The term home equity loans refer to a kind of loan offered against the property. Lenders base their decision on equity or total of debts and the current market price of the home. This is different from banks that hold credit in higher regard. We have a large number of experienced lenders who are ready to offer home equity loans in Brantford and other cities in Ontario.
Conditions and Terms of Payment for Home Equity Loans
An open first or second mortgage is what you get when you apply for a home equity loan. This is given at interest rates between 7% and 15% one year. As it is an open mortgage, the agreement allows you to end before the deadline but with a penalty fee of three months interest. The fine shouldn’t deter you from paying early as it contributes to a good credit score. In spite of high interest, people still refer home equity to bank loans, as they can be suited to the individual.
Popular Options Include:
- Interest Only Mortgage: The interest alone is needed as the principal is unchanged in this case.
- Construction Draw Mortgage: We pay your workers to ensure completion of your project.
- Blanket Mortgage: You can put up more than one house as security for the same loan in the hopes of getting better financing.
Our lending experts are ready to include more options to suit your circumstances. A custom home equity loan is a great way of actualizing your financial goals. It is a chance for you to utilize assets in your name for financial gain.
How Much Can You Borrow
The amount you get with a home equity loan depends on the property LTV. Loan to value ratio is calculated by dividing total debts by current price of the property. Our home equity lenders in Brantford are ready to loan up to 75% LTV on a property as higher than that indicates too little equity. Lenders are sensitive to such risk because they need to see a way of recovering their investment should you default on payments. Even if they are not so keen about credit, home equity lenders must calculate risk before lending to avoid losses.
Common Uses for Home Equity Loans
Once they are approved, home equity loans can be used in any way the borrower likes. Lenders only ask why you need the loan to keep proper records, unlike banks who use it to approve or reject applications. We have encountered a large number who use the money to pay other loans, pay school fees, invest in a business and home renovations.
- Debt Consolidation: Use the loan to pay off other expensive debts to be left with something more manageable.
- Renovation: adding spare rooms or simply conducting repairs not only makes the property more habitable, but it also increases its market value.
- Education: You can pay school fees for your children using home equity loans when your paycheck is delayed.
- Business Investing: Our loan experts have met many people who use home equity loans as business capital.
Without restrictions on how the money is used, many people in the city have used it to stop a power of sale, foreclosure and even help loved ones out of financial crises. The only expectation from private lenders of home equity loans is that you repay what you owe according to the terms agreed on. Failure to do so is risky as more than your credit score; it could cost you the home you love.
Differences between a Home Equity Loan and Home Equity Line of Credit (HELOC)
These two loans couldn’t be more different but customers don’t seem to realize it. A home equity loan is a great example of installment loans. This is because the terms of payment dictate a specific amount to be paid on a set date without fail. After a home equity loan is approved, you only get a lump sum to use and when you need more, there must be a new contract allowing access. The home equity line of credit is a form of revolving credit where it is possible to negotiate terms according to prevailing circumstances. It is possible to access the HELOC at any time when it is needed.