5 Must Ask Questions Before You Apply for a HELOC

Applying for a HELOC is serious decision that needs careful consideration of several things. You can’t just apply for a HELOC with no battle plan in mind and no real purpose for applying for this type of home loan. Here are 5 questions you must make sure to ask before you apply for a HELOC.

Are you aware of what makes HELOC different to a home equity loan?

Both HELOC and a home equity loan allow you to tap your equity but you will be able to use more of your equity with a HELOC as compared to a home equity loan. A HELOC is also a revolving type of credit whilst a home equity loan is a one-time lump sum loan.

A HELOC would be a better option for you if you know that you will have multiple substantial expenses in the future. Another pro about getting a HELOC is that you will only pay interest on the amount that you’ve actually taken out.

Are you sure that you can pay it back?

Getting a HELOC can seem like a quick hack to get access to funds but remember that a HELOC is a secured loan with your home as the collateral. If you fail to pay credit cards the worst that can happen is a lawsuit but failing to pay back a HELOC means you and your entire family can go homeless. This is why it is so important to make sure that you get a HELOC with reasonable terms with the help of a mortgage broker who’s also thinking ahead for you.

Are you okay with variable interest rates?

A home equity line of credit has a variable interest rate that is usually tied to whatever the present economic condition is. You might have a very low interest rate now but who knows what will happen in the future? Economic changes can adjust your HELOC interest rate many times over. Are you prepared to handle this uncertainty?

Are you going to use your HELOC wisely?

Using your HELOC to consolidate high-interest debts is a smart decision but using it to finance vacations you can’t afford may lead to you losing your home for non-payment. This is why you must think long and hard and discuss applying for a HELOC with a mortgage professional so you won’t end up finding about important details when it is too late.

Are you thinking about financial flexibility?

Veering off slightly from the subject of using your HELOC wisely, you have to be sure that getting a HELOC is the right financial move for you because of huge risks involved as mentioned earlier. You have to be sure that you are applying for the right reasons such as having a need for the financial flexibility that a HELOC can give you and not just because you love the idea of having a huge-limit-revolving-credit-card. Instead of using a HELOC for purposes that generate more debt, why not use it for purposes that either save you money (like debt consolidation) or make money you money (like an equity-boosting home remodel). The financial flexibility possibilities are there, you just have to know how to use it for your best benefit.

Applying for a HELOC can be a lot of work. Allow our mortgage professionals to help you with the details until you get approved for this means of tapping your home equity.. Contact us right away!

What You Need to Know Before Applying for a Home Equity Line of Credit

Having the means to tap your home’s value is a great resource to have for when you’re suddenly faced with an emergency need for cash such as for an unforeseen illness, vehicle repairs, or home expenses that are not covered by insurance.

Who wouldn’t want access to a cash source that offers lower interest rates than a credit card and offers you flexibility with the amount you need, right? More so that applying for loan after loan can become very taxing.

This is where applying for a HELOC or a home equity loan comes in. You apply to get a line of credit based on your home’s equity and you can reuse and repay it a number of times. Sounds great? Then you better read the other facts about getting a home equity line of credit below!

It Resembles Using A Credit Card

A HELOC can be used for multiple expenses or repurchases, repaid, and used again; just like having a credit limit for credit cards. You only pay interest on the actual amount used and won’t be charged anything on the unused portion.

Unlike a credit card, though, a HELOC’s interest is much lower and that there are nearly no fees charged for getting a cash advance, even up to 100% of what you are allowed to borrow. This is a far cry from the 20% limit for credit cards. Note that a HELOC can only be used for usually  maximum of 10 years until you need to reapply for one.

It Will Give You Freedom to Spend But Don’t Abuse It

Though a HELOC gives you so much flexibility, understand that it can result to increased debt if used irresponsibly. This means that you shouldn’t use it for frivolous things such as having grand vacations, buying expensive gadgets, splurging on clothes, and similar things. Use it for when you are unemployed, need to spend for a wedding, got a huge medical expense, have to pay for tuition, got a significant business expense, need overdraft protection, or when faced with an emergency such as multiple big bills at the same time.

It Has a Highly Variable Interest Rate

A HELOC’s changing interest rate can work for you or against you. You’ll have lower payments to make when interest is low and the opposite is true if interest rates are high.

You can opt for a a hybrid HELOC that allows you to lock on a fixed interest rate but be sure that you won’t end up on the losing end if you choose this by having your lending professional assess if this will work for your specific needs and means. The locked interest rate should be reasonable enough for you not to have future repayment issues.

Still have questions about applying for a HELOC? Contact us so we can give you the answers you seek! We also help with home equity line of credit approval. Talk to our lending professionals today!

Utilizing a Home Equity Line of Credit to Increase the Value of Your Home

Do you know that you can increase your home’s value by tapping into your home equity with the use of a home equity line of credit? Most homeowners have a ton of renovating and remodeling projects they would like to tackle but are refraining from because of shortage of funds. The thing is, now is the perfect time to use mortgage to finance projects like these because mortgage rates are at record lows while home prices are at an all-time high. Let us walk you through ways you increase the value of your house by using your HELOC aka home equity line of credit or your home equity loan.

Unlock Equity in Your Home

If you’ve been paying mortgage for quite some time, then you have built up quite an equity in your home. This equity can be tapped by refinancing through a home equity loan or a HELOC. You can borrow as much as your 80% of your home’s value without the mortgage and use that money for a dream vacation, tuition, or your much awaited home renovation.

Note that home equity loan and a HELOC are not the same. A home equity loans allow you to borrow a one-time amount with a fixed interest rate that you can pay over a fixed period of time while a HELOC allows you to borrow funds up to a set limit and pay interest only on the amount you borrowed. A HELOC also allows you to borrow again as you pay just like a credit card but using your home equity.

Refinance and Remodel – Increase Your Home’s Value!

Most people remodel or renovate their homes to meet the changing needs of their family but you can totally do the same to increase the value of your property. If your home is outdated, doing this can make staying in your home more enjoyable for you as well as make it easier for you to sell at a later date.

By tackling home remodeling projects using your home equity, you will have the funds to pay for quality. Meaning you will have money to pay contractors to do things right and not try to DIY to save money. You will also be able to maximize your home’s potential and turn it into an investment that you can make money from when you sell in the future.

Apply for a Home Equity Loan and Get Approved!

If you’re planning to do a home renovation to update your home and make it better, we can help at Homebase Mortgages. Our mortgage brokers can connect you with private lenders and help you determine your best options. We will help you evaluate your current situation financially and assist you in finding the best lender to suit your lifestyle and financial needs. Contact us today or at your earliest convenience so we can set up a free consultation and help you with your mortgage application.

Is a Second Mortgage or a HELOC Right for You?

second mortgagesWhen you’re refinancing your home you’re going to have many things to choose from; for most a second mortgage is the right answer. Here we’re going to go over everything you need to know about a second mortgage, how they’re beneficial and if they’re right for you. Before you make any choice about refinancing your home, talk to one of our talented Toronto mortgage brokers and see what we can do for you. Let’s get started!

What is a HELOC?

A HELOC is a home equity line of credit. Unlike a normal mortgage, this is a revolving line of credit; revolving means you can pay it back, borrow it back, etc. etc. over and over again, just like a credit card. These are great for some situations and disastrous for others. If you’re retired or retiring for example, you can take the equity out of your home and put it towards your daily expenses. One of our Toronto mortgage brokers will be able to help you find a low interest and fair home equity loan for this purpose. You want to be careful about taking money out of a HELOC account on a day to day business, as this can backfire on you rather quickly.

What is a Second Mortgage?

A second mortgage is a bit like a HELOC loan; instead of borrowing the money and paying it back again, you’re going to be able to borrow it one time and then repay it that one time. This is a great option if you’re looking for a large lump sum so you can pay off debts or purchase big ticket items. If you’re going to need a more steady income stream, you may want to think of a HELOC loan instead. Second mortgages are the de facto choice for most people who need a loan against their house. In both cases you’re going to need equity to borrow money.

What is Equity?

Equity is what you actually own in your home. It’s a good bargaining chip for when you need to borrow against your home. You’ll need to figure out your equity before you try and apply for a mortgage. Take the appraised value of your home and subtract any mortgages or debts that you have against the property. If you owe any taxes you should subtract this too, so you can get a realistic view of what’s going on. Now you know how much equity you actually have in your house.

Choosing between a second mortgage and a HELOC can be hard, but you’re going to need to make the right choice. Let one of our Toronto mortgage brokers help you make the right decision for your finances. Without competition, banks have zero incentive to make sure that they’re giving you the right deal. So make sure you’re getting the deal that’s right for you.

To find out how we can help you find a great mortgage, apply online here!

Should You Take Out a HELOC in 2016?

It’s no secret that there’s never been a better time to borrow, and when you take out a home equity line of credit in 2014 you’ll get unheard of interest rates! Working with one of our Toronto mortgage brokers you’ll be able to get everything you need to get a low rate for a long term or short term HELOC. Why just take whatever deal a lender feels like giving you when you can get the right deal for you? Let us pair you with a lender that will give you a square deal on a round loan!

What is a Home Equity Line of Credit?

Home equity is the actual amount of your home that you actually own. A line of credit is like a credit card, so a home equity line of credit (also known as a HELOC) is a line of credit secured by the equity in your home. You’ll need a majority of equity in your home to take out a HELOC and it’s best for people with big ticket purchases or those investing in remodelling their homes. It’s important to note that if you’re not able to pay back, just like with anything secured by equity, you could lose your home.

Why Not a Second Mortgage?

A second mortgage or home equity loan is a different kind of animal altogether. Working with one of our Canada mortgage brokers will help you figure out which one is right for you. A second mortgage or home equity loan will be delivered up to you in a lump sum – you won’t have the opportunity to change your mind later and borrowing ANOTHER second mortgage again too soon can damage your credit and hike your interest rate. A home equity line of credit is more like a pay as you go kind of option. You’ll have everything there that you need to fund your project or purchase, and if you need something more you’ll be able to get that too.

Why You Should Borrow Now

Borrowing now is one of the best decisions you can make. Through early 2014 you’ll find that rates are at century lows; you’ll be able to get the highest loan to value ratio that we’ve seen since the 70s. Why get stuck with a bad deal when you can get everything that you need now? The only reason you should wait is if you’re working on debt consolidation; the higher your credit the less you’ll pay in points and interest in the long run. Good credit is important, but aside from that you’ll be able to get some great rates!

Don’t Go It Alone

When you work with one of our Toronto mortgage brokers you’re going to get all the help you need. We’ll help you understand how your credit and equity will work for or against you, help pair you with the right lender and work with you to get the best deal.

To find out how we can help you find a great mortgage, apply online here!

Comparing Home Equity Lines of Credit

HELOCCanadians today have more options than ever before when it comes to second mortgages and home equity lines of credit; if you want to get the one that’s right for you you’ll want to work with one of our Toronto mortgage brokers. Here we’re going to go over the things you need to look at when comparing different HELOCS so you can get the best deal. From interest rate margins to annual percentage rates, there are things you need to sort out before you settle on just one!

Why is Interest Important?

Since home equity lines of credit are long term arrangements, interest rates play a “vary” (who could resist the pun?!) important part in the agreement. You’re going to want to have the lowest rate possible, down to a fraction of a percentage point. When you work with one of our Toronto mortgage brokers you’re going to have someone on your side who will help you get the lowest interest rate.

1% of $100 is a $1. So if your mortgage is $500,000 at 15% a year… that adds up to $75,000 A YEAR in interest if you only pay the bare minimum payment! That’s an extra $25,000 to $50,000 that you just don’t need to pay, and it all boils down to percentage points. If you want to be able to get the loan that’s right for you, you want someone who can get you a low interest rate. When you have a smart Toronto mortgage broker on your side, you’ll get the lowest possible interest rate and the best terms.

Interest Rate Index

There are more than one interest rate indices available, and different lenders will use different ones. You’re going to want to have someone who uses a common one like the LIBOR or COFI; there are many others but it’s important that they don’t use something that they made up arbitrarily to get themselves more money on the whole. Interest rates (as of September 2012) are quite good, as low as 3% depending on who you borrow from. If you’re paying 15% for a mortgage or a HELOC there are better offers out there. Let us as Toronto mortgage brokers help you find them.

What Are Interest Rate Margins?

Interest rate margins, also referred to as points in your home equity line of credit contracts, are the padding that the lender adds on to make more money. So if you have a mortgage that is signed at 3% with an interest rate margin of 3% added on, your total in interest will be 6%. This sounds bad, and it can be depending on how your HELOC, private mortgage or second mortgage is calculated. Let us help you find the right second mortgage for you.

Everything boils down to how it’s handled in the beginning. Why refinance if you can get a great loan at the beginning? With a Toronto mortgage broker like us you’ll get everything you need to get the right home equity line of credit for you.

To find out how we can help you find a great mortgage, apply online here!

How to Close Your Home Equity Line of Credit

If you want to close your home equity line of credit, you’ve come to the right place. While we as Toronto mortgage brokers can always help you open your line of credit, closing it can be a little different. You’ll usually have between 5 to 20 years to borrow and repay on your HELOC, but if you want to pay it all back early and close the line it won’t be difficult. Make sure you know how much you owe and have the amount available. Let us look at your paperwork and help you figure out if you’re going to have to pay any balloon payments at closing so you don’t have any surprises.

What is a HELOC?

Home equity lines of credit are like credit cards funded with the equity in your home. Instead of having to have the best credit, you’ll be able to cash in on all those mortgage payments you’ve been making. The best way to start off with one is to work with one of our Toronto mortgage brokers. Use it to remodel or repair your home, use it to send your children to university or start living your retirement dreams. Whatever you do with a HELOC you’ll have plenty of time to pay. You’ll just want to make sure that you’re ready to end it and have the funds available to pay it off in full.

Know Your Terms

You’re going to need to know what your terms are before you start getting your money together. Some have provisions where you must keep a minimum balance (ex: $300 or 10%) each month for a certain amount of time, say 5 years. After this time period is up, you can almost always settle your debt. By working with a Toronto mortgage broker you’ll be able to know when it’s time to pay up and when it’s time to hold on. You may be able to save more money by paying interest a few months more than having to pay a hefty pre-payment penalty that’s indicated in your mortgage contract.

Contact Your Lender

If you’re working with us as part of consolidating your debts, we’ll help you with this step. If you’re doing this on your own, you’re going o need to contact your lender and tell them that you want to cancel your home equity line of credit. Some lenders will ask you to keep your HELOC longer and will give you an incentive to do so. Others will give you an incentive to close early, but you will need to work with your broker.

If you’d like to know how to close your HELOC early, work with us! We’re here to help and we know how to deal with lenders to get you the best outcome. When you work with one of our talented Toronto mortgage brokers you’ll have the attention to your case and get the outcome that’s right for you. Visit our HELOC page today to learn more about how we can help you: http://www.homebasemortgages.ca/home-equity-loans/line-of-credit/

Do HELOCS Have a Cap on Interest?

HELOCBy law home equity lines of credit, or HELOC loans, must have a cap on how much the interest rates can increase during the life of your loan. This doesn’t cap how much interest fees creep up on you over the life of your loan, but it does make sure that a 4% HELOC doesn’t convert to a 20% HELOC in a couple years too. You’re going to want to work with one of our Toronto mortgage brokers to make sure that you’re making the choice that’s right for you – after all, HELOCS are risky business!

What is a HELOC?

A home equity line of credit, or HELOC, allows you to turn all that equity you’ve built in your home into cold hard cash you can use. You don’t want to end up with a line of credit that’s not working for you, so it’s important to work hard to make sure you’re working with a lender that has your best interests at heart.

When you work with us as your Toronto mortgage broker you’ll get all the help you need to find the HELOC lender that will work with you. But it’s not just the lender you have to worry about – you’ll need to worry about interest too!

Why Does Interest Matter?

Interest matters when it comes to your HELOC – the higher the interest on your loan the more you’ll end up having to pay. You want to get this figure as low as possible, but how?

Credit plays a big part in getting an interest rate that works for you. You’ll want your credit to be in a great place before you start applying for home equity lines of credit.

Equity also plays a large part in getting an interest rate that’s equitable. The more equity you hold in your home when you get started the better off you’re going to be when it comes time to borrow.

You’ll also want to be careful about borrowing before you pay off other mortgages or as soon as you pay off another loan. It looks bad to lenders.

Can You Afford a Home Equity Line of Credit?

How much equity do you have available on your home? Are you still paying off a first or second mortgage? Did you just pay one off? Like mentioned above, these can look pretty bad to your lender when they’re reviewing your application.

“Why is this person borrowing again?” They might ask themselves – people addicted to credit can be a great source of income for a bank, but they can also cost them big when it comes to lending out home equity lines of credit.

Compare and Save

You’ll want to make sure you compare different lenders and loans, just so you can make sure you’re getting the best rate. Working with us as your Canada mortgage broker can help you understand your options and if a home equity line of credit is really the right way for you to go. Visit our home equity lines of credit page today to find out how we can help you today: http://www.homebasemortgages.ca/home-equity-loans/line-of-credit/

Avoid an unpleasant surprise with home equity lines of credit

It’s a story as old as time: you get a great low introductory rate… and then the come down. You think you’re getting a great deal, but since you didn’t have one of our handy-dandy Canada mortgage brokers to help you, you didn’t realize what a raw deal you actually were getting. It’s important to really understand what you’re walking into before you sign on the dotted line. When you work with us, you’ll get all the help you need to know that you are getting the right HELOC for you. Don’t just hope that you’re getting the best deal, KNOW that you’re getting the best deal.

Is that just an introductory rate, or are you happy to see me?

You’re going to need to establish that the rate you’re getting is a really going to have to the rest of your HELOC. There’s so many people that end up getting the wrong home equity line of credit that could easily be fixed just by looking over the paperwork. You’re going to want to make sure that the great introductory rate that you’re getting sticks with you over the life of your loan. Even if they say that you’re going to keep this rate, let us look over it as well as your lawyer. Don’t leave anything to chance.

How much will it cost to close?

Closing costs for a HELOC are about the same as you would pay for a mortgage – this is the place you want to pay close attention. Extra fees can be lobbed on there pretty arbitrarily, so you’re going to want to look over your documents and get a clear cut explanation of each fees. Sometimes you can save up to 20% off your closing costs just by doing a little due diligence!

What is the minimum revolving balance?

Almost every HELOC is going to have a minimum revolving balance, so you’ll want to know this before you sign the paperwork. Having a HELOC without a minimum revolving balance is idea, but we don’t live in an ideal world. You’ll want to ask and find out how much you’ll have to pay interest on each month, even if you’re not going to be using it. Knowing is half the battle after all, so make sure you know before you sign!

Know what you’re getting into

You need to always know what you’re getting yourself into. When yo work with one of our Toronto mortgage brokers you’ll get all the help you need to understand your home equity loan in full. From balloon payments to odd penalties (like closing your HELOC early), you’re going to be prepared for what’s coming down the road.

If you’re thinking about an equity line of credit but you don’t know where to start, give us a call! We’ll be here for you through every step of the process and can help you find the lender that will give you the best deal.

Is Now the Right Time to Get a Home Equity Line of Credit?

When it comes to getting the right home equity line of credit, you need to know that interest rates are going to be low for a little bit. Right now interest rates are projected to stay in the 3% to 4% range for the next 2 to 3 years, which means that you are going to be able to save big on your next home equity line of credit. You’re going to need to make sure that this loan is on the up and up; it’s not uncommon for lenders to add in weird penalties, exorbitant fees, and other “extra” ways of making money off borrowers. Make sure you speak with one of our Toronto mortgage brokers before you get started.

What is a HELOC?

A HELOC, or home equity line of credit, allows you to tap into the equity in your home without selling it. Unlike a second mortgage or other kinds of home equity loan, you’ll be able to borrow as many times as you need – as long as you keep paying, of course. Most HELOCs have a term limit, just like every other mortgage you’ve had before. You’ll still have interest, monthly payments to make (only if you’ve already borrowed, if not you won’t have to worry about this) and the lender to deal with. It’s important to work with one of our Toronto mortgage brokers to make sure that you’re getting the best rate for you.

Why is now the right time to borrow?

Right now interest rates are at the lowest point they’ve been at in almost a century. You just won’t be able to find a better time to borrow them right now, it never hurts open the HELOC for a rainy day. If you don’t borrow, and you don’t pay. It never hurts to have that rainy day fund, and with many analysts saying that is around the corner it could be the best thing you ever did.

Always know the terms of your HELOC

Before you take out any kind of equity loan against your home you need to know the terms. Don’t just trust your lender or your mortgage broker! Do your research, understand what you’re getting into, and understand what’s expected of you as a borrower. The more you know the better off you’ll be.

Should you get a HELOC?

Everyone’s different, and we really can’t give you advice without speaking with you first. If you’d like to know more about home equity lines of credit, give us a call! We’ll be able to help you understand all of your options as a borrower, find a lender that matches your needs best, and make sure that you’re getting a great deal that fits your needs. Don’t get a raw deal just because you don’t know what you doing, let us help! Call today and see the HELOC is right for you – why spend more than you have to?