A home equity loan is a kind of loan where the security is a piece of real estate. These type of loans are given as mortgages registered on a property and the main basis for approval is home equity. Equity is simply the value of a home minus the value of existing mortgages on it. The main difference between home equity loans and bank loans is that credit score is not deemed to be so important. Banks approve or reject mortgage requests solely on a person’s credit score but luckily people with poor credit but enough equity can also enjoy access to the equity in the property. Our team has vast experience with getting home equity loans in Windsor.
This loan usually demands interest rates between 7%-15% interest for a period of one year. They are usually open first or second mortgages on the property, which the borrower can end early if they wish to. Doing so attracts a penalty fee of three months worth of interest but despite it is worth noting that these loans are much more flexible than ordinary bank loans. You must explain how you will use the loan to a bank and they will not approve unless they are convinced. Home equity lenders are very flexible that they will accept nearly any explanation for needing a home equity loan. One of our loan officers can talk to you if you need help deciding what the best option for you would be.
Popular Custom Options Include
Other custom options can be written into the loan agreement and our loan experts are pleased to discuss your situation in order to help you make an informed decision.
The amount you are eligible for depends on home and debt value. Lenders have to calculate the loan to value ratio (LTV) by dividing the total amount of debts by the appraised value of the house. Our network of lenders will generally give up to 85% LTV on homes in Windsor. While LTV is the most important value for a home equity lender, some in the city are sensitive to job history and credit score.
There are many uses for money depending on the clients’ needs. We mostly encounter people who use the money to invest in a home renovation or pay off a high interest debt. Some people use it for higher education but a few simply use their home equity money to buy a new car or go on vacation. The best use for the money, of course, depends on you and your priorities.
The loans we offer can also be used to stop foreclosure or a power of sale. In some cases, home equity loans are used to help family members or pay for emergency treatments.
A home equity line of credit (HELOC) and a home equity loan are very distinct. The latter is a type of installment loan with a fixed number of payment and interest rates while the latter is a type of revolving credit without fixed rates like a credit card. A home equity loan involves a lump sum at first then a client has to wait for a new contract whenever they need more funds. As a credit line, you can withdraw an HELOC whenever you like as long as the credit limit is never surpassed. While very different, these loans often cause confusion because approval for both is based on property LTV and not credit score that banks prefer.