Home equity loans are secured by real estate property. They are different from regular bank loans because approval for them is based on equity and not the borrower’s credit score. Equity is the value of a property and all the mortgages on it. We are a professional team of lenders who have been offering home equity loans in Welland and other cities in Ontario, Canada.
Payment Conditions and Options for Home Equity Loans in Welland
A home equity loan is the first or second open mortgage on your home or piece of real estate. Private lenders offer this loan at 7%-15% interest for a typical period of 12 months. As an open form of credit, you are allowed to finish paying early but with a penalty. Creditors often charge a fine of three months interest fees to anyone who decides to be done with loan repayments before they are due. This shouldn’t discourage you, as paying early boosts your credit much more than simply paying on schedule.
Despite high interests and a rather short repayment term, people still prefer the more flexible home equity loans. Bank mortgages come with pre-defined terms and conditions which cannot be customized to the client’s needs. Our home equity lenders in Welland are always prepared to discuss your special circumstances and tailor a loan product to them.
Popular Custom Options Include:
- Interest Only Mortgage: The principal is not affected, as you only need to pay interest on the loan.
- Construction Draw Mortgage: Our lenders pay your contractors to ensure completion of your construction project.
- Blanket Mortgage: This is given to multiple properties to a borrower who wants to secure more funds.
More variations can be added in the mortgage agreement just to make sure your home equity loan in Welland meets all your expectations.
How Much Can I Borrow With a Home Equity Loan
Loan amount varies from one lender to the next but all decisions are based on loan to value (LTV) ratio. After looking at your credit score, loan equity lenders divide the total of mortgages by appraised cost of a home to get LTV and decide whether to lend any money. If your LTV is at 75% or below, our home equity lenders in Welland will extend the loan. Private lenders are very sensitive to risk, and will not offer loans against property with more than 75% LTV.
The loans we offer in the city are reasonable amounts of money that you can use to pay bills, help loved ones, pay for tuition and even purchase cars.
Common Uses for Home Equity Loans
Home equity lenders in Welland might ask why you need the money but that is only for record keeping purposes. Unlike banks, private lenders allow you to use the money as you wish. Our loan officers have come across several reasons over the years but there are some more common than others. Debt payment, renovations, and education are the most prominent uses for home equity loans. Rarely do we see people who need loans for car and vacation payments.
- Renovation: This is money used to upgrade a home for value addition.
- Debt Consolidation: You can pay off expensive loans so that you remain with one that can be less of a hassle to manage.
- Education: Loans can be used to pay school fees when the paycheck is late to arrive.
- Business Investing: Many times, people take home equity loans as a source of business capital.
Our home equity loans in Welland allow customers to meet their needs whenever the money is tight. People have used this loan to pay emergency medical bills, stop a power of sale, or help loved ones in financial trouble.
How Home Equity Loans and Home Equity Lines of Credit Differ
A home equity loan is a type of credit whose payments are made in fixed installments, for a set period. The HELOC is much more flexible, as terms and condition tend to change, and it can be withdrawn at any time. With a home equity loan a set lump sum is given to the borrower, but with a HELOC any amount under the credit limit may be drawn.