Is a Home Equity Loan Risky?

home equity loanThere are many kinds of risky loans that you can take out against your home; like with everything else in life, the risk is only there when you don’t know what you’re doing. You’re going to need to understand how equity works, how much you should borrow versus how much you can borrow, and you need to know if it’s the right lending choice for you. Here we’re going to go over everything you need to know about home equity, and we’ll help you decide if it’s the right choice for your financial future. Don’t get a home equity loan without consulting a mortgage broker first!

What is Equity Anyway?

The most important thing to know about HEL loans is the equity part. Equity is the true value of your home minus any mortgages or liens you have against it. So if you have a $200,000 home and you have $100,000 in mortgages against it, you only have $100,000 in equity. You may borrow up to 70% of your true equity stake in your home, but lenders rarely give this much to anyone regardless of their credit. You’re going to want to be careful about borrowing against your home. While the money may be easy to get, it can be hard to repay. This is why you need a Toronto mortgage broker who can help you get the right one for you.

How do HEL loans work?

HEL, or home equity loans, work by using the equity you have in your home has collateral. You’ll be able to get the money you need much faster than you would with a second mortgage, but you’re using your home to get the money instead of your credit. Home equity loans sound a bit scarier than a traditional mortgage, but it’s all pretty much the same thing. You’re going to need a mortgage broker to get the help you need to get a good loan.

Everything starts with the application! You’ll need to have all of your ducks a row before you apply, and a mortgage broker is going to be able to help you do that. If you don’t have enough credit to apply or not enough money in the bank to cover your closing costs, they’ll advise you as to how much money you’re going to need. They can recommend credit repair procedures that you can do and they’ll help you know what kind of loan you can expect to get.

Do You Need Good Credit for a HEL?

You don’t necessarily need great credit for this kind of loan, but you will want decent credit to get a good interest rate. Even private lenders that accept poor credit will look to it to give you an interest rate. With interest rates in Canada at all-time lows, you’re going to want to apply as soon as possible. Talk to your Toronto mortgage broker and see what kind of home equity loan you can get.

Are Home Equity Loans Hard to Apply for?

home equity loans in TorontoHome equity loans are a great way to get money out of your home when you need it. Like other types of financing, it all comes down to your application; this is where one of our Toronto mortgage brokers can help! There are so many nagging little details on a HEL application that can ruin your chances for getting a good amount and interest rate that you’re going to need help filling it out. We’ll help you fill it out, review it and go over any areas that look a little strange.

What is a Home Equity Loan?

Also known as a HEL (not to be confused with a HELOC), these types of loans take the equity out of your home; If you have $50,000 equity in your home, you can borrow up to 70% of this or $35,000 in this case. This is to keep you safe from becoming over extended and owning more debt than the home is actually worth. Your mortgage broker may be able to find you a lender who will lend you more than the standard 70%, but you’ll want to have a discussion to make sure you’re getting the right loan for you.

What Can a Home Equity Loan be Used For?

They can be used for virtually everything, but that doesn’t mean they should be. You’re going to want to be very careful about what you use your HEL for. Wise investments could be investing the money back into your home with repairs, or you could invest in continuing education. Basically anything you wouldn’t spend your savings on you will probably want to avoid spending a home equity loan on. If you’re not sure what a good investment would be for your loan, ask your mortgage broker.

One great investment would be paying off your bills with adebt consolidationplan. Before you do anything with the money, you’ll want to look around and see what bills you can pay off and clear out. Don’t borrow equity out of your home if it’s at a higher rate than what your current bills are at; this will just lead you down the garden path.

How Hard is it to Get a Home Equity Loan?

Getting the loan isn’t nearly as hard as most might think, but it really does start with the application. If you neglect anything the lenders will find a reason to up your interest rate or offer you a bad deal. Most will just skim the application; if they notice anything off into the bin it goes. If you want a home equity loan, let us help!

We’ll not only help you fill out the paperwork, we’ll help pair you with a fair and equitable lender. If your credit is not so great, we can recommend some steps you can take to improve your FICO score and get a better rate. Regardless of your needs, we’ll work hard to make sure you get the home equity loan you deserve.

Also, visit our home equity line of credit page today to learn more!

Are There Disadvantages to a Secured Line of Credit?

secured lines of credit in TorontoThere can be many disadvantages to a secured line of credit, but most of these can be sidestepped with the right Toronto mortgage broker (like us!) Most people get into a bad situation with any type of credit lines because they don’t understand the terms of the agreement that they’ve entered into. Here we’re going to talk about things you need to look out for before signing up for a secured line of credit and how they work. Let’s get started!

What is a Secured Line of Credit?

The “secured” comes from collateral. If you don’t pay your credit card bill, you’ll wind up with negative marks on your credit. Everyone has had this happen to them, don’t feel bad! But when you don’t pay a secured line of credit off, you can wind up losing whatever you put up to secure the debt. In this case (at least when we’re talking about it here) the collateral will be your home. You don’t want to lose your home because you got a bad secured line of credit! Talk with one of our Toronto mortgage brokers before you sign on for one of these.

What are the Advantages of a Secured Line of Credit?

While these can be risky if you try to get one on your own without understanding them, they can be fantastic when done right! A secured line of credit is something known as “revolving credit” which means it works a lot like a credit card. You’ll borrow up to 70% of the equity in your home at any given time, but you can pay back and borrow back as often as you want. Depending on what kind of credit line you get, you’re going to want to think about what you’re going to be using it for before you get one.

What can a Secured Line of Credit be Used For?

They can be used for virtually everything, but it’s good to stick to a one time big purchase at the beginning or using it to plan for your retirement (like in the case of a Canadian reverse mortgage for example). Just because you’ve been granted x amount of money doesn’t mean you have to borrow it all at once, and you should always be careful about what you’re spending your money on! A mortgage broker can really help you decide whether a Canadian secured line of credit is right for you or if you should think of a more conventional type of financing like a second mortgage instead.

Secured lines of credit can help get you the money you need out of your house when you need them… but not all mortgage lenders are created equal. We’ll help you find that magic fit that will help you get the money you need and make sure you can pay it back in a reasonable amount of time. The best thing about mortgage brokers is that we work for you and not for the bank! Put us to work for you today.

Is a Home Equity Loan Right for You?

If you want to pay off debts, send your children to college or fund your retirement, home equity loans may be right for you. It’s one of the easier lines of credit to get, since you’re using your home to secure the loan. You can borrow up to 75% of the value of your home and you’ll also be able to spend it on what you need to. There are fewer restrictions on these, but you’ll still need a mortgage broker to help you through the process. Here we’re going to go over the benefits and disadvantages of home equity loans so you know if it’s right for you.

How Do Home Equity Loans Work?

A home equity line of credit pulls from the equity, or value, of your home. Instead of a traditional loan where you use your credit as leverage to get the money you need, you’re using your home. You can borrow against your home minus the existing mortgage amount or other liens against your home. You can get these from traditional lenders like banks and private mortgage sources like brokerages and private investors.

You’ll need a mortgage broker to help you get the lowest introductory rate and best terms for your home equity loan. Once you’ve been approved you can draw from it like you would a credit card, or you may receive a lump sum. It’s all about who lends you the money. You will only owe interest and make payments on money you actually use, as opposed to second mortgages.

Why Home Equity Loans Work

If you need to make repairs to your home, send your children to college or even repay your debts, you’ll be able to. Unlike other loans you won’t’ have to pay back huge amounts and you’ll only pay for what you borrow. You don’t even have to take out the max value on your home. You decide how much you borrow, how you repay your loan and best of all what you spend it on.

What’s Bad About Home Equity Loans?

They’re easy to get for a good reason; if you can’t repay the original loan plus interest you may lose your home. It’s a tough position to be in, but with a mortgage broker you’re going to get the best terms and you’ll understand the contract before you enter it. Being educated before you get started with a home equity loan will save you a lot of pain down the road.

So is a home equity line of credit right for you? Everyone is different and if you want to know you’re going to have to talk to a professional to learn more. There are so many things like credit, home value, how much you’ve borrowed against the home in the past and more that will effect what type of terms you can get for your line of credit. 

To learn more about our great rates on home equity loans, click here!

What Makes a Home Equity Loan Different from a Second Mortgage?

While the idea behind the two is the same, there are some differences between the two that you need to understand. First a second mortgage is generally based on your credit score, while a home equity loan is based on the equity of your home. If you fail to pay back a second mortgage you will suffer damage to your credit, but you may be able to avoid foreclosure. Depending on how a home equity loan is structured you may lose your house if you fail to repay. While a home equity loan sounds severe with the right lender you’ll be able to get the money you need and repayment terms you can live with.

How does a Home Equity Loan Work?

Home equity loans use the equity in your home as collateral for the loan. Your credit can be less than perfect and you can still get a decent interest rate, unlike a conventional second mortgage. Equity is the true value of your home. If you have a home worth $500,000, you have a mortgage that is $100,000 your equity would be $400,000. You can borrow up to 70% of your equity (so you can maintain a controlling interest in your home) for a variety of purposes.

What Can Home Equity Loans be Used For?

You can use them for virtually anything you like, but spending the money wisely is the most important part of getting a loan. Many people will reinvest the money right back into their home so they can bring up the value (and the equity!) of the house. Others will spend it on retirement and enjoy their golden years, while others will send their children or themselves to university to get a better job. The good thing about a home equity loan is you only have to pay interest on the money you borrow; you don’t have to borrow the entire available amount and you can even use it to repair your credit.

Be Careful About Home Equity Loans

When getting a home equity loan you need to be careful. You’ll want to go to a mortgage broker to find a good rate and see different competing offers from various lenders. When you choose us as your mortgage broker we’ll be able to find you an exact match for your needs for your home equity loan; walking you through the paperwork and the terms of the loan you’ll go into things eyes wide open and will be able to avoid sticker shock before you get to the negotiating table.

Home equity loans aren’t right for everyone. If you’re not sure what option is right for you, we can help you evaluate your finances; you may qualify for a second mortgage or private loan (bad credit isn’t always bad credit!). Many factors like credit, how much equity you have available and if you’ve borrowed against your home in the recent past will affect how much you can get for your home equity loan.

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

Open Up the Tap on Your Equity with a Home Equity Loan

home equity loans

You’ve been making timely payments all these years, isn’t it time your home started to give a little back? With the right mortgage broker (us!) and a home equity loan you can get all the money you need to consolidate your debts, send your kids to university or even start a business. With any kind of equity loan the devil is in the details and you don’t want to try and negotiate this one your own. Let’s explore how they work and why you would want one.

What is Equity?

If you don’t know, equity is how much you have invested in your home. If your mortgage(s) are completely paid off you have 100% equity. If you’re still paying off half your house you have 50% equity. You can figure out how much equity you have in your home by subtracting the remaining debt from the most recently appraised value of the home. This way you’ll be able to know exactly how much of a home equity loan you can take out.

Don’t Take Out a Large Home Equity Loan

Just because you’re approved for a big amount doesn’t mean you should actually borrow that much! You’ll want to work with one of our Toronto mortgage brokers; we understand the market, the tricks lenders pull and we’ll work hard to help you get the best equity loan possible. Every situation is different, don’t take a cookie cutter mortgage that just isn’t in your best interest. Also be careful about what the terms are before you sign on that dotted line.

Plan Ahead

When it comes to home equity loans you need to have a plan for the future. Why are you borrowing this money? Will you get some kind of return on it? Are you going to be able to pay it back? How much will you need to pay each month to pay back your home equity loan? If you don’t know the answers to these questions one of our Canada mortgage brokers can help. We have a lot of experience when it comes to home equity loans and we’ll be able to show you how to get the right loan.

Your Equity is Important

Each time you make a mortgage payment you’re socking away money for the future – that future is now. Why should you get robbed of your equity because you didn’t know any better? We’ll work with you to help you understand your rights and obligations as a borrower and to really understand what you’re signing. From finding the right mortgage lender to signing we’ll be there with you for every step of the way.

You’ve worked hard for your home and you shouldn’t have to lose it. Working with us as your Toronto mortgage broker will help you not only get the money you need now but keep your home in your future for years to come. Don’t get a bad deal, get the right deal!

Discover our home equity loans today!

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.