The kinds of loans secured by the property are known as home equity loans in real estate circles. As the name suggests, these are given to property with enough equity as opposed to bank mortgages for which you must have a great credit score. Equity is the equivalent of home’s value minus all the debts on it. We are an experienced team of loan officials who have been providing home equity loans in Stratford and other cities in Ontario, Canada.
Terms and Conditions for Payment of Home Equity Loans
Moneylenders for this kind of loan may not be interested in your credit score but they certainly have clear terms and conditions of payment. In most cases, a home equity loan is granted as the first or second open mortgage on a property. They charge relatively high interest rates between 7%-15% for the loan for a one-year term. It is an open mortgage because you can choose to finish paying for twelve months are over. This is a good move for those trying to upgrade a credit score but you must contend with a fine of 3 months interest for the lenders to accept your decision.
The payment rates and schedule might seem very strict but this is only the lenders attempt to cushion themselves from imminent loss. Home equity loans are gaining more popularity in the city as people look for more flexibility than banks are ready to offer. Our loan experts understand your unique needs and are therefore ready to customize your contract as much as possible. In the end, you have a home equity loan that not only meets your needs but one whose payments you can afford.
Common Tailored Loans Include:
- Construction Draw Mortgage: This loan is issued to pay contractors for your building projects. This is in recognition of the fact that many building projects stall due to lack of funds.
- Interest Only Mortgage: It is clear from its name that you only need to pay interest for this custom option.
- Blanket Mortgage: If one house does not suffice to get you all the funding you need, it is possible to use multiple properties as security.
Owing to the diverse needs of clients, our officers are ready to weave any special requests into the mortgage agreement to try satisfying everyone.
How Much Can I Borrow With a Loan
This ultimately depends on your equity but before determining interest rates, home equity lenders must calculate a metric called loan to value (LTV) ratio. This is achieved by division of debts with the appraised value to get an ideal value of 75% or less. The remainder indicates how much equity there is left and it is considered too much of a risk if you own less than 15% of your home. Home equity lenders are not keen on credit score but they are very sensitive to risk, avoiding any property with too much debt.
The home equity loans we offer in Stratford are good amounts of money that you can use to meet immediate financial obligations.
Common Uses for the Loan
Our loan experts have encountered many uses for the loan during their tenure in Stratford Ontario. Some use their loan for serious matters while there are a few who only need it to finance life’s luxuries. On rare instances, home equity loans have been used to stop a foreclosure or activation of a power of sale.
- Business Investing: Use the money as capital or to buy new stock for a retail venture.
- Education: Your kids don’t have to miss a day of school if you are a property owner in Stratford city.
- Debt consolidation: Many people prefer one loan that they can afford as opposed to taking multiple loans whose monthly payments they can’t meet.
Home Equity Loans and Home Equity Lines of Credit (HELOC)
There is a home equity loan that is paid back in fixed installments together with interest, and then there is an HELOC, which it is often mistaken for. The home equity line of credit is a different type of loan whose payment rates are dynamic. There are no more access permissions needed after the first HELOC installment, so you can use as much as you like when you need it but not exceeding the credit score.