Home equity loans are a kind that is secured by a piece of real estate. It is different from a bank loan in several ways including the fact that private lenders don’t focus on your credit score. These loans are approved according to the equity in a property as a more accurate method of risk assessment. We are a team of highly trained experts who have been issuing home equity loans in Orillia for many years now.
Terms and Conditions for Home Equity Loans
Home equity lenders have certain terms and conditions that must be met before they can provide loans in Orillia. The money is extended to you as a standard mortgage for the first or second time on that particular property. It is usually lent at 7%-15% interest for 12 months but you have a choice to finish paying early following the open clause on a registered mortgage. People still scramble for home equity loans despite the high-interest rates compared to traditional bank loans. They are so much sought after because t is possible to have a home equity loan customized to your needs.
Personalized Loans Include:
- Interest Only Mortgage: In this case, you only pay interest on the loan without affecting the principal.
- Blanket Mortgage: You have the choice to use more than a single property as security for a bigger loan.
- Construction Draw Mortgage: We can pay workers at your construction site to make sure the project is complete.
More custom options can be added to the loan agreement as our loan experts try to make sure you have a satisfactory product.
How Much Will You Get with this Loan
Home equity lenders do not concentrate much on credit score but they certainly have criteria to approve or reject loan applications. They rely on a metric known as LTV or loan to value ratio, which must be 75% or less for you to be approved. The exact amount and interest depend on how far your LTV is from the acceptable minimum. In simple terms, a property LTV of 50% will attract a higher loan amount and at lower interest compared to another with 82% loan to value ratio. This might be the most important metric but there are some equity lenders who also need o know the borrower’s employment and credit history before making the final decision.
We provide realistic home equity loan amounts in Orillia that can be used to meet various needs.
How is a Home Equity Loan Used
From our experience in the market, it is evident that there are as many uses for this loan as there are people in the city. Some needs are obviously more urgent than others are but fortunately, home equity lenders do not mind how you spend the loan as long as you can repay on time.
- Education: You can pay your school fees or keep your kids in school using the loan money.
- Debt Consolidation: It is possible to use the loan money to pay expensive loans.
- Renovation: Home repairs and improvements are utterly important both for comfort and value addition.
- Business Investing: Many people find home equity loans to be an excellent source of capital for their startup ventures.
Comparing Home Equity Loans with Home Equity Lines of Credit
The only significant likeness between a home equity line of credit and home equity loan is that both are approved according to equity left in a property. In overlooking credit score, lenders take on huge risks with borrowers and they must, therefore, make sure to loan only properties without a heavy debt burden. A home equity loan is paid in fixed monthly installments unlike the home equity line of credit, which has flexible rates. You can access the home equity line of credit at any time you want but without going over the credit limit. All said and done, the home equity loan is your opportunity to alter your financial prospects utilizing assets that you already own. The loan may be used to fund a business, pay for a vacation, or stop a power of sale. You need to pay in accordance with the agreement to avoid loss of property.