Got a Good Credit Score and Still Got Rejected for a Home Equity Loan?

There is a common misconception that a good credit score means that someone will surely be approved for a home equity loan. The truth is, rejection for a home equity loan isn’t exclusively for those with bad credit. A good credit score can prove beneficial and help someone get a mortgage approval but it is not a sure way to gauge whether you will be approved for a home equity loan or not. At the most, a good credit score is only one of the indicators that lenders use to determine if a potential borrower is capable of paying back a loan. If you have a great credit score and still got rejected for a home equity loan, any one of the following could be the culprit.

Consider Your Income to Debt Ratio

If you are not making a lot and racked up a significant amount of debt, then this could be why you got rejected for a home equity loan. Lenders will want to make sure that you can afford to have more loans given your current income status. They often have minimum and maximum requirements for debt in relation to income. Note that most lenders have a limit of 43% to 49% debt to income ratio.

Having Low or Unreliable Income

If you are self-employed or have a highly fluctuating income, some lenders will be very wary of lending to you as well. Traditional lenders see each loan as an investment. An investment that won’t pay off or may have problems is a bad investment for them. This is why lenders don’t just ask for existing bank balance or a statement of account these days, they want a solid proof of income that goes back months or even years more so if someone has an inconsistent or unreliable income source.

History of Bankruptcy or Foreclosure

Do you know that your credit score will be affected for a period of 6 years since the date your bankruptcy was completed? More so, filing for it twice will mar your credit report for around 14 years. This is why it is possible to get rejected for a home equity loan even though bankruptcy or foreclosure may have happened to you so long ago in the past and things are all going well now.

Get Approved for a Home Equity Loan

With the above factors said, you can still get approved for a home equity loan even when you’ve been previously declined provided that your financial situation improves. For example, once your credit score goes to between 300 and 900, it can show that you are capable of getting bills paid on time. Your odds will improve by a lot once your credit score reaches 680 because that is the minimum score most lenders go by. Note that an application denial and a repeated checking of your score have no impact on your actual credit score. You are free to apply again when you’re ready.

Are you unsure about applying for a home equity loan because of a previous denial? Contact us at Homebase Mortgages! Talk to our Canadian mortgage professionals so we can assess how to best assist you as well as what can be done to increase your chances of home equity loan approval.

 

Is It Worth It to Pay Your Debt with Your Home Equity?

Trying to manage several debts can be a huge headache more so if you have to deal with debt collectors and are already financially stressed out. It might be best to consolidate your debt to make payments easier to manage as well as get rid of unnecessary stress. More so, debt consolidation can save you a lot of money on interest!

Pros of Using Home Equity for Paying Debt

If you’re a homeowner, the home equity you’ve built up over time is a huge asset that you can use to help you manage your debts. Using home equity for debt consolidation comes with a number of advantages such as:

  • Save on interest. Getting a home equity loan to pay for high-interest debts and thus, effectively converting them to a more manageable loan with a lower interest rate can save you upwards of tens of thousands down the road.
  • Pay your debts faster. Because more of your money will go towards the payment of your debt instead of going to paying for high-interest, you will be able to save not just money but also time on your road to becoming debt-free.
  • Manage monthly payments better. Fewer monthly payments to think of means that it is near impossible to forget paying certain bills. This also means less stress because you have fewer deadlines to think about and less possibility of being fined for paying a certain bill beyond the due date.
  • Get a bigger loan. You may apply for a personal loan to consolidate debt but if you already have quite a bit of debt, you may not get approved or will only be approved for a small amount of cash. If you use your home equity by getting a home equity loan, you can get access to as much as 80% of the value of your home equity. This places you in a better financial position to fix things and improve your credit score too.

Cons of Using Home Equity to Pay Debts

Nothing is without disadvantages more so when it comes to finances, and the same holds true for using your home equity for paying debts. No matter what type of home equity loan you apply for, it is still a ‘debt’ that you will have to pay later. It doesn’t make your financial issues go away, rather, it only makes things easier to handle. Don’t forget that a home equity loan uses your home as collateral. This means that failure to comply with the terms can mean losing your home. This is why it is best to consult with professionals regarding what type of home equity loan can help you meet your needs and borrow from a lender who’ll agree to terms that are within your means.

Are you shopping for a lender or not sure what home equity loan to apply for to consolidate your debts? Contact us today with your details and we’ll get back to you as soon as we can!

 

How Home Equity Loans Can Fund Hobbies For Seniors

A home equity loan is a type of loan taken on a home’s equity. It can be used by anyone who owns a home with substantial equity. Most people who have such equity are seniors who are in or near retirement age because they’ve been paying for that equity for quite some time.

When someone is in retirement age or have altogether retired, their income will not be as much as they were used to. This puts a halt on enjoying life’s simple pleasures such as traveling or investing in a hobby, but only if one has no access to any other source of funds.

The beauty of a home equity loan is that as a senior, you will have more reasons to look forward to retirement knowing that you’ll have something to fall back to should you have need for extra cash.

So Now You’re Retired!

Retirement gives you quite a lot of free time to do what you want such as pursue hobbies or activities that you’ve always wanted to. This is great, but hobbies and experience-enriching activities come with a price tag.

Of course some hobbies are next to being free such as watching the birds at the park, knitting, or starting a backyard garden. Learning to fly an airplane or sailing a boat aren’t. In fact, some of the most popular hobbies for seniors are a bit on the pricey side. Know more about them below!

Popular Hobbies for Seniors

Hobbies are no way frivolous. Each activity adds quality to one’s life and can improve health, both physical and mental. The most popular hobbies for seniors are as follows:

  • Boating and fishing – boating and fishing can go beyond the rent of a boat or the purchase of fishing equipment. Serious hobbyists buy their boats and that can also net a bit in terms of maintenance. This is really worth it though because you’ll end up saving in the long run.
  • Dancing – Unless you’ve been a dancer in your younger years, learning how to dance in retirement will mean taking a few lessons plus night outs with friends.
  • Hiking – Hiking would incur some traveling if you’re not anywhere near scenic spots or hiking trails. You’ll also need proper gear like shoes and gloves.
  • Hunting – just like any other hobby, hunting will need investment in both time and equipment. Guns and gear for practice and actual hunting may not be the same so you will have to purchase both and perhaps even start a small collection.
  • Traveling – By far the most popular and also the most expensive hobby for seniors, traveling will incur expenses even when you only choose to go for road trips and stay with friends. Overseas travel would mean a stay in a hotel or some form of paid accommodation.

How Does a Home Equity Loan Benefit You?

Applying and getting approved for a home equity loan will allow you to tap into your equity so you can enjoy more of your golden years without sacrificing anything, especially your quality of life. It is similar to taking a withdrawal from an investment that you’ve made throughout the years. You’ll be able to take out up to the limit a loan provider will allow. You can also stay in your home until a change of ownership occurs such as when you decide to sell or pass the property to someone else.

Excited to live the life that you deserve with the use of your home equity? Contact us and apply for a home equity loan today!

How to Finance Home Improvements to Improve Home Equity

Home improvement projects to improve home equity brings in good returns, however, they come at a cost too. Luckily for homeowners, they can take out a line of credit, get a home equity loan, or try a refinance to fund such projects. If you’re wondering what financing option would be best for you, read on below!

Home Equity Loan

A home equity loan gives you access to a lump sum that is taken against the equity if your home. This has a lower interest rate than the other financing types mentioned below (generally speaking) and gives you the financial power to fund extensive or expensive home improvement projects.

Home Equity Line of Credit

A HELOC is a way to get access to a considerable amount of cash for a set period of time known as the draw period. After the draw period, you’ll be paying what you owe during the repayment period (which will usually be more than a decade) which will give you ample time to prepare your wallet and budget for payment. This also means that if you use the funds from a line of credit in improving your home, you’ll be breaking even by the time payment is due.

Mortgage Refinance

The beauty of a mortgage refinance is that it will allow you to sort of re-do an old mortgage that was made a few years ago if current market rates are lower. This will result to lower interest and lower monthly payments which will no doubt be easier on your budget and will help free up some funds for other use.

Another type of refinancing is a cash-out refinance which will let you get cash from your home’s equity, as much as 80% of your home’s equity. This is tempting for sure but be warned that this is a bigger loan wherein you’ll be using your home as a collateral so you might end up losing your home if you’re not careful; however, a cash-out home refinance can still work in your favor if you use the funds to significantly improve your home’s value through smart home improvement projects.

Personal Loan

If you have the capability to pay back a loan ASAP and don’t want to use your home as collateral, then a personal loan might be the right option for you. It is easier to get if you have a good financial record though the interest rates are often much higher than the other types of loans mentioned earlier; however, you’ll get better control.

Credit Card

If you really cannot use savings to finance a home improvement, then using your credit card could be an option. The interest rates will be really high compared to the types of loans mentioned earlier but you can work your way around this by using cards that offer great perks or rewards for every dollar spent, better yet, use your card to buy home improvement materials in stores that have a rebate system.

Increasing your home equity can be done with some smart decisions. Unfortunately, even smart decisions cost money. If you need help tapping your home equity to finance home improvement projects, we might be able to help. Contact us today!

8 Affordable Home Improvement Hacks to Boost the Value of Your Home

Are you trying to find home improvement hacks that will help you sell your home, add value to your home, or perhaps just make your home a lot more enjoyable? We’ve got what you’re looking for below!

Front Door Facelift

A beautiful piece of hardware on your front door will elevate how it looks and add extra class to your home. Consider using this idea together with a front door paint job or if you’re not able to change your hardware, try painting your existing one with a faux brass finish. Instant facelift!

Amp Up Your Curb Appeal

You don’t have to have a green thumb to have a pretty lawn. You can simply have a professional install sod and perhaps plant a few low maintenance evergreen plants for you. Aside from keeping your walkways clean, a touch of well-maintained green is all you need for reasonable curb appeal.

Go for a Kitchen Update

A kitchen update doesn’t have to mean an expensive renovation. You can spend just a few hundred dollars for changing some light fixtures, painting the cabinets, and changing the hardware. If you’re willing to spend a few thousand dollars, you can get your cabinets and some countertops refinished too.

Add an Extra Bedroom

If you have an extra room for an office space or a den, you can easily convert that into a bedroom by installing or building a closet. An extra bedroom can significantly increase your home’ value and make it easier to sell.

Give Appliances a New Life

Do you know that you can order new face panels or doors for some appliances to have them all match? Matching appliances instantly upgrades a kitchen.

Invest in More Storage

Adding storage space and building extra closet are great ideas especially for older homes. With the right design, you can even make everything look like they were custom built with the home, increasing your property’s value.

Change Up the Lighting Fixtures

Switching to modern designs for lighting fixtures or adding a timeless chandelier can do wonders to any room of your home. Not to mention make your home a lot more appealing to buyers when it’s time to sell too.

Bathroom Update Is Always A Good Idea

Bathrooms bear the brunt of a home’s wear and tear so it follows that it will benefit the most for updates as well. New fixtures, new mats, and even a new toilet seat can go a long way without costing too much. Regrouting tiles may be a great idea too if budget permits.

Aside from the above home improvement hacks, cleaning your carpet or refinishing your old wooden floors will likewise give you plenty of returns for minimal investment. The secret is really just choosing the home improvement projects that your home truly needs and prioritizing the ones that will give you the most returns for your investment.

Want to consult with mortgage experts about the best ways to boost and use your home equity in the future? Contact us and we’ll be happy to talk to you about using your home equity for a loan. Our services include home equity loans, second mortgages, mortgage refinancing, and private mortgages.

 

Home Equity Loans in Canada

Living on a fixed income can be very difficult for a lot of Canadians, more so for retirees or those nearing retirement. Financial stress is no joke when you consider rising prices of basic needs, possible health issues with expensive treatments, and other unexpected expenses that may come up. It is no wonder that more and more homeowners are finding it necessary to tap into their home equity to help manage their financial situation.

Why Use Home Equity?

Home equity is the value that a homeowner owns in his or her home. It is computed as the difference between the home’s current market value and any existing debts on the property. As a homeowner pays the mortgage on his or her property, home equity is built larger and can be later accessed via home equity loans when needed. Homeowners may choose between a HELOC, a second mortgage, or a reverse mortgage as types of home equity loans.

What is a Home Equity Loan?

Any home loan that uses the home equity as collateral can be called a home equity loan. In Canada, home equity loans usually offer lower interest rates than unsecured loans and allow the borrower to borrow more since the loan is secured by the home’s equity. Oftentimes, a home equity loan also has flexible repayment options and are easier to qualify for than unsecured loans.

To get a home equity loan, you may apply to traditional lenders such as banks or find a mortgage professional to help you connect with private lenders. Note that loan requirements may vary widely depending on the type of home equity loan that you want to apply for. Most people apply for a HELOC or a second mortgage.

What is a Second Mortgage?

Any home equity loan taken on a home with a primary mortgage can be considered as a second mortgage. The amount that can be borrowed on a second mortgage is limited by several factors, the primary one being the value of the home equity.

For a second mortgage, the borrowed equity is given as a lump sum and paid off over a set period of time. The interest rate can vary greatly depending on the lender and the exact circumstances of the loan.

What is a HELOC?

A HELOC is a home equity loan that is taken on a loan with an existing mortgage and is granted as a revolving line of credit. With a HELOC, the homeowner can reuse the funds as it gets paid and only gets charged interest on the actual amount used. HELOCs are usually approved for people with solid income and a good line of credit.

Uses for Home Equity Loans in Canada

Most Canadians use home equity loans for debt consolidation, home renovation, and higher education. Some use it to have a more enjoyable retirement or to give financial assistance to family members who are short on cash. Some people use home equity loans to fund a business or for investment purposes.

No matter what use you may have for your home equity loan, you must make sure to borrow only from lenders who won’t take advantage of your financial predicament. If you need help securing a home equity loan, contact us at Homebase Mortgages.

 

Should You Apply for a Home Equity Loan or Get a Line of Credit?

Making the choice between getting a line of credit and applying for a home equity loan is a tough decision to make. Both will be tapping into your home equity, which means that to get either loan, you’ll be using your home as collateral. However, getting a home equity loan or applying for a line of credit is certainly smarter and easier than getting a personal loan. If you need money to pay off high-interest credit card debts, send your child to college, finish your basement, renovate your home to bring up its value, or invest, using your home equity by accessing it through a loan can really give you the breathing space you need with your finances.

Why is choosing between a HELOC and a home equity loan such a challenge? Since both loans tap home equity, shouldn’t they be basically the same? The reason why it can get confusing to pick between a home equity loan and a HELOC is because both of them have a lot of benefits, but which one will be more beneficial is based on case to case scenario. Their key differences are explored below.

Interest Rates

A HELOC typically has a variable interest rate that is dependent on a prime rate. This means that if the prime rate goes down, the payment you need to make also goes down. If the prime rate goes up, then you’ll have to pay more per month.

A home equity loan has a fixed interest rate that takes away the surprise of getting charged more on certain months. You won’t get shocked with higher billing when market rates change. A lot of people find this very comforting and allows them to manage making payments easier.

The rates for both HELOCs and home equity loans are about 50-66% lower than credit card rates. That’s a lot of savings!

Payment Schedule

A HELOC usually has a variable payment schedule or amount. Each month, you will be charged a minimum payment based on your balance. The due date differs by each month too.

A home equity loan follows a monthly payment schedule that has been agreed to in advance. You’ll know exactly when the bill will be due months in advance because it is stipulated in the agreement.

Use of Funds

Lines of credit are used by companies and people to help them cope with erratic cash flow. The flexible lines of credit serve as bridges to fill the timing gap between sources of funds and expenses.

Because funds are given as a lump sum for a home equity loan, the money can be used to fund one-time big expenses such as a wedding, extensive home renovation, property taxes, and consolidating debts.

Do you have more questions that were not addressed above? Contact us to get answers before applying for a home equity loan or a line of credit. Our mortgage professionals will be glad to help and tell you more about ways to use a HELOC and ways to use a home equity loan.

 

Have a Bad Debt? Let a Home Equity Loan Take Care of It!

It is near impossible to get out of debt when you also have bad credit. Unfortunately, debt and bad credit is a common problem faced by a lot of Canadians these days. Some people are paying their bad debt with a home equity loan and it seems to be working so the question is, should you get a home equity loan to help you get out of debt?

Pay Your Debt with a Home Equity Loan

Is it a good idea to get a home equity loan to pay your debt? Yes, if you’re really strapped for cash and your loan is getting uncontrollably bigger because of interest. Note that it may not turn out well if you get a loan that proves to be even more challenging to deal with than your existing debt.

How to use a loan to pay for a debt, then? The smart way is to use a home equity loan for debt consolidation of high-interest debts. Generally speaking, home equity loans tend to have a lower interest rate as compared to other debts such as credit card debt, personal loan, and car loan so it makes sense to use it to help you save on interest. This way, you’ll be going for a long-term solution that will make handling debt a lot easier.

Use Your Money Wisely!

Most homeowners who are in debt do not know that they may not actually be in debt. How so? If you’re a homeowner who’ve built up some home equity, there is a possibility that the value of your assets may be substantially bigger than any debt you may have; hence, you’re not really in debt.

Use your money to work for you. By tapping into your home equity, you are actually tapping into the money you’ve accumulated in your home’s value. You have to be extra careful and know exactly where your money will be going so the first thing you should do is to assess your real financial situation. You can do this by listing all your assets and debts plus getting a credit report. This way, you will know exactly how much money you owe. As for knowing your credit score, this will come in handy when you need to determine what financial solution will work best for handling your bad debt.

Get Out of Debt by Planning Ahead

The last thing you want to do when you have a bad debt is to keep reborrowing in the future. This becomes very difficult to break once this evolves into a cycle. You need to plan effectively how you will use your home equity to pay off your debt. Do your research and weigh out the pros and cons of different home equity loans so you can make an informed decision about which type of home equity loan you should apply for. Don’t forget that aside from paying your bad debt, you also want to fix your credit score the best way you can.

Do you need help fixing your bad credit with a home equity loan? Contact us at Homebase Mortgages! Our staff will be happy to discuss how a home equity loan can fix both your credit score and your bad debt.  Call today!

 

Is It Easy to Get a Home Equity Loan in GTA for 2019?

Getting a home equity loan if you’re from the Greater Toronto Area shouldn’t be much of a hassle if you own your home and willing to work with lenders other than banks. It will help a lot too if you have some assistance from mortgage professionals in the GTA like us at Homebase Mortgages.

But First, What Is A Home Equity Loan?

Getting a home equity loan means applying and getting approved for a secured loan that uses your home equity as collateral. To be approved, the homeowner will have to meet the minimum home equity requirement. Banks have very stringent requirements and will usually reject a home equity loan application from homeowners that they don’t think can pay or have a property that is not in a desirable location. For this reason, home equity loans from private lenders are gaining popularity in the GTA and Ontario as well as the rest of Canada more so that they don’t usually scrutinize homeowner details other than the amount of home equity.

Payment Options and Terms for Home Equity Loans in the GTA

A typical home equity loan comes with a 1-year open first mortgage or second mortgage that charges between 7% to 15% for interest. An open mortgage has an option allowing you to pay early without incurring huge penalty fees and can be tweaked to fit your specific financial situation. Your mortgage professional can assist you with getting terms that are unique for your circumstances.

Is There an Upper Limit for a Home Equity Loan?

Your home’s value plus any existing debts you have on your property determines how much you can borrow with a home equity loan. Expect that your Loan to Value Ratio will be calculated by lenders to determine how much they can lend you together with other metrics that they may use.

Why Get a Home Equity Loan?

There are many uses for home equity loans. You can use the money to consolidate debt by paying off your smaller loans with huge interest, saving on interest payments down the road. You can use the funds to renovate your home, set up a business, or pay for expensive higher education. There is no real right or wrong reason to apply for this type of home loan as long as you are not planning on using the money on frivolous things.

Is a Home Equity Loan Different from a HELOC?

Yes. Although both loans use your home equity as collateral, a HELOC is an installment loan that works almost like having a credit card with a huge credit limit. On the other hand, a home equity loan often has a fixed rate and has to be paid within a shorter time period.

Is It Easy to Get a Home Equity Loan in 2019?

Yes and no. Getting approval can be challenging if you go the traditional route by applying to banks. An approval is much easier if you work with mortgage professionals who have the right connections to private lenders who will be more understanding of your financial plight. Contact us today!

 

 

second-mortgage-toronto

The Differences Between Home Equity Loans in Canada and HELOCs

Home Equity Loans and HELOCs allow you to use your home’s equity as collateral when borrowing money. The borrowed money from a HELOC or a Home Equity Loan can be used to pay for college education, buying a new property, or used for home renovations and repairs. But is this all? Before borrowing any sum of money using your home’s equity, it is best to understand how specific loans work to protect yourself by understanding the disadvantages and advantages of these loans.

How do Home Equity Loans and HELOCs Work?

HELOCs and Home Equity Loans are both secured loans. You use your property’s equity as collateral for the lender to hold on to as they lend you money. Failing to pay the loan allows the bank or lender to claim your property.

For Home Equity Loans, you may borrow as much as 80% of your equity in one go. This loan usually gets a low interest rate and is affordable for most people.

For a Home Equity Line of Credit or a HELOC, you will be given a line of credit that is secured by the value of your equity. The ceiling amount for the HELOC is computed based on your home equity. This is the amount that is made available for you by the lender. You can borrow from this limited credit line in times you need cash and can pay according to set terms.

Repaying a Home Equity Loan and a HELOC

HELOCs usually come with repayment terms that range from 5 to 25 years. The amount borrowed should be paid after that term either as a lump payment or installment basis. During the term, the borrower can be charged interest on the borrowed amount and required to pay the said interest.

Repayment for a Home Equity Loan is usually a fixed amount per month or can also be variable depending on the agreed upon terms between the borrower and the lender.

Pros and Cons of HELOCs and Home Equity Loans

A huge advantage is the fact that both Home Equity Loans and HELOCs allow you to access a huge amount of money without having to sell your home. This gives you the flexibility to use your money as you need it. A HELOC will give you the freedom to use only an amount that you need for a given time, making it a good option if you have a few scattered recurring expenses here and there such as expensive medical bills and tuition fees. A Home Equity Loan, also called a Second Mortgage, is a great option for huge expenses such as a complete home renovation or buying another property.

A disadvantage that can’t be ignored is the fact that you can lose your home if you fail to pay your HELOC or Home Equity Loan. You really need to make sure that your financial situation isn’t stressed enough at time current time to afford repayment in the future.

Make sure that you’ve got help from mortgage professionals who will do their best to get favourable terms from your lender. Remember that you have to be smart and truly assess your financial situation before risking borrowing a home loan.

Are you ready to get a Home Equity Loan? How about getting a HELOC? Contact us so we can discuss which one will fit your needs best.