A home equity loan is an example of loans that are secured by real estate. The loan is usually given as a registered mortgage on property and approval for them is based on property’s equity. Equity is simply the value of a home after the debts have been subtracted. Home equity loans are different from traditional bank loans, which are approved on credit score. We have a team of experts with years of experience offering home equity loans in Scarborough.
Options and Conditions of payment for Home Equity Loans in Scarborough
The typical home equity loan is, in reality, an open first or subsequent mortgage offered for only one year. Interest rates are 7%-15% per month but as an open mortgage, you have a choice to end it early. There is a three-month interest penalty for those that decide to finish their loan repayments before its due date. The greatest thing about home equity loans is that unlike bank loans, they can be customised to meet a client’s needs. Our loan officers are available to discuss the most appropriate loan solutions for your situation.
Common Tailored Options are:
- Interest Only Mortgage – The principal remains as only the interest is required as the loan payment.
- Blanket Mortgage – In this case, a mortgage is placed on many properties at the same time to secure more financing.
- Construction Draw Mortgage – We can pay your construction contractors as work continues
These are just a few of the loan customisations as more variations can be written in the agreement and our loan experts are there to advise on the best solutions for your needs.
How Much Can I Borrow with a Home Equity Loan in Scarborough
The amount you can get depends on your home’s value and the debts in it. Home equity lenders must calculate a metric known as loan to value, which is equal to the value of total debts divided by the current appraised price. Lenders in our network will lend on a property with 85% LTV. Some lenders depend solely on LTV but others are also sensitive to a borrower’s employment and credit history. Home equity lenders give you a chance to access the equity in your home in exchange for money for tuition and development projects. even if you cannot get bank loans, it is still possible to utilise your own assets for personal expenses.
Common Uses for Home Equity Loans
Clients are free to use the loan in any way they like. Our business works with several people who choose to invest their loan money in renovations, paying off expensive debts, business projects or higher education. Some find it worthy to use their money for luxury vacations and cars. Ultimately the best use for the loan money depends on your financial needs in Scarborough.
- Renovation – It is important to make home improvement and repairs but that is an expensive undertaking. A home equity loan can finance your home renovations and repairs.
- Debt Consolidation – Loan money may be used to pay off expensive debts. After debt consolidation, you should have only one loan to pay at low interest.
- Our loans that we provide in Scarborough may be used for things like helping family members, seeking emergency treatment or even seeking emergency treatment.
Differences Between Home Equity Loans and Home Equity Lines of Credit
Many confuse the two but there are obvious differences between home equity loans and home equity lines of credit. A home equity loan is a type of instalment loan which should be paid in equal instalments over a fixed period. An HELOC is on the other hand more flexible with terms that can be adjusted to suit the customer’s situation. With a home equity line of credit, you can withdraw any amount and at any time as long as you stay within the credit limit. For the home equity loan, you get an initial lump sum but once it is finished, you have to apply to a new contract for the next batch of funds. Home equity loans and home equity lines of credit are so different but there is one comparison in that approval for both depends on equity in a property. This is a home equity lender’s way to assess risk including judging whether they are likely to be compensated.