not go back far enough to qualify you for a loan.
Your credit score
Your credit score is an assessment of your ability to repay a loan. The score is calculated using a formula based on your credit history and other factors. Your credit score can change over time, rising or falling with changes in your financial situation.
How your payments are calculated
There are five main factors that will affect the amount of your payments. You have options, and your decisions will determine your payments and total cost of borrowing.
Use the calculators below to see how your choices might increase or decrease your payments and total cost of borrowing. Here are the factors that determine how much you pay:
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The type of product you choose: With a Loan, you make pre-set payments over the term of the loan. A Line of Credit has no set term; your payments depend on how much you borrow at any given time.
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Principal amount: The total amount borrowed. Generally speaking, the more you borrow, the higher your regular payments will be.
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Interest rate: A fixed interest rate stays the same for the time period chosen. A variable interest rate will rise or fall with changes to the TD Prime Rate.
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Term: This is the amount of time you’re given to repay what you've borrowed. (more commonly applies to Loans)
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Payment frequency: Loan payments can be scheduled weekly, bi-weekly, twice a month or monthly. Lines of Credit have a minimum monthly payment and a set payment date each month.
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The type of product you choose: With a Loan, you make pre-set payments over the term of the loan. A Line of Credit has no set term; your payments depend on how much you borrow at any given time.
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Principal amount: The total amount borrowed. Generally speaking, the more you borrow, the higher your regular payments will be.
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Interest rate: A fixed interest rate stays the same for the time period chosen. A variable interest rate will rise or fall with changes to the TD Prime Rate.
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Term: This is the amount of time you’re given to repay what you've borrowed. (more commonly applies to Loans)
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Payment frequency: Loan payments can be scheduled weekly, bi-weekly, twice a month or monthly. Lines of Credit have a minimum monthly payment and a set payment date each month.
- The type of product you choose With a Loan, you make pre-set payments over the term of the loan. A Line of Credit has no set term; your payments depend on how much you borrow at any given time.
- Principal amount The total amount borrowed. Generally speaking, the more you borrow, the higher your regular payments will be.
- Interest rate A fixed interest rate stays the same for the time period chosen. A variable interest rate will rise or fall with changes to the TD Prime Rate.
4. Term This is the amount of time you’re given to repay what you've borrowed. (more commonly applies to Loans)
5. Payment frequency Loan payments can be scheduled weekly, bi-weekly, twice a month or monthly. Lines of Credit have a minimum monthly payment and a set payment date each month.
Frequently asked questions
Agreeing to co-sign a loan is a big decision. But it’s also a decision that thousands of people gladly make each year.
Co-signing for someone else’s loan is your guarantee to the bank that the loan will be repaid. The act of co-signing makes you just as responsible for the debt as the person doing the borrowing. If for any reason the borrower does not pay back the loan, you as the co-signer will be fully responsible for any payments that remain.
A borrower will need a co-signer if their own credit history doesn’t qualify them for a bank loan. This situation is very common among young adults, who don’t yet have the financial track record to build a solid credit rating. They’ll need someone to co-sign, someone whose own credit history qualifies all by itself for the loan. Typically, the co-signer is a family member or family friend—someone with whom the borrower has a relationship of trust.
Co-signing a loan allows you to give meaningful help to someone you care about. However, this kind gesture also comes with risk.
You are agreeing to pay back the loan if the original borrower doesn’t. If the borrower misses payments or is late in paying, your own credit history will be affected. And while the borrower might make every payment on time, the total debt will be factored into your credit score as if the loan had been yours in the first place. In addition, the debt will add to what is known as your credit utilization—in other words, it will take up more of the credit you’re qualified to use, and that might reduce how much you can borrow before the co-signed loan is paid off.
Being a co-signer is a huge demonstration of your trust in the borrower. But where that trust has been earned, your healthy credit history gives you the power to extend a helping hand where it’s needed and deserved. By co-signing a loan, you’re enabling another person’s goals and demonstrating your confidence in the bond of your relationship.
Estimate your total cost and payments
When you apply for a loan or line of credit, there’s more to consider than the amount you’re borrowing. Use these calculators to understand what the full cost of borrowing might be.
Step 3: Applying
Application Checklist
To start your application, there are a few things we’ll need from you:
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Government-issued identification (original and not expired) Examples of valid ID
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Proof of income
- If employed, provide your last two paystubs
- If self-employed, provide your last two Notice of Assessment documents (tax returns) -
Expense statements: Mortgage/rent payments, utility bills, taxes, other credit statements, etc.
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Bank account details form for the deposit of funds and to schedule repayment
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Adding a co-signer?
The same information and documents will also be needed from them -
Applying to consolidate debt?
We’ll need up- to- date statements of those accounts, including their balances and account details -
You consent to credit checks
As part of this credit check, we will give your information to credit bureaus and other lenders. They will give reports and information to us, about you, to help assess your eligibility and creditworthiness. -
Applying for a Student Line of Credit?
Proof of enrollment will be required
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Government-issued identification (original and not expired) Examples of valid ID
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Proof of income
- If employed, provide your last two paystubs
- If self-employed, provide your last two Notice of Assessment documents (tax returns) -
Expense statements: Mortgage/rent payments, utility bills, taxes, other credit statements, etc.
-
Bank account details form for the deposit of funds and to schedule repayment
-
Adding a co-signer?
The same information and documents will also be needed from them -
Applying to consolidate debt?
We’ll need up- to- date statements of those accounts, including their balances and account details -
You consent to credit checks
As part of this credit check, we will give your information to credit bureaus and other lenders. They will give reports and information to us, about you, to help assess your eligibility and creditworthiness. -
Applying for a Student Line of Credit?
Proof of enrollment will be required
- Government-issued identification (original and not expired) Examples of valid ID
- Proof of income
- If employed, provide your last two paystubs
- If self-employed, provide your last two Notice of Assessment documents (tax returns)
- Expense statements: Mortgage/rent payments, utility bills, taxes, other credit statements, etc.
- Bank account details form for the deposit of funds and to schedule repayment
- Adding a co-signer?
The same information and documents will also be needed from them - Applying to consolidate debt?
We’ll need up- to- date statements of those accounts, including their balances and account details - You consent to credit checks
As part of this credit check, we will give your information to credit bureaus and other lenders. They will give reports and information to us, about you, to help assess your eligibility and creditworthiness.