Home equity loans as the name suggests are given against the equity of a property. Equity is a simple measure obtained by the value of a home minus its debts. The main difference between home equity loans and bank loans is that approval for them does not depend on credit score or job security. Our team has years of experience in providing various home equity loans in Richmond Hill helping people who were turned down because of low credit.
Terms and Conditions for a Home Equity Loan in Richmond Hill
A home equity loan is a second mortgage on a property that lenders offer at 7%-15% interest. It is called an open loan because borrowers can end early if they are willing to pay a penalty of three months interest as indicated in the mortgage. Banks are very rigid with the mortgage approval process, demanding credible explanations for needing the loan but home equity lenders are very flexible. Our loan specialists are available to help you understand different loan options for you to choose the most appropriate one.
- Construction Draw Mortgage – This is where our company pays your contractors to ensure that your project is completed.
- Blanket Mortgages – For this type, a loan is placed on more than one property to secure financing.
- Interest Only Mortgage – This is a loan where only interest is paid and the principal amount remains the same.
More tailored options could be added to the agreement so feel free to discuss your specific needs with our loan experts to make sure you get the best deal on a home equity loan in Richmond Hill.
How Much Can I Borrow With a Home Equity Loan?
This loan allows you to access the equity in your home or property but to decide whether you deserve one, the home equity loan lenders must calculate the LTV (loan to value ratio). This is done by dividing the value of debts on a property by its current selling price to achieve a score that should be under 85% for our home equity lenders to approve your request for a mortgage in Richmond Hill. LTV may be the most important factor to get you a home equity loan but note that some lenders in this city are also sensitive to credit score and job history among other factors.
Common Uses for Home Equity Loans
How the money is used depends on the client and their immediate needs. We have worked with people who need home equity loans to pay off other debts, finance college education and home upgrades. On some occasions, there are people who need it to pay for a vacation or luxury car but it doesn’t matter because the best use for this money depends on the client.
- Home renovation – Repairs and upgrades increase the value of a home.
- Debt Consolidation – The money may be used to pay off high interest loans.
- Business – The money can be invested in a start-up or existing business in order to boost revenue.
- Education – With a home equity loan, your children do not have to miss a day of classes over a lack of tuition payment.
The home equity loans we offer can also be used for less common purposes like stopping a power of sale, foreclosure or helping out family members.
Home Equity Loans Vs. Home Equity Lines of Credit
Home equity loans are a kind of installment loans while home equity lines of credit are a type of revolving credit. This means that there are fixed terms for the loan while interest may vary for the line of credit. When you are approved for a home equity loan, you get a lump sum of money. A home equity line of credit also known as an HELOC can be used whenever you like and you can withdraw any amount without seeking further approval. The line of credit may be used as the borrower wishes as long as the stay within the set limit. These two types of loans have many differences but something remains the same approval for home equity loans and home equity lines of credit depend on LTV.