Home equity loans are the kind issued by private lenders who don’t really mind a borrower’s credit. You only need to show ownership of a piece of real estate with enough equity to get this loan. Equity is equal to the value of a home minus all the mortgages on it. This loan is different from your usual bank mortgage and we are a team of experts with years of experience providing home equity loans in Innisfil.
Rates and Conditions for Home Equity Loans in Innisfil
Home equity lenders provide this loan for a typical period of 12 months for a 7%-15% interest fee. It is issued as your original or next mortgage on the property and it has an open clause, which you can activate to end payments earlier. Doing this comes with a small penalty in 3 moths interest.
The rates may be high and terms quite strict but home equity loans are still much preferred. This is because unlike traditional mortgages, it is possible to customize these loans to their needs. Our loan officers are willing to work on the loan agreement to make sure all your needs are satisfied.
Most Common Options Include:
Some needs are more prevalent than others, which is why our experts have identified popular tailored home equity loans among people in Innisfil.
- Interest Only Mortgage: In this case, only the interest is needed and the principal remains unchanged.
- Blanket Mortgage: You are allowed to use more than one home as security for the loan to secure more financing from the same lender.
- Construction Draw Mortgage: The company gives you a loan to pay your construction workers so that your project is finished without a hitch.
Countless variations can be included in the mortgage agreement to meet the unique needs of residents.
How Much Can I Borrow With a Home Equity Loan
The amount you get depends on how much equity there is left after all debts have been subtracted from the appraised value of the property. Lenders must calculate the loan to value ratio of a property as it helps in deciding what amount to offer and at what interest. The LTV is calculated by dividing the total debts by selling price in the hopes of getting a value lower than 75%. Our home equity lenders in Innisfil are ready to offer loans up to the maximum acceptable LTV to increase the odds of their being compensated in case you default.
They recommend reasonable loan amounts so you can use the money to meet living expenses or pay off expensive debts. Some people simply go on vacation or purchase cars with the loan money as there are no restrictions on its use. Moneylenders only want to know your reasons for needing the money so they can keep records. This is unlike banks and traditional lenders who are much likely to reject loans based on your reasons for needing the money.
Common Uses for the Money
In our experience providing home equity loans in Innisfil, we have seen many uses for the money but some are more serious than others. Debt payment, education, home renovation, and business investing are some of the most common uses for this money but car payments and vacation payments are also popular.
- Renovation: You can use the money to pay for home repairs and upgrades that cause its price in the market to increase.
- Education: The money can be used to pay school fees for your children even when you don’t have adequate annual income.
- Business Investing: Home equity is a vital source of capital for startups and established ventures find it useful in expansion projects.
- Debt Consolidation: Money can be used to pay off expensive credit cards to be left with one loan whose payments you will never miss.
Disparities between Home Equity Loans and Home Equity Lines of Credit (HELOC)
A home equity line of credit or HELOC is a type of revolving credit whose interest rates vary like those of a credit card. You can use the HELOC at any time but never surpass the credit limit. The rates you pay on a home equity loan remain the same throughout the year. Probably the reason why so many people confuse them is that both loans are approved based on LTV.