A home equity loan is a kind that is secured by a piece of real estate. Private lenders who hold equity in higher esteem than credit score and job history offer it. Equity is simply the value of a house minus its debts. This loan allows people with poor credit to access their equity for personal gain, much unlike banks who are guided by credit score as a measure of risk. Our company of loan experts has had many years of experience giving home equity loans in Thorold, ON.
Fees and Payment Terms for a Home Equity Loan in Thorold
The loan is given as a registered mortgage for the first or second time on a property. As a registered mortgage, the lender has the right to sell your property to claim their investment in case you default. There is also an option to end things early as the standard home equity loan is really an open mortgage. If you take this option, be ready to pay a fine of three months interest fees. Home Equity Loans are much sought after than regular bank loans for their flexibility. Our specialists are always on hand to listen to your situation and design a mortgage agreement accordingly.
Common Custom Options Comprise of:
- Blanket Mortgage: Our lenders allow you to use multiple properties as loan security when you need large amounts of money.
- Construction Draw Mortgage: We can pay your workers to complete your home building project without stalling.
- Interest Only Mortgage: For this loan, only interest payment is needed as primary amount remains untouched.
Our seasoned experts know that there are varying needs among home equity borrowers. It is for this reason that they are always willing to make alterations to the agreement so that each client gets a loan that is fully customized to them.
How Much Money Can I Get with this Loan
There isn’t a standard home equity loan as the amount depends on a home’s equity. The more equity you own, the higher your odds of getting a hefty amount. To measure risk in different properties, home equity lenders in Thorold must calculate the loan to value (LTV) ratio. This metric is gained by dividing the total of loans on a property with its appraised value. Lenders hope for a result of 85% or below, to which they can offer loans. In ignoring credit score, home equity lenders take on heavy risk and they must try to protect themselves by avoiding properties with too much debt. Though the registered mortgage grants them the power of sale, they are not assured of recouping after other creditors have claimed their money. LTV is the most important metric but some lenders also rely on credit score to decide who qualifies for a loan.
Common Uses for the Money
Our loans are reasonable amounts of money that you can use in any way. Home equity lenders leave spending decisions to the borrower because after all, it is their money. You can pay debts, meet daily living expenses, or take a vacation.
- Business Investing: Most people take this loan as capital for a business but some only need it to expand or buy inventory.
- Renovation: Adding a room or modern function to a home increases its market value. This can help in getting you a bigger loan or selling the property at a higher price.
- Debt Consolidation: Relieve yourself from stressful credit card payments by paying them off with a home equity loan. Then you will only have a single loan to pay at affordable monthly rates.
You are indeed free to spend this money as you like but make sure you repay as agreed. Less common uses for the loan include paying for emergency treatment, helping family members, or even stopping a foreclosure or power of sale.
Telling Home Equity Loans Apart from Home Equity Lines of Credit
Customers find it hard to differentiate between a home equity loan and home equity line of credit as both are given on basis of LTV. An HELOC has many distinct features including flexible interest rates where a home equity loan is repaid in fixed installments. You can withdraw an HELOC whenever the need arises but keep in mind the loan limit.