Home equity loans are a kind of loan whose security is real estate property. It is different from bank mortgages, based on credit score in that equity is the primary deciding approval factor. Equity is the value of a home and the debts in it. Home equity lenders are very sensitive to risk and will not lend to property without enough equity. They are in the real estate business meaning that without equity, they wouldn’t make much of a profit. We have an active team of home equity loans in Caledon, ON who have been in operation for many years.
Payment options and Terms for Home Equity Loans in Caledon.
The first or second open mortgage on your home is given at a 7%-15% interest and for a period of one year. As an open mortgage, you may choose to end the contract early so you can relieve yourself of the burden. If the mortgage is paid out early then a three month interest pentalty fee applies.
Custom Home Equity Choices Include
- Blanket Mortgage: This is where many properties are used as security for the loans in a bid to get more funding from the same lender.
- Interest Only Mortgage: Principal is untouched, as you only need to repay interest.
- Construction Draw Mortgage: We pay contractors to ensure that your project is finished on time.
Our experts can add more options in the agreement as they understand the unique needs of residents. They are ready to listen to you and help you decide which is the best alternative for your situation.
How Much Can I Borrow with a Home Equity Loan
You qualify for different amounts depending on equity in your property. To assess how much of a risk your home poses, lenders must calculate a metric known as loan to value (LTV) ratio. It is obtained by the division of debts by the selling price of a home to get a percentage value that should be ideally below 75%. Our home equity loan lenders in Caledon will lend up to 75% LTV on a property as anything more is an indication of an unbearable risk. While LTV is the most important value for home equity lenders, some still base their decisions on borrowers’ credit score and employment history.
Home equity lenders in Caledon offer very reasonable loan amounts, which can be used to reverse your future financial prospects. It is indeed the perfect way of utilizing personal assets to repay debts, renovate your home, or expand your business.
Common Uses for Home Equity Loans
Home equity lenders in Caledon usually ask your reasons for needing the money but don’t worry about it because unlike traditional lenders, they are willing to accept whatever reason you give. You are free to use the loan in any way as long as you have a good repayment plan.
- Renovation: Money for renovation can be used for home repairs or upgrades that ultimately increase its market value.
- Education: The loan can be used to pay your children’s school fees or fund your own college education.
- Business Investing: Loan money is a great source of business capital. Many people fund their startups while others use it to expand their premises.
Our home equity loans in Caledon also help people contribute to charitable activities, stop a power of sale and pay for emergency medical bills.
Comparing Home Equity Loans and Home Equity Lines of Credit
A home equity loan is very different from a home equity line of credit as it is an installment loan. The home credit line of credit, which is better known as an HELOC, is a type of revolving credit with flexible rates and conditions. An HELOC can be withdrawn at any time it is needed and it is possible to negotiate the terms according to your circumstances. The only similarity between a home equity loan and the home equity line of credit is that they are approved based on property LTV.