A loan secured against property is known as a home equity loan, commonly offered by private lenders. The creditors prefer extending registered mortgages to borrowers based on their home’s equity. By subtracting a property’s value from its debts, private companies are able to provide mortgages, unlike institutional lenders who are highly sensitive to credit score. We are a team of experts who have been providing desirable home equity loans in Sault Ste. Marie, Ontario.
What you get upon approval for a home equity loan is usually a first or second mortgage. This loan is typically offered for a one-year term at 7%-15% interest. It is an open mortgage meaning that the borrower has an option of ending it early. This, of course, is only possible if you are ready to pay a penalty fee of three month’s interest. These are popular loans compared to those offered by banks for several reasons including the fact that they can be tailored to meet a client’s needs. Our professional loan officers are always ready to listen to your desires in order to suggest the best home equity loan products just for you.
Common Custom Options Include:
These are a few of the custom options as you may request anything to be written in the mortgage agreement. In light of this, our experts are pleased to discuss your needs and make appropriate suggestions.
The loan amount you are eligible for is largely dependent on the property value compared to debts. To assess this, lenders must calculate the loan to value ratio or LTV. Dividing the total debts in a home by its current selling price should give a result of 85% or less. Our lenders in Sault Ste. Marie can only lend at a maximum 85% LTV but there are some who are also guided by credit score when making decisions on home equity loans.
That said, home equity lenders offer reasonable amounts meaning that the borrower will get enough funds to finish a business project, go on vacation or buy a car. Such a loan gives homeowners a chance to utilize assets they already own to improve their livelihood.
There are no restrictions as to how you should use the money but we have encountered many clients who usually need the money to pay bills, tuition fees, investment and a range of personal expenses. Occasionally, there are people who use their home equity loans to pay for expensive cars and vacations leading to the conclusion that the best use of home equity loan money depends on the borrower’s immediate needs.
The home equity loans provided by our company in Sault Ste. Marie, Ontario can also be used to help out family members, pay for emergency treatment or stop a power of sale among other issues.
Borrowers who don’t understand the differences often mix up these two forms of credit. Like other installment loans, a home equity loan has clear, fixed terms of repayment, which is not the same for home equity lines of credit. Here, the terms are more flexible and a borrower has permission to withdraw any amount within the credit limit at any time. With a loan, you will get a large sum in the beginning but to get more you have to await approval of a new contract. The differences are as clear as day but, the stark similarity between home equity lines of credit and home equity loans is that they are approved or denied based on equity.