Home equity loans are given with a piece of real estate as security by lenders who are ready to overlook credit score and other factors that banks use to dismiss loans. Equity or the value of a home without the debts is the metric relied upon by home equity lenders when qualifying loan applications. We are a professional team who have been offering home equity loans in Napanee for many years now.
Terms and Conditions for Home Equity Loans in Napanee
The typical home equity loan is given as an initial or subsequent open mortgage on a property. You receive this loan at an interest rate of 7%-15%, which is different from what banks offer but with good reasons. Lending to people with poor credit score is a risky affair. The registered mortgage may protect an investor from losses but money gained from a power of sale is not always enough to pay all lenders in line to recoup. Despite the high-interest fees, people still turn to home equity lenders whenever they need a mortgage. This is because unlike a bank mortgage, it is possible to have a home equity loan that meets all your needs. Our experts will be happy to hear about your situation and recommend a suitable loan for you.
Common Customized Loans Include:
- Interest Only Mortgage: You pay interest on this loan without affecting the principal.
- Blanket Mortgage: You can present multiple properties as security to guarantee more funding.
- Construction Draw Mortgage: We can pay your contractors until the building is completed.
Our lenders understand that borrowers have unique needs, which must be factored in the mortgage agreement. You are encouraged to discuss your circumstances in order to get an ideal home equity loan.
How Much Can You Borrow
The loan is offered according to the equity a client has on their property. To know exactly how much to give to whom, home equity lenders in Napanee must calculate the property LTV or loan to value ratio. This metric is achieved by dividing a property’s debts by its selling price hoping to get 85% or less. Even with a registered mortgage to protect their interests, it is not always easy to recoup after other lenders have been compensated so lenders feel the need to avoid homes with too many loans.
How to Use a Home Equity Loan
As our officers have seen, there are countless uses for a home equity loan depending on a borrower’s priorities. Most people use the loan to pay expensive loans, furnish renovations, pay school fees or invest in a business. On the rare occasion, people use home equity loans to buy expensive cars or purchase holiday packages.
- Business Investing: You can rely on the money as capital for a new business venture.
- Education: School fees can be expensive but your kids will remain in school with a home equity loan.
- Renovation: It is important to conduct repairs and upgrades in case you need to sell the home in future.
- Debt Consolidation: This loan is often used to pay off other high-interest debts.
We offer reasonable home equity loans in Napanee to help with serious issues like stopping a power of sale, paying for emergency treatment, or helping loved ones. Our officers only ask why you need the loan for proper record keeping unlike banks that must see a profitable use of the loan before approving it.
Differences Between a Home Equity Loan and Home Equity Line of Credit
Many people assume them to be the same but a home equity loan and home equity line of credit couldn’t be more different. The home equity line of credit or HELOC is a revolving type of credit with revolving interest rates like a credit card. For a home equity loan, on the other hand, you have to repay the loan in fixed interest rate for a defined period. You are allowed to withdraw any amount of a home equity line of credit but you must be careful to stay within the credit limit. Approval for both loans is dependent on home equity.