There are different types of mortgages, often categorized according to the creditor or terms of issuance. A home equity loan is one that is provided by private lenders with real estate property as security. Creditors offering this type of loan usually overlook credit score and job history to approve based on equity. We are a team of private lenders with years of experience providing the much sought after home equity loans in Grimsby.
Payment Terms and Interest Terms for a Home Equity Loan in Grimsby
The interest fees and payment term depends on the lender but generally, they charge between 7%-15% interest for a one-year term. This loan is provided as a registered open mortgage on a property, meaning that you can end things early by taking a fine of 3 months interest fees. As a registered mortgage, the loan lender is at liberty to sell property given as security in case you default on the loan. Home equity loans are gaining increased popularity in Grimsby and other Ontario cities for their unrivaled flexibility. Our loan experts have enough experience that enables them to customize loans to different clients with diverse needs.
Common Examples of Personalized Home Equity Loans
- Blanket Mortgage: As the name suggests, a borrower is enabled to use more than one house as security for the same loan. This is done when trying to secure a large amount that cannot be covered by a single property.
- Interest Only Mortgage: This is a loan where you pay only the interest on the loan as primary amount stays unchanged.
- Construction Draw Mortgage: This is a loan used to pay your construction workers to completion of the building project.
Some more variations are possible as our lenders in the city always try to deliver loans that are fully customized to the borrower.
How Much Money Will You Get for the Equity in Your Home
It is encouraging to know that your credit score will not affect the lender’s decision but know that they also have a set criteria for approval. They are very sensitive to risk and under no circumstances will they extend loans to a property with a heavy debt burden. It is for this reason that they have to see an appraised value of the property and total of existing debts. These figures help in calculating loan to value (LTV) ratio, which is then used to decide who qualifies. Our home equity lenders in Grimsby generally loan up to 75% LTV on a property as anything more indicates that there is too little equity.
If you meet this requirement, the creditor will extend a reasonable loan amount that you can use to meet your financial goals.
How to Use the Money
You can use the money in any way you like as a way of satisfying your financial needs. Our loan officers have noticed a few common used of the money during their service to residents of Grimsby, Orillia, Cambridge, Milton and other cities in Ontario.
- Debt Consolidation: Experts advise borrowers to use the money as payment for other expensive loans. A single big loan is more affordable in the long term and it is possible to keep up with monthly payments compared to multiple high-interest credit cards.
- Home Renovations: It is important to repair and upgrade your house regularly as a way of increasing its market value.
- Education: Some people seek home equity loans to help them cover school fees.
- Business Investing: Home equity loans often act as a source of capital for new businesses and some entrepreneurs also use it o expand their premises.
There are some instances when the home equity loan is used to make car payments or for expensive vacations. Albeit rarely, home equity loans are also used to stop a power of sale or foreclosure; thereby saving a borrower from losing their treasured property.
Differences Between a Home Equity Loan and a Home Equity Line of Credit (HELOC)
An HELOC is a type of credit comparable to a credit card or other types of revolving credit. It is much different from a home equity loan which is characterized by fixed payment terms and interest fees. You are free to use any amount of a home equity line of credit, taking into consideration the credit limit.