A loan where real estate acts as security is best known as a home equity loan. As the name suggests, approval for this loan type depends on equity, not credit scores typically used by banks. We have a network of experienced professionals who have been providing home equity loans in Guelph, Ontario for many years. Our company also serves other cities in the vicinity including Whitby, Toronto, and Brampton.
Terms and Conditions for Home Equity Loans
This loan is typically provided as an initial or second mortgage with 8% -12% interest for a one-year term. A standard home equity loan is an open mortgage that allows early repayment at the borrower’s discretion. Paying off a loan early is beneficial for your credit score and enables you to pursue other important projects.
However, taking this path means you are ready to pay three months interest in penalty fees. This said, home equity loans are still chosen over traditional bank loans, which are too rigid. Our loan officers are always available to discuss your situation and tailor the best loan to suit your needs.
Popular Options Include:
- Interest Only Mortgage: For this, the principal is untouched, as you only need to pay interest.
- Blanket Mortgage: Multiple products are put up as security in a bid to secure more funding.
- Construction Draw Mortgage: We pay your contractors to finish your project without a hitch.
Our specialists can include more variations to the loan agreement to make sure that it indeed does meet your special needs.
How Much Can You Borrow with a Home Equity Loan
The loan amount you are eligible to receive is determined by the home’s value and the total debts on it. To assess risk, home equity lenders in Guelph calculate a metric known as the loan-to-value (LTV) ratio. It is obtained by dividing the total current debts on the house by its current market value. The result should never exceed 75% for any lender to consider your application. LTV is the most important deciding factor for a home equity loan, but some lenders are also sensitive to the borrower’s credit score.
Common Uses for a Home Equity Loan
Once approved, you are free to use this loan as you want. If lenders ask why you need the loan, it is not to disqualify you but only for the sake of records. During our tenure in the Guelph market, our experts have identified some of the best uses, including home renovations, business investing, paying off debt and education. A few people only want access to this money so they can pay for a dream car or idyllic vacation.
- Renovation: this money is used to make necessary upgrades and repairs to the home.
- Business: Many choose to inject this money into their businesses so that they can make a profit.
- Education: Countless people want home equity loans to pay for higher education.
- Debt Consolidation: Rather than be overwhelmed by expensive loans you can take this loan and pay any money owed so that you remain with one big but manageable debt.
Our loans can be used in any way based on your priorities, whether it’s avoiding foreclosure, handling a power of sale, or covering high medical expenses. Unlike traditional lenders, home equity lenders do not restrict how you use the funds.
Differences Between Home Equity Loans and Home Equity Lines of Credit (HELOC)
A HELOC is a form of revolving credit which is, in fact, different from installment loans like home equity loans. This means that the payment terms and rates are always the same, but for a home equity line of credit, it is possible to negotiate terms. While you need new contracts for access to additional funds from your loan, the HELOC can be used at any time the need arises. Though so different, the only comparison is that both types of credit are approved according to the property’s equity.
A loan where real estate acts as security is best known as a home equity loan. As the name suggests, approval for this type of loan depends upon equity and not credit scores which are often relied on by banks. We have a network of experienced professionals who have been providing home equity loans in Guelph, Ontario for many years. Our company also serves other cities in the vicinity including Whitby, Toronto, and Brampton.
Terms and Conditions for Home Equity Loans in Guelph
This loan is typically provided as an initial or second mortgage with 8%-12% interest for a one-year term. A standard home equity loan is an open mortgage whose payments can be completed early if the borrower feels up to it. Taking the chance to finish a loan before its due date is a good thing for a credit score, and it allows you to move on with important projects. However, taking this path means you are ready to pay three months interest in penalty fees. This said, home equity loans are still chosen over traditional bank loans, which are too rigid. You will always find a loan officer from our company who is ready to discuss your situation and customize the best loan that will suit your needs.
Popular Options Include:
- Interest Only Mortgage: For this, the principal is untouched, as you only need to pay interest.
- Blanket Mortgage: Multiple products are put up as security in a bid to secure more funding.
- Construction Draw Mortgage: We pay your contractors to finish your project without a hitch.
Our specialists can include more variations to the loan agreement to make sure that it indeed does meet your special needs.
How Much Can You Borrow with a Home Equity Loan
Home value and the total of debts on it are enough to determine the loan amount you are eligible to receive. For a clearer picture of risk, home equity lenders in Guelph must get a metric known as the loan to value (LTV) ratio of the property. It is obtained by dividing the total current debts on the house by its current selling price. The result of this division should never exceed 75% for any lender to consider your application. LTV is the most important deciding factor for a home equity loan, but some lenders are also sensitive to the borrower’s credit score.
Common Uses for a Home Equity Loan
Once approved, you are free to use this loan as you want.
Lenders inquire about the loan’s purpose for record-keeping, not to disqualify applicants. In Guelph, our experts recommend using home equity for renovations, business investment, debt repayment, and education.
A few people only want access to this money so they can pay for a dream car or idyllic vacation.
- Renovation: this money is used to make necessary upgrades and repairs to the home.
- Business: Many choose to inject this money into their businesses so that they can make a profit.
- Education: Countless people want home equity loans to pay for higher education.
- Debt Consolidation: Rather than be overwhelmed by expensive loans you can take this loan and pay any money owed so that you remain with one big but manageable debt.
The loans we offer can be used in any way based on your priorities. It can be your way out of foreclosure, power of sale or high medical charges. Home equity lenders allow borrowers flexibility in using funds, unlike traditional lenders who may reject based on specific reasons.
Differences Between Home Equity Loans and Home Equity Lines of Credit (HELOC)
A HELOC is a form of revolving credit, different from installment loans like home equity loans. While payment terms and rates are fixed for a home equity loan, they can be negotiated for a HELOC. Accessing additional funds requires new contracts for a home equity loan, but a HELOC provides flexible access as needed. Both types of credit are approved based on the property’s equity.