Home equity loans are secured by real estate property and; lenders who do not really mind a borrower’s credit score issue them. They rely on the total value of a home and total debts, which is better known as equity. Our team has experience providing home equity loans in Pickering and we also offer services in other cities in Ontario.
Payment Terms and Condition for Home Equity Loans
When you seek a home equity loan, what you get is actually a one-year mortgage on the property. It is provided at an interest rate of 7%-15%. The first or second open mortgage on your home can be repaid in full before the deadline but choosing to do this leads to a penalty fee of three months interest. It is a good idea to pay early without regard to the penalty as doing so leads to a high credit score contributing to approval for loans with better terms and conditions.
People still like home equity loans despite the high-interest fees because they are more flexible than your usual bank loans. This means a loan may be tweaked to suit your special preferences. Our team is always ready to help you choose the most appropriate home equity loan in Pickering.
Popular Custom Options Comprise of:
- Interest Only Mortgage: The principal is not a concern, as you only need to pay interest.
- Blanket Mortgage: In this case, you use more than one house to secure more funds
- Construction Draw Mortgage: Your service providers are paid to ensure seamless completion of your project.
After discussing your needs, our experienced loan providers will definitely work your options into the loan agreement. The result is a fully customized home equity loan that will help to actualize your dreams.
How Much Can I Borrow with a Home Equity Loan
Home equity lenders offer reasonable loan amounts but this depends on the value of a home versus its debts. They are very sensitive to risk and even if they do not follow the same criteria as banks, private lenders of such loans must calculate a metric known as loan to value ratio. The property LTV shows how much the owner owns and helps a lender decide how much to give each borrower. After dividing the value of loans by the appraised price of a home, our lenders will loan up to 75% LTV on the property. Some lenders rely on other parameters like credit score and employment history.
Common Uses for Home Equity Loans
Lenders do not place restrictions on how loan money is spent, as they understand that customers know their priorities. In our interactions with clients, your officers have come across several reasons for needing this money and we have come up with some of the best. Home renovations, education, debt payment, and business investing are the most common reason why people seek home equity loans.
- Business Investing: Money offered can serve as a good source of business capital.
- Education: Your kids do not miss school when you have home equity loan money.
- Debt Consolidation: It is more practical to have a single loan with average interest rates than a set of unpaid high-interest loans. One debt is definitely easier to manage and it carries less risk of damaging your credit score.
More options can be added to the loan agreement including less common options like stopping a power of sale, helping loved ones, or paying emergency medical bills.
Differences Between Home Equity Loans and Home Equity Lines of Credit (HELOC)
There are many differences between home equity lines of credit (revolving credit) and home equity loans (installment loans). The payment terms and conditions for home equity loans are fixed while an HELOC has terms that are more flexible. The latter is accessible at any time the borrower need money while new contracts must be drawn to release more money. You have to stick within the set credit limit of an HELOC. The only similarity between the home equity lines of credit and home equity loans is that lenders base their decision on the value of a home and total of debts.