Home equity loans are a kind given if you offer real estate as security. Lenders prefer registered mortgages on a property and in giving this loan; they do not consider a borrower’s credit score. This is different from banks, which must consider employment history, annual income, and credit before loaning any client. We are a team of loan professionals who have been providing home equity loans in Brockville, Ontario for many years now.
Payment Terms and Conditions for Home Equity Loans in Brockville
A standard open first or second mortgage is what you are actually offered as a home equity loan. The registered open mortgage means that a lender has the power to sell if you default but it also permits you to end it early if you like. The interest rates for a home equity loan in Brockville range from 7%-15% and if you end payments before one year is over, you have to pay three months worth of interest fees as a penalty. The main difference between these loans and traditional bank mortgages is that a home equity loan may be customized to the customer’s wishes. Our loan experts in Brockville are available to discuss special needs and design a product that will meet your goals.
Examples of Tailored Home Loans:
- Blanket Mortgage: For this loan, you can present multiple properties as security for the same loan to secure better funding.
- Interest Only Mortgage: Only interest is required as the principal amount remains unchanged.
- Construction Draw Mortgage: In this case, we pay your construction workers until the building project is completed.
Our lenders are ready to include more custom options if you are willing to discuss them. In the end, you will have a loan to use for different financial obligations.
How Much Money Will You Get
The exact amount of money you will get with this loan is determined by how much equity is on your property. Before deciding on loan amount and interest rate, home equity lenders must calculate a metric called loan to value ratio. This is achieved by dividing the value of debts with a home’s appraised value. Our lenders are willing to loan up to 85% property LTV as it means that the owner has 15% stake in it. While loan to value (LTV) is of utmost importance, some lenders are also concerned with credit score and job history when making lending decisions.
How is the Loan Used
The money given to you can be put to any use without restrictions from the lenders. It can be used as capital for your business, to pay for renovations or as school fees for your kids. Some people use the money to pay for vacations, or expensive cars. The money can be used to meet any personal needs so the home equity lenders do not interfere on its spending. Our officers have seen several uses for this loan, with some being more common than others.
- Renovations: The money can be used to upgrade or repair the home.
- Debt Consolidation: This loan is often used to pay off other high-interest loans.
- Business Investing: The loan can act as capital for your business.
- Education: This loan has often been used as school fees
The loans we provide in Brockville have some uncommon uses like stopping a power of sale, foreclosure or even paying for emergency medical treatment.
Differences between Home Equity Loans and Home Equity Lines of Credit (HELOC)
There are clear distinctions between a home equity loan and home equity line of credit but many people assume they are alike. This is only because approval is based on loan to value ratio but beyond that, nothing is the same with the two loans. A home equity loan is best likened with an installment loan. This means you have a pre-defined payment term and fixed interest rates. Different from that is the home equity line of credit with revolving credit much like a credit card. What this means is that the interest rates and payment period might change according to the circumstances. The entire HELOC is available for the borrower to use in any way as long as they stick within the set credit limit.