Home equity loan refers to a type of credit whereby security is in form of a piece of real estate. The lenders extend these loans as registered mortgages on the said property. Equity is the actual market value of a home after all existing debts have been removed. It is to the private lender what a credit score is to a bank and we have a number of independent lenders who have been offering home equity loans in Waterloo for many years. Our experienced loan specialists also serve in other Ontario cities like Milton, Cambridge, and Richmond Hills.
Payment Terms and Conditions for Home Equity Loans
With a first or second mortgage on your property, it is possible to pay before the standard 12 months are over. This loan carries a 7%-15% rate and ending it early comes with a penalty of three months interest fees. Do not let this hinder you from paying because it helps with improving a low credit score. We always have a loan officer available to discuss your wishes and design a custom loan just for you.
Popular Options Include:
- Construction Draw Mortgage: We pay your construction workers to ensure smooth completion of your project.
- Blanket Mortgage: Multiple properties can be fronted as security for the same loan in a bid to secure more money.
- Interest Only Mortgage: This is a case where you only pay the interest, as principal remains unchanged.
Everybody who needs a loan has special preferences which our officers are ready to include in the mortgage agreement. This will result in a custom loan that will really address your situation and hopefully improve future finances.
How Much Can I Borrow with a Home Equity Loan
This is settled based on how much debts you have on the property and its appraised price. To be sure about the risk of lending to you, creditors in Waterloo need to divide the total debts by price of a home. This gives a metric called loan to value (LTV) ratio, which homes equity lenders deem to be more important than credit score. However, some home equity lenders are also sensitive to your job history and personal state of credit.
Common Uses for Home Equity Loans
Banks usually ask why you need the money to see whether you will make enough profits to repay them. The reason you give might cause rejection of your application but not with private lenders. This category of creditors leaves borrowers to do, as they like with the money as individual priorities differ. The most common uses for this loan are to pay school fees, debt and invest in renovations.
- Renovation: Money is often used for upgrades and repairs that ultimately increase a property’s value.
- Debt Consolidation: It is better to focus on repaying one loan with moderate interest rather than trying to keep up with multiple high-interest debts.
- Business Investing: If you use the money to start a business or finance operations, there will be profits gained from assets that you already own.
The loans we offer are also used to settle emergency medical bills, stop a power of sale or save loved ones in financial trouble. Lenders do not dictate the use of your money but you need to repay as per the terms and conditions to avoid losing both your home and credit score.
Differences Between Home Equity Loans and Home Equity Lines of Credit
These are very distinct loans but many consumers still think they are the same. A home equity loan is paid in fixed installments for a specific period. Unlike installment loans, home equity lines of credit have negotiable terms that can be aligned to match a borrower’s current circumstances. The rules of access also differ in that you can use the HELOC at any time but must seek extra permissions to get more of your home equity loan after the first installment is depleted. People only assume home equity lines of credit and home equity loans are alike is because approval for both is dependent on equity. Our loan experts will pleasantly guide you through your options to make sure you end up with a suitable home equity loan in Waterloo, ON.