Home equity loans are a type of loan that is secured against real estate properties. Private lenders who do not focus on credit score but instead use equity to approve or reject loans offer them. We are an experienced team of professionals that are able to provide home equity loans in St. Catharines, ON.
Rates and Payment Terms for Home Equity Loans
As a second or initial open mortgage, the standard home equity loan is offered at 7%-15% interest. The agreement allows you to end this mortgage before the stated due date but if you do, be ready to pay the 3-months interest fine. This penalty shouldn’t deter you though because early loan payments are good for your credit score. Many people prefer home equity loans to bank mortgages mainly because they are easily customized to their needs.
Popular Customized Options Include:
- Construction Draw Mortgage – We pay your construction contractors gradually to ensure completion of your project.
- Interest Only Mortgage – Only interest is paid which means that the principal remains the same.
- Blanket Mortgage – You can secure financing by putting more than one property up as security for a loan at the same time.
After discussing your needs, our home equity lenders in St. Catharines will include them in the mortgage agreement. The result will be a fully customized loan that meets all your financial expectations.
How Much Can you Borrow with a Home Equity Loan
Equity determines how much money a private lender can give. To make a clear evaluation, they have to calculate the loan to value ratio by dividing total debts by the current selling price. Ideally, this number shouldn’t exceed 75% for our home equity lenders in St. Catharines to give you the money. The higher the LTV on the property, the greater the equity is on the property. People who seek home equity loan often do so because of poor scores making it necessary for private lenders to take extra precautions. It is for this reason that they charge high interest on loans and avoid any property with more than 75% loan to value ratio. Ordinarily, home equity lenders do not care much for credit but there are some who are sensitive to employment history, and credit rating among other factors.
Common Uses for Home Equity Loans in St. Catharines
When banks ask your reasons for needing a mortgage, customers are wary because their explanation might lead to rejection but things are different for home equity loans. Private lenders only seek your reasons to update their records, giving you freedom to use your money as you see fit. From our records, most people use their home equity loans to pay off debts, start businesses and finance education. There are some who use loans to pay for their expensive cars or go on holidays but on occasion, these loans are taken to take care of loved ones or handle emergencies.
- Education – This loan may help you keep the kids in school when income isn’t adequate.
- Debt Consolidation – People often use their money to cover small loans and avoid high rates and ominous consequences of missed payments.
- Business investing – Entrepreneurs often use home equity loans to finance their businesses.
- Renovations – Home equity loans are often taken to fund home renovations for value addition. Improving a home is important as it reduces the LTV, thereby giving you a chance to qualify for better loan amounts in future.
Differences between a Home Equity Loan and a Home Equity Line of Credit (HELOC)
Both a home equity loan and home equity line of credit (HELOC) are approved based on equity but that is all the comparison. Home equity loans are installment loans while an HELOC is a type of revolving credit akin to a credit card. Revolving credit means that terms may change at some point while installment loans have rigid terms and conditions. When you receive the first chunk of money, you need to wait for more contracts to approve more of the home equity loan. Different from that is that an HELOC may be accessed whenever it is needed bearing in mind the credit limit. Our loan professionals are always available to discuss your best home equity loan options in St. Catharines, Ontario.