Home equity loans are a kind of credit secured by real estate property. Lenders of such loans are ready to overlook credit score and approve loans based on equity instead. This is an opportunity for people with bad credit to utilize assets they already own for financial gain. We are a team of trained loan specialists who have been providing home equity loans in Bracebridge for many years.
Payment Terms and Interest Rates for Home Equity Loans
This is a standard first or subsequent open mortgage on a property. You must pay the loan and 7%-15% interest in one year but some people prefer doing it early. This option comes with a fine of three months interest fees. In addition to higher interest rates compared to banks, home equity lenders try to mitigate risk by giving a registered mortgage. This gives them the power of sale if a borrower fails to honor the agreement.
Home equity loans are much sought after because clients are looking for the flexibility they cannot find with bank mortgages. It is possible to have our officers customize a loan according to your current circumstances.
Common Tailored Loans Include:
- Interest Only Mortgage: You only to pay interest for this loan whose primary amount never changes.
- Blanket Mortgage: Lenders accept more than one property as security for loans
- Construction Draw Mortgage: You get enough money to pay workers to complete a building project without a hitch.
Our home equity lenders in Bracebridge understand that each borrower has unique needs and therefore, they strive to make a loan agreement tailored to them.
How Much Can You Borrow
Different clients qualify for unique loan amounts in accordance with the equity presented. By gauging the total debts and a property’s value, lenders are able to obtain an important metric called loan to value (LTV) ratio. If dividing loans by the appraised price of a home they get 85% you are eligible for a loan. The lower a property’s LTV is, the higher the loan you will receive. Our home equity lenders are willing to loan up to 85% LTV as it shows that there is enough stake left for them to leverage. Loan to value may be of utter importance but there are home equity lenders who also rely on job history to inform their lending decisions.
The loans we offer can be used in a variety of ways to meet a borrower’s special circumstances.
Common Uses of a Home Equity Loan
Over the years of service in the city, our officers have seen several uses for the home equity loan. Top on the list is paying debts, school fees, investing in a business or upgrading a property. Few people come for a home equity loan to furnish car payments or buy an expensive vacation package.
- Renovation: Home improvements and repairs are a great way of increasing its selling price.
- Debt consolidation: It is better to have a single big loan that you can manage as opposed to multiple credit cards with high monthly rates.
- Education: A home equity loan will suffice as school fees if your paycheck is late.
- Business Investing: If you lack the capital to start a business, a home equity loan will suffice.
You are allowed to use this loan in any way as long as you can repay on time to spare the lenders from losses. The money has been used for some rare purposes including stopping a power of sale, foreclosure, helping loved ones and paying for emergency medical treatment.
Differences Between Home Equity Loans and Home Equity Lines of Credit (HELOC)
There are clear disparities between the two, starting with the fact that a home equity loan is a type of installment loan. You have to pay the agreed interests within a set timeline but for a home equity line of credit, the rates tend to change as time goes by. Notably, a home equity line of credit has a limit not to be surpassed but borrowers are allowed to use the money whenever they need it. Our team will help you discern between the loans and decide on the most suitable option according to your circumstances.