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.

 

Top Uses for Home Equity Loans in Canada

Getting a home equity loan is one of the increasingly popular ways for Canadians to take advantage of current low-interest rates and increasing house prices. Below are the top uses that Canadians are utilising their home equity loans for.

Funding Home Renovation

A home equity loan is a smart way to raise funds for home improvement and renovation. Renovating a home results in increased home value which can then further decrease a loan’s interest rate. More so a renovated home is not only more attractive to look at but is also often more functional.

Paying Taxes

Back taxes can be as high as a few tens of thousands of dollars, cash that not everyone has in their savings account. Home equity can be tapped as a short-term loan that can be used to pay the CRA for back taxes.

Home Construction Loan

A home equity loan can be used to fund a home construction. This has been done by a lot of Canadians in recent years when upgrading to a new home.

Paying for Big Purchases for Self-Employed Individuals

Self-employed individuals often face stricter lending restrictions, making it difficult for them to buy a home or make a big purchase using a loan. Tapping their existing home’s equity is a good workaround to the existing system.

Investing in Advanced Education

Going to a university can be very expensive, more so for someone who doesn’t have a lot of savings or who have to stop working to complete a degree. By using equity to finance education, a person can afford to stop working for a year or two to place himself or herself in a better position to earn money to pay back the home equity loan.

Starting a Business

Starting a business needs capital and capital means lots of money. By accessing home equity, a homeowner can gain easier access to funds as compared to getting other types of loans. A home equity loan can also be used to pay for a business loan.

Spousal Buyout After a Divorce

Divorce is sometimes followed by having to split the family home so each party will get to have a share. In situations where one spouse can’t just move out and get another place, getting a home equity loan to ‘send off’ a spouse is not uncommon.

Debt Consolidation

Home equity loans in Canada are most often used for debt consolidation. This is because tapping home equity is for a loan has significantly lower interest rates as compared to credit card debts and personal loans. By using home equity for debt consolidation, homeowners can save a lot of money on interest as well as having to worry about paying several separate bills per month.

There are many uses for home equity loans in Canada. Thanks to their flexibility, they can be utilised as a solution to various financial situations. Contact us if you need help getting a home equity loan in Canada or want to assess whether applying for a home equity loan will be best in your situation.

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!

 

HELOC-toronto

What You Need to Know About Using Home Equity to Borrow Money

Borrowing money by using home equity is nothing new, but many people are still misinformed about what they need to know about how to do it. Tapping your home equity for a loan is easier to get an approval of than trying to get other types of loans. Below are further details on this.

Computing Your Home Equity

Your home equity is the value that you own in your home. The more money you pay for your mortgage, the larger your home equity gets and the easier it will be to qualify for loans that use home equity as collateral. Your home equity can also get larger if real estate prices rise in your area. This is because home equity is computed as the difference between your home’s current market value minus the money you still owe in your mortgage.

Computing your home equity means that you have to get your home appraised to have an idea about the current market value. You need details on how much you’ve paid in total as well because the more information you have, the easier it will be for you to apply for a home equity loan.

Getting a Home Equity Loan

A home equity loan is a loan that is secured by your home equity. You will be lent a certain amount by the lender based on the value of your home equity as well as your perceived ability to pay. Below are 3 common types of home equity loans and some information about them.

  • A Mortgage Refinance means that you’ll negotiate a new contract with your lender after breaking your first mortgage contract. You may need to pay a penalty fee for your first mortgage but you’ll gain access to as much as 80% of your home equity. This can be helpful if you have a big expense coming up and you’re confident that you can take advantage of better interest rates to pay off this new loan.
  • A HELOC or a Home Equity Line of Credit is a revolving line of credit tied to a set value of your home equity. With a HELOC, you can access as much as 65-80% of your home equity at one time or little by little as needed. You can pay off a small amount and borrow again over and over just like what you do with a credit card as long as you pay the minimum payment required per month. A HELOC also has a lower interest rate than a second mortgage so if you’re looking for flexibility and a better interest rate, a HELOC could be for you.
  • A Second Mortgage is another loan that you apply for on top of your primary mortgage. By getting a Second Mortgage, you need to make sure that you’re able to pay off 2 mortgages at once. This can be a burden for those who are financially struggling but an advantage for those who just need access to a large amount of money as a lump sum.

Know that by applying for any type of home equity loan means that you’ll be using your home as collateral for a loan. Contact us if you have questions or if you need help assessing which home equity loan you should get and need help borrowing money.

second-mortgage-toronto

Handle a Bad Debt Using Home Equity

Getting out of debt when one has bad credit is one of the most common issues faced by Canadians these days. It may be quite easy to get out of debt if one has good financial records but for those with bad credit, this is a huge challenge to overcome.

Is it Smart to Get a Loan to Pay for Debt?

Most people who have bad debt are in such a situation because they’re strapped for cash; hence, the way to pay off a debt for them is to get a loan. This can be a good idea but can turn out to cause more problems if the new loan is more difficult to manage than the existing debts in the first place.

To effectively use a loan to pay for debt, the smart move is to consolidate high-interest debt with funds from a low-interest loan. This way, it will be possible to get out of the bad-debt-cycle that can result in bigger problems down the road if not dealt with promptly. The idea is to take the long-term approach in handling bad debt and to avoid falling into short-term band-aid solutions that only serve to make things worse later. Loans that can work for this purpose are second mortgages or home equity loans.

Are you Really in Debt?

If you’re a homeowner, you may actually be better off financially than you think. The reality is that your home, or rather, your home equity is a huge asset that can get you out of debt if used properly. You may think that you’re in debt but if you look at the big picture, you could not be in debt at all.

To pay off bad debts with your home equity, you need to assess your real financial situation by getting a credit report and listing down all your assets and debts. Find out how much you truly owe and your current credit score to give you a good starting point to determine which possible solutions can be the best for you.

Once you have a list of your debts and assets, take a close look at your credit report and your list to find any mistakes as well as prioritize which debts need more of your attention.

Plan Ahead to Get Out of Debt

You need to have a long-term plan to pay off debt to avoid reborrowing in the future. Your plan should include what percentage of your current income will go into paying debt as well as how to effectively use a loan to consolidate debt if applicable. If you’ll be using your home equity to pay for your debt, you need to look into which type of home equity loan will help you achieve your goals.

Remember that as you pay your debt with your home equity, you should do so in a way that will also help to fix your credit score. We can guide you with this at Homebase Mortgages. Call us today and we’ll talk about the details of getting a bad credit loan or using your home equity to pay your debts with you!

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.

 

Using Your Mortgage to Build Assets

Most people wouldn’t think of their home equity as a form of savings that can be used just like cash, but if you know how to tap your equity, you can make it work for you and improve your financial situation.

Using Your Home Equity

Your home equity is the value of your property that you own. You can easily have an estimate of it by subtracting what you still owe from the current market value of your home. The better the market value of your home and/or the less you still owe in your mortgage, the larger your home equity!

A great thing about your home equity is that you don’t have to sell your home in order to access it. Once you have a good percentage of your home’s value as your equity, you can apply for a home equity loan and use the approved loan to improve your home’s value (with upgrades and renovations), to pay for a degree (to improve your income potential), or to invest in other opportunities.

The secret is in using your home equity in a way that helps you attain your financial goals. The 3 common ways to use your home equity for cash are through a HELOC, a second mortgage, or via mortgage refinancing.

Using a Home Equity Line of Credit (HELOC)

A HELOC is the secured loan you’ll want to get if you want to use your home equity for a recurring expense that you may not be able to finance just by trying to save for it (like tuition for university studies).

A HELOC is a revolving line of credit that allows you access to funds as you are able to pay them back until a time limit or value limit is reached. It is very flexible and is wallet-friendly considering that you’ll only have to pay interest for the amount you borrow. A possible issue is the fact that the interest rate is often variable too, leaving those who are not very savvy with money a bit confused come payment time.

Using a Home Equity Loan or a Second Mortgage

Although often mistaken to mean the same as a HELOC, a second mortgage is a totally different type of home equity loan. For one, funds are received in a lump sum and a one-time deal until the loan has been paid off. The monthly payments and interest rate are fixed amounts as well – which is the opposite for a HELOC.

A second mortgage is ideal for funding a very expensive home renovation or a much needed debt consolidation plan. Just like a HELOC, a second mortgage is paid on top of a primary mortgage; hence, having a clear picture of your financial situation is best before applying for one and risk losing your home for non-payment.

Using Mortgage Refinancing

A refinance means breaking your existing mortgage contract and creating a new one with the benefit of giving yourself access to your home equity while doing so. Another benefit is that a refinance allows you to get better terms although you’ll have to trade it with some of your equity. Not a bad bargain if you’re strapped for cash and need access to funds in a cheap and relatively easy way.

Building your assets can be a lot easier if you can make your existing assets do the heavy lifting for you. Contact us if you wish to discuss possible ways of using your home equity for investment opportunities. We’d be happy to help you apply for a home equity loan!

How to Use Your Home Equity for A Loan

Home equity is a huge asset that you can use to help you fund some projects, finance investments, or use as emergency cash with the help of a home equity loan. There no one specific way to best use a home equity loan but by understanding what it is, you’ll be better equipped to decide how to use your home equity.

Home Equity As An Asset

Oftentimes, a homeowner’s biggest asset is the value of the property he/she truly owns, otherwise known as the home equity. It can be viewed as a time deposit that the homeowner can access later in life to fund retirement or as an emergency piggy bank for when a sudden need for a lot of cash arises. It is therefore in your best interest to build your home equity while you can.

How to Build Home Equity

You can build your home equity by paying your mortgage or by improving the market value of your home. After all, home equity is computed as your home’s market value minus the amount you still owe. The pricier your property becomes and the smaller the amount you still owe, the bigger your home equity is.

Simply put, you can steadily build your home equity by going for home improvement projects that propel your home’s price appreciation up or by paying any loans you have on your house. .

Uses for Home Equity

Because home equity is an asset that is as good as cash savings, you can convert your home equity to cash that you can use to finance big expenses such as buying another property for investment with a home equity loan, funding your retirement with a reverse mortgage, and financing small expensive projects with a HELOC.

You can surely borrow against your home equity but you have to be sure that you understand the terms involved. Know that when you decide to borrow against your home equity, you’ll be risking your home to a foreclosure if you signed up for terms that are not within your means to fulfill. You have to communicate with your mortgage broker to ensure that any home loan you take is within your means to pay back or you might face losing your home.

Get a Loan Using Home Equity

Two popular ways to tap home equity is by applying for a HELOC and getting a home equity loan:

A home equity loan is given in a lump sum but will require you to keep paying a billed amount monthly. You won’t be allowed to take any new home loans on top of this until you’ve fully paid the amount you borrowed and interest is set from the start.

A HELOC is a line of credit from which you can borrow as little or as much as you need and as often as you want as long as within the set timeframe and limit. It is a great option for those who’ll have recurring big expenses. A bonus is that you only pay for interest on exact amount taken out and not the entire loan limit.

Both loans can prove to be beneficial as long as you honor their terms and make sure that you find a fair lender to borrow from. Ready to apply for a HELOC or a home equity loan? Contact us today so we can discuss what home equity financing option is best for your needs.