Home equity loans are a type of loan given to real estate as security. These loans are given without any regard to the credit score. Equity is the value of a home minus the debts in it which creditors trust to be a good measure of credit worth. We are an experienced team that has been offering home equity loans in Midland, Ontario for many years.
Terms and Payment Conditions for a Home Equity Loan in Midland
To get this loan you must understand that it is the first or subsequent mortgage on the property given at higher interest rates than banks would. You need to finish paying this loan plus 7%-15% interest in one year but many people choose to do it earlier. This is possible with an open mortgage but clients must pay a penalty in three months interest fees. Home equity loans in Midland are given out as registered mortgages to give the lender an advantage. If you are unable to pay, a lender can sell off your home and recoup their investment. Despite the strict terms and payment conditions, more people prefer these loans, which are more flexible than traditional bank mortgages. Our loan experts are happy to discuss your special needs and recommend a loan tailored to your circumstances.
Common Tailored Options Include:
- Construction Draw Mortgage: This is an option where we pay your construction workers to see your project to completion.
- Interest Only Mortgage: For this loan, you only need to pay interest fees; the primary amount remains unchanged.
- Blanket Mortgage: In this case we allow clients to use more than one home as security for the loan.
Our lenders understand that customers have diverse needs which they must consider in designing the mortgage agreement. When they are finished you will have a fully customized home equity loan to help you meet your financial obligations.
How Much Can You Borrow with this Loan
A home equity loan amount is decided when the lenders see the appraised value of your home in relation to the debts in it. They can use these values to calculate a metric known as loan to value (LTV) ratio. This is obtained by dividing the debts by a home’s market value for a result that should be ideally below 85%. Home equity lenders must avoid properties with high LTV as it indicates too little equity for them to benefit. While they can sell a property in default, other lenders must first get paid before home equity lenders in Midland can claim their cut. While loan to value is the most important metric, some lenders also look at annual income and credit score when deciding whom to lend.
How to Use a Home Equity Loan
Our home equity loan experts believe that the user knows the best uses for the loan, unlike banks who need a practical explanation before issuing a loan. In our experience people often use a home equity loan in payment of school fees, business investing, home renovation and as payment of debts. Some clients only require a home equity loan to finance a vacation or to purchase a dream car.
- Renovations: Properties can be upgraded using home equity money for a chance to sell it at a higher value.
- Business Investing: A loan may come in handy as capital for your new business.
- Education: Pay for your own education or ensure your kids stay in school using the loan money.
- Debt Consolidation: Home equity loans are used to pay off other expensive debts.
The home equity loans in Midland are a reasonable amount that can be used to meet financial obligations.
Discerning Between a Home Equity Loan and Home Equity Line of Credit (HELOC)
The differences are clear but people think a home equity loan to be the same as an HELOC because approval is based on property loan to value. Home equity loans are a type of installment loan that has fixed rates for a defined timeline. The home equity line of credit’s closest comparison is a credit card, with its revolving terms and conditions. While you have unrestricted access to the HELOC, you must be careful not to go over the credit limit.