Any kind of a loan where a piece of real estate is used as security is a home equity loan. These loans are offered as registered mortgages on a property. Approval for a home equity loan depends on the equity in the property, which is calculated by price minus debts in the home. This loan is very different from a bank loan approved according to credit score. Our professionals have many years providing home equity loans in Kitchener and other cities in Ontario.
A home equity loan is generally a one-year open first or second mortgage on the property. You can end the mortgage offered at 7%-15 interest early if you are ready to pay a three-month interest penalty fee. These loans are more flexible than bank loans meaning you can customize the terms to your needs. There is always a loan expert on standby at our company to help you decide the best options for you.
Common Custom Options Include
It is possible to add more custom options in the mortgage agreement to suit your preferences and our loan experts are always ready to discuss available options with you.
The amount an individual can borrow depends on the value of the home and that of existing debts. To assess these lenders will have to get a metric known as LTV or loan to value ratio by dividing existing debts with the current appraised value of the house. Our network of lenders can give money up to 85% LTV on properties in Kitchener. This might be the most important metric but some lenders also make their decisions based on credit score and employment history and other parameters.
The money borrowed with home equity is spent as the borrower sees fit. The most common uses for the money our business encounters are investing and paying off expensive debts. Some people purchase cars and pay for vacations but the best use of the money depends on your personal needs.
The money that we provide also has less common uses like paying for emergency treatment, stopping a power of sale, or helping loved ones.
These are two loans with stark differences. A home equity loan has a fixed number of payments and fixed interest because it is an installment loan. An HELOC is a kind of revolving credit like a credit card without a fixed number of payments. A home equity loan generally has a fixed interest rate stated in the initial agreement but an HELOC does not. You can withdraw any amount of the home equity line of credit as long as it is within the credit limit but things are different with the home equity loan. You get a large amount in the beginning then are required to draw up new contracts to allow access to more money. For both types of loans, interest rates and approval are based on the loan to value ratio of a property.