Home equity loans are a special type offered by private lenders against property. These loans typically take the form of a registered mortgage with terms that are based on the equity in your home. Equity is calculated by subtracting the current value of debts on a property by its current market value and it is an important measure for lenders who use it to assess risk. This is different from the approach taken by institutional lenders who provide mortgages based on credit score and job history among other factors. We have a team of experts in the industry who have been providing home equity loans in Burlington for years.
Payment Terms and Conditions for Home Equity Loans in Burlington
A home equity loan is technically a standard second or initial open mortgage that you should ordinarily pay in one year. The interest rate may be anything from 7%-15% but as this is an open loan you can choose to finish paying early. This will redeem you from the burden of meeting monthly payments and while it will improve your credit score, ending things early will set you back three months interest in penalties. Home equity loans are so popular because of their flexibility compared to bank loans that are not so easy to customize. Our loan officers are always willing to discuss your needs in an attempt to identify special preferences that would make your home equity loan in Burlington more useful.
Popular Custom Options
- Blanket Mortgage – This is a loan taken out on several properties simultaneously.
- Interest Only Mortgage – As the name suggests, only interest is paid and the principal amount remains as is.
- Construction Draw Mortgage – We will pay your contractors as work is done to ensure the completion of your project.
More options can be written into the agreements to suit your needs; our experts will listen carefully and explain your best options.
How Much Can You Borrow?
Equity in your property is the main determiner of how much you get from a home equity lender. To make an informed decision they must figure out the home’s LTV or loan to value ratio. Private lenders base lending decisions on this important percentage. The result of dividing a home’s debts by its value should be no more than 85% if you hope to get a loan. Our home equity lenders in Burlington offer mortgages at the maximum 85% LTV but there are some who decide based on credit score and employment history.
Loan amounts are reasonable enough for you to pay off debts, go on holiday, buy a car, or even invest in a business. A home equity loan in Burlington is without a doubt a great opportunity to utilize your home for low-interest money without worrying over credit.
Typical Uses for Home Equity Loans
Private lenders might ask why you need the money but this is only for record keeping. Banks might reject your application over how the money will be used but home equity lenders allow you to use it as only you know best. Whether it is for emergencies, entertainment, business, or education, make sure to repay as per the agreement to avoid lengthy legal processes.
- Business – Loan money might be enough capital for that business you always wanted to start.
- Education – You can pay school fees for yourself or family members.
- Renovation – The best way to add value to a property is by doing necessary repairs or upgrading features for additional comfort.
- Debt Consolidation – A home equity loan will help you pay off all small, high-interest loans to reduce the expense and risk of a ruined credit score.
The loans we provide in Burlington, Ontario can be used for charity or stopping a foreclosure.
Differences Between Home Equity Loans and Home Equity Lines of Credit (HELOC)
As the name suggests, an HELOC is a line of credit, much like a credit card with flexible terms. The home equity loan is comparable to an installment loan whose interest rates and terms are fixed. You can access an HELOC at any time but for a home equity loan, you must get a new contract approved each time you need more money after the initial lump sum. The only significant connection between these loans is that they are approved based on equity.