The kind of a loan secured by the equity in a piece of real estate is a home equity loan. It is issued by private lenders if there is enough equity in the property. Equity can easily be calculated by subtracting the total debts from the price of a home. These lenders value equity more than credit score, the figure relied on by banks and institutional lenders. Our well-trained specialists have many years of experience in offering home equity loans in Vaughan, Ontario.
Payment Options and Terms for Home Equity Loans in Vaughan
When you go in search of a home equity loan, lenders will offer you an open first or second mortgage. You will be expected to repay with interest of 7%-15% but it is possible to end the mortgage early. If you decide to finish making payments before they are due, the lending company will charge a fee of three months interest. Home equity loans give people a rare chance to utilize the assets they already own for financial gain. You can use the money to finance any project and if you are not sure which, talk to our loan experts who are always ready to help.
Examples of Customized Loans
- Interest only mortgages are loans where the principal remains and only interest is required.
- A blanket mortgage is when more than one house is used for secure financing.
- Construction draw mortgages are loans where a contractor is paid gradually as their work progresses
These are just a few of the alternatives but more could be written in the mortgage agreement to suit your unique situation. Our seasoned experts are always happy to advise you on the best choices.
How Much Can I Borrow With Home Equity?
Lenders are the judge of what you get and they know that by calculating the home’s loan to value ratio/ LTV. Dividing the total value of debts on the said property with its current selling price should give you a number less than 75% to assure lenders that you are worthy. Our vast network of home equity lenders in Vaughan will lend on a property with at most 75% LTV- the most important factor in loan approval decisions. Some lenders are sensitive to employment history and credit score among other issues.
How Do People Use Home Equity Loans?
The most common uses of these loans as we have discovered is to finance businesses, pay school fees, and home renovations. On rare occasions, our company encounters people who use home equity to pay for a vacation or dream car. It is best to use the money as you wish because only you know what is most important.
- Debt Consolidation –Many people use the money to pay off expensive debts to leave them with a single, more manageable loan.
- Renovation – making home improvements is necessary for value addition. Home improvements also enhance comfort in the living places.
- Business Investing – Loan money may be used as capital for your new business.
- Education – Your kids remain in school when you use home equity to pay their tuition fees.
A home equity loan can also be used to stop emergencies like a power of sale or foreclosure. Accessing home equity can save you from losing your property to banks when you fail to repay their loans. You are more likely to qualify for a home equity loan because its lenders do not consider credit scores.
Home Equity Loans vs Home Equity Lines of Credit
A home equity loan is an installment loan while home equity loans are more similar to a credit card. Home equity loans have fixed interest rates while those of a home equity line of credit are subject to change. This is because the latter is a revolving type of credit. For a home equity loan, you receive a large sum and will need to create a new contract to approve more funds. The home equity line of credit may be used, as you like as long as the limit is never exceeded. You can withdraw any amount without seeking more approvals. The main similarity between home equity loans and home equity lines of credit is that approval depends on the property’s LTV.