A home equity loan is a kind secured against a piece of real estate. Lenders provide registered mortgages based on the equity in a property. Equity is the current value of a house minus the debts on it. Banks rely mainly on credit score when approving loans but as the name suggests, you get a home equity loan based on equity left in the property. We have a team of experts who are proficient at providing home equity loans in Mississauga.
Home equity loans have a period of one year and are usually a first or second open mortgage on the property. Open mortgages give the borrower an option to pay off the mortgage before the mortgage term ends but at a fee of three months interest. Many people choose home equity loans over bank loans because of the flexibility they provide. Our loan specialists are available to talk about your options for a home equity loan in Mississauga.
Common Custom Options for Home Equity Loans
These are a few of the tailored solutions preferred by borrowers but others may also be included in the agreement.Our experienced experts can discuss your needs and give you advice on the best options for your situation.
The home value is the most important metric to get your home equity loan approved. Equity is calculated by subtracting debts from a property’s price but to assess risk, home loans lenders must calculate loan to value or LTV. This metric is calculated by dividing debts by selling price of a property presented as security. Our network of home equity lenders in Mississauga will work with 85% LTV and nothing more. While LTV is the most important factor, some home equity lenders may also be sensitive to credit score and the borrower’s employment history.
Our business has seen people use the home equity loan in reasonable ways like tuition fees payment, home renovations or tax payments. Some people use it to purchase expensive cars or vacations but whatever you do with the loan is up to you. The money could also be used in less common ways like medical expenses, business capital and acquisition of property. The best use of home equity loan money depends solely on the financial needs of the borrower in Mississauga.
In addition, the home equity loans we provide in Mississauga can be used to pay for emergency medical expenses, foreclosure or helping family members get ou of debt.
Many people cannot tell the difference between these two types of financing even though they are very different. A home equity loan has a fixed interest rate but like with a credit card, the interest rates on an HELOC are subject to change. You can take out any amount below your credit limit for a home equity line of credit but for a home equity loan you get a lump sum of money. The only similarity between the two loans is that they are approved or rejected depending on a home’s loan to value ratio.