Using a Home Equity Loan as an Emergency Fund

conventional mortgagesIt can be hard to save for a rainy day, but if you have a home you might just be in luck; with a home equity loan brokered by one of our Toronto mortgage brokers you’re going to get all the money you need to weather the storm. While it may not be the most ideal situation, it’ll be the last resort you can turn to when you need to get through some trouble. You’re going to have to meet some criteria and you’re going to have to be careful about what lender you’re working with.

Do You Have Equity?

The first thing you need it figure out is if you have equity! The first thing we do as your Canada mortgage broker is look over how much equity you have in your home. If you don’t have enough we’ll suggest you hold off – the more you have in your home the better the terms will be. If you have bad credit you could also run into trouble, and again, we’ll let you know if now really is the right time to take out a second mortgage.

Use a Home Equity Line of Credit as a Safety Net

If you do qualify for a home equity loan and you’re in a good place to borrow, you can use the equity as a safety net. The interest on your mortgage is most likely tax deductible (talk to a Toronto mortgage broker like us first before you do this!) and you’ll be able to hold on to that money for the future. Home equity lines of credit are much better suited for creating a safety net; the problem with a HELOC is though that you might have one open now but you never know when the lender is going to close it.

It’s Risky!

Since it’s fueled with the equity in your home there is always the chance that you could lose your home if you’re unable to repay. This is why it’s so important to get the right deal for you from the start. When you work with us we’ll help pair you only with lenders that have a history of fair dealings. We’ll look over your mortgage contract to see if the promised rate is what you’re getting and we’ll work with you to get you the mortgage that works for you.

Is it Right for You?

It can be hard to create a safety net – these are interesting if not uncertain times. A second mortgage or home equity loan on your home can give you the money you need to pay off your debts and keep things going until they get better. Your home is the one investment that you can tap when times get tough – that’s why it’s so important to get as high a loan to value ratio on your home as possible. You only have one chance to get it right, let one of our Canada mortgage brokers help you get the money you need today.

Contact us today and see what we can do for you.

Understanding the Bad about Home Equity Loans

Home equity loans are a great way to tap into your home, but here we’re going to talk about the ugly side and how to avoid it by working with one of our Toronto mortgage brokers. But what are the stumbling blocks? Are HELOCS and other forms of equity loans doomed for failure? Are the cards stacked against you from the start? It really depends on who you choose to do business with! Let’s get started and talk about everything you need to know before you get started.

Home Equity Loans Start Off Easy

One of the best things people love about home equity loans is that the payments in the beginning are really easy to handle. Even if you don’t work with a Toronto mortgage broker like us, you’ll generally enjoy easy payment terms in the first half of your HEL or HELOC. You won’t have to worry about balloon payments – but the interest payments will rack up. More and more as time passes the trouble will brew. If you didn’t get the most favourable repayment terms from the start of your mortgage you’re going to end up in trouble.

And Then the Payments Get Bigger

After the fun first half where things are going well, the payments will grow. More and more of your monthly payments are going to go to interest instead of the principal, or original debt, and then you’ll end upside down on your mortgage. The payments get larger and larger over time until a balloon payment to close out the mortgage comes do – if you can’t pay it you can always refinance… but then you’ll end up back at the start again. You’re on a debt treadmill and if you want to keep your home you’ll have to keep running.

Can You Keep Up?

Getting upside down is the worst outcome that can happen. But if you don’t know what you’re getting into when you take out a home equity loan it’s going to happen. That’s why you need to talk with a Toronto mortgage broker like us before you get started. We’ll be able to help you understand what a home equity loan or second mortgage will mean for you and your financial future.

Getting the Deal You Deserve

It all starts by having a plan for the future. If you’re able to plan ahead and know what you’re spending your second mortgage on, you’ll be able to budget and get the best deal. We’ll negotiate on your behalf with your lender or another that gives you a better deal; we’ll work with them to make sure that your monthly payments stay manageable and that you get the best interest rate over the life of your loan. Why pay more than you should when you can get the deal that’s right for you? Working with Toronto mortgage brokers like us will help you understand your options and if now is the right time to borrow.