The term home equity loan refers to a kind of loan secured by real estate. Lenders issue these loans as registered first or second mortgages based on the equity in a property. Equity refers to the price of a house minus the debts on it. Unlike bank loans that are given according to credit score, home equity loans are offered according to the property’s value. We have a team of professionals with years of experience who provide home equity loans in Hamilton and other cities in Canada.
Payment Terms for Home Equity Loans in Hamilton
Standard home equity loans are usually first or second mortgages provided at 7%-15% interest rates. They are open mortgages that borrowers can conclude early by taking the penalty of three months interest fees. Home equity loans are largely sought after owing to more flexible than bank loans. The money can be used to address immediate financial needs and avoid a bad credit score from late or nonpayment of loans. If your equity is sufficient, we can provide the home equity loan amounts you need in Hamilton. Your employment history and credit score should not prevent you from accessing the equity in your property. These loans can be customized according to the clients’ needs and our loans experts are always ready to advise you on the best choices depending on your situation.
Common Tailored Options for Home Equity Loans
- Blanket Mortgages – this is an arrangement where the loan is taken against many properties to guarantee secure financing.
- Construction Draw Mortgages – We pay contractors for your construction project as it continues.
- Interest Only – as the name suggests, this is a mortgage where the principal remains the same and only interest is paid.
There are much more tailored options for borrowers, which can be written in the mortgage agreement. Our professionals are always available to discuss your situation and suggest the best options for you.
What Can You Get From a Home Equity Loan?
The loan amount you can get from a home equity loan largely depends on the price and debts on te property. They must calculate its loan to value ratio by dividing the value of loans by a property’s price. The result should be below 85% for your application to be approved by our network of home equity lenders in Hamilton. Some lenders depend only on LTV to make lending decisions but some are sensitive to credit scores and the borrower’s employment history. These lenders offer loans up to 85% of your house’s value. For example, if you have a home worth $100,000 and owe $50,000, you can borrow up to $35,000.
Common Uses for Home Equity Loans
Our firm has seen people who use their loan money to fund business projects, pay for education among other expenses. Less common uses of home equity loans include; vacations, car payments, and medical expenses. How you use the home equity loan is dependent on your immediate needs.
- Business Investing – Loan money can be turned into capital for your business.
- Education – Use the money to put your children through university or college.
- Renovation –The loan money can be used to make improvements to your home. This will add value to your home so you can sell it at a better price.
- Debt Consolidation – You can use the money to pay off all your high-interest loans. By consolidating all your debts into one loan, they are easy to manage and less likely to harm your credit score.
Additionally, the loans we provide in Hamilton can be used to help family members, stop foreclosure, and seeking emergency medical treatment.
Home Equity Loans Compared to Home Equity Lines of Credit
These are often confused but home equity loans and home equity lines of credit have important differences. The latter is a form of revolving much like a credit card with flexible interest rates, unlike home equity loans whose rates remain the same. An HELOC can be taken out at any time without exceeding the credit limit but for a home equity loan, you have to take the initial lump sum and wait for a new contract to be drawn so you can access more money. Both loans are only approved if the LTV of the property is low enough. The LTV helps home equity lenders to determine risk of approving home equity loans in Hamilton