These are a kind of loan with real estate as security, offered by private institutions that do not consider the same factors as banks do. Rather than look at the borrower’s employment history and credit score, a home equity lender concentrates on the equity in a property used as collateral. We are a team of experts who have been offering home equity loans in Huntsville and many other cities in Ontario.
Terms and Conditions for Home Equity Loans
A home equity loan is usually given as a normal first or second mortgage on a home at 7%-15% interest. These fees must be paid in one year but a borrower may choose to end things early if possible. This happens if you are ready to pay a penalty fee of three months interest. Lenders receive this as a registered mortgage, giving the power of sale to the lender should they fail to honor the loan. The reason for such high interest on the loan is that even with the power of sale a lender might not get paid because creditors who came before must first claim their investment. These loans are so popular among borrowers owing to their flexibility compared with ordinary bank loans.
Common Examples of Customized Home Equity Loans in Huntsville
- Interest Only Mortgage: Only interest is paid, as the principal amount remains unchanged.
- Blanket Mortgage: If you need extra funding that one home cannot secure, the blanket mortgage allows you to use another.
- Construction Draw Mortgage: We pay your workers to ensure completion of your building project.
Our loan officers are ready to add more of your preferences to the loan agreement. All this is in an attempt to give you a loan that you will afford to repay and also meets your needs.
How Much Will You Get With This Loan
The loan offered each client depends on how much stake they own in their property. To make a judgment, lenders must calculate a metric known as loan to value (LTV) ratio by dividing a property’s debts with its selling price. In so doing, they hope to get 75% LTV or less in order to extend a loan. Home equity lenders in Huntsville are very sensitive to risk and generally avoid properties with too heavy a debt burden. The loan to value ratio might be an important metric to home equity lenders but there are some who must see your credit history to offer you a loan.
Ways the Loan is Often Used
You are free to use the loan money in any way because home equity lenders are not interested in how you spend it. Unlike banks that might reject your application over the reason for needing a loan, these lenders are lenient. In their encounters, our loan officers have seen many uses for the loan including paying debts, education or renovating a home. In some cases, the loan is needed to fund a business or simply go on vacation.
- Business Investing: The home equity loan is used to invest in a business or start one.
- Renovations: A loan may be used to finance home repairs or upgrades. This contributes to an increment in a home’s market value leading to better loans in future.
- Education: You can send the kids to school using the home equity loan.
- Debt Consolidation: You can pay off existing high-interest debts using the loan.
Our home equity loans in Huntsville have less common uses like helping the family, stopping foreclosures, or making car payments.
Differences With Home Equity Loans and Home Equity Lines of Credit
A home equity line of credit (HELOC), is a type of revolving credit whose closest comparison is a credit card. This means that payment conditions and interest fees might change as time passes by. Home equity loans, on the other hand, are a type of installment loan to be paid within a specified timeline. You can get any amount of an HELOC at any time when it is needed but never exceed the credit limit. Most people miss the differences between these loans only because both are given according to a property’s loan to value ratio.