A home equity loan is one given with real estate property as security. Private lenders are ready to issue such a loan considering equity. This is much, unlike banks, make a lending decision based on credit score. Equity is equal to the appraised value of a property minus all the debts in it. A home equity loan enables borrowers who would otherwise be disqualified for a mortgage to utilize personal assets in actualizing their financial goals. We have a team that specializes in setting up home equity loans in Port Colborne.
Terms and Conditions for Payment of a Home Equity Loan
This loan is usually extended as a first or second mortgage on a piece of real estate. It is given at 7%-15% monthly interest for a one-year term. If you are able to pay earlier, the open mortgage registered on your property allows it but only for customers who are ready to pay a three-month interest fine. As a registered mortgage, you could also lose the property through a power of sale in case you are unable to pay the loan. Home equity loans are more flexible than bank mortgages, which is great news for borrowers who need a fully customized loan. Our lenders are always ready to discuss your special circumstances and tailor your loan to them.
Popular Custom Options Include:
- Interest Only Mortgage: For this, you are only required to pay interest without any effects on the principal.
- Construction Draw Mortgage: This is lent to people who need to pay their construction workers. Our company will pay your contractors until the building is complete.
- Blanket Mortgage: Multiple properties are used to secure more financing.
In understanding diverse customers’ needs our officers are ready to add more custom options to the agreement.
How Much Can You Get with a Home Equity Loan
Every client qualifies for a unique loan amount depending on equity in his or her property. To make the best judgment, a private home equity lender finds it necessary to calculate a metric known as loan to value ratio. The LTV is obtained by dividing a property’s market value by its debts. Our home equity lenders in Colborne are ready to loan up to 85% LTV on a property. It would be a great risk if home equity lenders were to offer loans for more as even with a power of sale; they might not be compensated after other lenders have claimed their cut. LTV is most important but there lenders who will give loans based on credit score and employment.
Uses for a Home Equity Loan in Port Colborne
We may ask why you need the money but that is not a factor influencing the lending decision. Banks like to see the money put to use in a profitable venture but home equity lenders are lenient. You can use the money in any way you feel is ideal. During our time in the industry, our officers have seen many uses for the loan including school fees, business capital, and renovations.
- Renovation: A borrower may use the loan to pay for home repairs and upgrades. By upgrading the home, you are able to increase its value if you hope to put it up for sale in future.
- Debt Payment: Using one loan to pay off other high-interest debts is known as debt consolidation and is more affordable than several lines of credit.
- Education: Loan money is often used as payment of college fees for your children or loved ones.
- Business Investing: A home equity loan often acts as capital for startup ventures. Some entrepreneurs also rely on the loan in the expansion of their ventures.
To the home equity lender in Port Colborne, you can use the loan as you wish as long as you are able to repay on time and in full.
Home Equity Loans Compared with Home Equity Lines of Credit (HELOC)
In truth, the only comparison between a home equity loan and home equity line of credit is that they are both approved according to LTV. An HELOC as a home equity line of credit is called has revolving interest rates and terms of payment but not the home equity loan which is paid in fixed installments. You can access any amount of the HELOC but remember not to exceed the credit limit.