A home equity loan is a type secured by any piece of real estate, given as a registered mortgage. Approval, as the name suggests, depends on in equity the borrower still has the property. Equity is simply defined as a home’s value minus all debts. These loans are very different from bank loans, which are usually approved, based on credit score. Our competent team of experts has several years of experience providing home equity loans in North York.
Terms and Payments Options for Home Equity Loans in North York
Typical home equity loans are usually the first or second mortgage provided for a period of one year. It can be ended early if you like but note that there is a penalty in three months interest fees. Home equity loans in the neighbourhood come at interest rates between 7%-15%. The best thing about these loans compared to banks is that they can be customised to meet a client’s needs. Our professionals are available to talk about the best mortgage solutions for your needs.
The Usual Customised Loan Options Are
- Construction Draw Mortgage – Your contractors get paid as your project progresses.
- Interest Only Mortgage – Principal amount is unchanged and only interest for the loan is needed.
- Blanket Mortgage – To get more funding, you can rely on multiple properties as security.
These are just some of custom options that borrowers of home equity loans like. More tailored choices may be written in the agreement and our experts are only happy to discuss your issue and recommend the best alternative accordingly.
How Much Can You Borrow with a Home Equity Loan
The amount you can borrow with a home equity loan depends on the total debts and value of your home. Before giving you any money, the lenders must calculate loan to value ratio or simply LTV. This is the total of debts divided by its appraised price. Our lenders in North York will lend up to 85% LTV on a property in North York. While many base lending decisions on equity alone, some home equity lenders also consider job history, credit score and income. Home equity lenders give one the perfect opportunity to access home equity for the sake of personal development projects and even tuition. This loan allows you to use assets in your name to cater for personal expenses when the banks have turned you down.
Popular Uses for Home Equity Loans
There are no restrictions on how to use the funds from a home equity loan. Our company works with several people who use the loan as renovation money, tuition fees, payment of other expensive loans and business investing. Some buy cars or go on vacations while others cater to medical expenses. As our experts have witnessed over the years, the best use of the money depends on the client’s financial needs in North York.
- Education – The loan can be sued to pay school fees for you or your children’s tuition.
- Renovation – A home equity loan could suffice for home renovations and repairs that could increase its market value.
- Debt Consolidation – It is possible to take a big loan and pay off other expensive debts.
- Business Investing – Home equity loans often come in handy for people looking for capital for their new ventures.
The home equity loan can also be used to stop a power of sale, foreclosure or help family members.
Comparing Home Equity Loans with Home Equity Lines of Credit
There are clear differences between them but so many people can’t tell a home equity apart from a home equity line of credit. They are both approved based on equity but that is all the similarities between them. An HELOC is a flexible loan whose terms and conditions may change at any time while a home equity loan is given with a set of rigid terms and conditions. You initially get a big chunk of the initial loan but must get another contract to approve more money. You can take out a home equity line of credit at any time it is needed for various needs.