This is a loan where a piece of real estate is used as security. Home equity loans are basically offered as mortgages registered on a property. Equity or the value of a home minus its existing debts is the main basis for being approved for a home equity loan. This is much unlike bank mortgages; as factors like job history and credit score are deemed to be of less importance than equity. Our professionals have years of experience with providing home equity loans in Cambridge. We also offer loans in other Ontario cities like Milton, Barrie, Newmarket, and Niagara Falls to name but a few.
Terms and Payment Options for Home Equity Loans in Cambridge, Ontario
A standard home equity loan is generally your first or second open mortgage. It comes with an interest rate of 7%-15% for a one-year term. There is a choice to end the loan early by paying only a three-month interest penalty fee. Unlike ordinary bank mortgages, home equity loans are flexible enough to be customized to each customer’s unique needs. One of our loan officers can discuss different variations and decide the best alternatives for you.
Popular Custom Options Include:
- Interest Only Mortgage: Only the interest should be paid and here, the principal is unchanged.
- Blanket Mortgage: A loan is placed on multiple properties, which is helpful in securing reasonable financing.
- Construction Draw Mortgages: We will pay all service providers as the construction work is finished.
More custom options may be included in the loan agreement and our loan experts are pleased to discuss your special situation and recommend the most appropriate options available to you.
How Much Can I Borrow with a Home Equity Loan
The value of the home and that of existing debts on a property determine the amount a person can borrow. Lenders have to calculate a value known as Loan to Value (LTV) ratio, which is equivalent to the value of existing debts on a property divided by the current appraised value. Our network of home equity lenders usually loans up to 75% on properties in Cambridge. While LTV is the most important deciding factor, some lenders might also be sensitive to employment history and credit score.
Common Uses for Home Equity Loans
The money you borrow with this loan may be used in any way you wish. The best use of this money seen by our company is to pay off expensive debts, invest in home renovation or higher education. Some use the money to buy cars or holiday packages. The best use of this money depends on your circumstances which lenders are not privy to.
- Renovation: Money can be used to make upgrades or repairs to your home.
- Debt Consolidation: This man is often used to pay off other expensive debts.
- Education: You can pay tuition fees to keep your kids in school.
- Business Investing: Home equity loans are a good source of cash to fund a business.
Loans that we offer can be used for rare issues like stopping foreclosures, helping loved ones, and paying for emergency treatment. Unlike traditional lenders, we only require your reasons for needing the loan to update our records. You are free to use these loans as you see fit but make sure to repay as agreed to avoid dire consequences.
The Difference between Home Equity Loans and Home Equity Lines of Credit (HELOC)
Home equity loans and home equity line of credit (best known as HELOC) are very distinct loans. An HELOC is a type of revolving credit like a credit card, which doesn’t have fixed terms and number of payments. This is different from a home equity loan with rigid rates and terms. With an HELOC, a borrower can take out money at any time as long as the borrower stays within the credit limit. For a home equity loan, an initial chunk is given but you must wait for another contract to release additional funds. Both types of loans have to be approved based on LTV, and this is the only similarity between them. Our experts are available to help you understand the home equity loan better so that you may choose a product that will meet your needs.