What do Lenders Look for with Home Equity Loan Applications?

If you’re looking for any kind of mortgage, there are a few set things that lenders will always look for. Your credit, your housing expense ratio, how much debt you have, all of these things and more will tell a lender what they need to know about you. You will have to have enough disposable income to apply to buy a home, but the more liquid you are the better. If you can show them that you already have 20% of your down payment ready to go, or if you’re trying to get pre-approved before you apply, your chances will be much better.

What’s Your Housing Expense Ratio?

How much of your monthly income is going towards your new mortgage? Your lender is going to look at how much money you make and project how much your monthly home equity loan payment will be, along with home owner’s insurance and even private mortgage insurance if you have to go that route. If this ends up being in excess of 28% of your gross income, you’ll be denied. The numbers have to make sense or they just can’t lend to you. So if you make $5,000 a month, and your mortgage payment is going to be $2,500 a month, this is 50% of your gross income; this means you’ll be denied. Make the numbers work, know how much things cost before you apply.

What’s Your Debt to Income Ratio?

Take the amount you earn every month and multiply it by 36% or .36 This will give you a guideline. Again, if you’re making $5,000 a month and $2,500 a month is going towards your debt, you’ll be well over the 36% guideline. You can only have so much debt, and you’ll need to keep this number below INCLUDING your new mortgage. You just can’t go over this number, most lenders don’t like it and if you want a home equity loan you’re going to have to be able to keep this number low.

Are You Steadily Employed?

You have to have some kind of income coming in if you want to get this kind of loan. If you can’t prove that you can make the payments you might need a co-signer or a co-applicant. While home equity loans do run off the equity that you hold in your home, you’ll still need to be able to show that you can make your monthly payments.

What Does Your Credit Report Look Like?

You need to know where you’re at with your credit – if you have bad credit you will have a hard time getting a home equity loan. Don’t fall into the trap that you have equity so you won’t have to worry about credit as much; credit is a determining factor when it comes to deciding your terms and interest rate. Get your credit as high as you can before you apply for any kind of loan, even an equity based one.

Apply for a home equity loan today! https://www.homebasemortgages.ca/apply/

Can You Afford a Canadian Home Equity Loan?

home equity loanMany will go over the benefits of a Canadian home equity loan, but few will actually talk about their affordability and what situations they’re right for. These types of loans are not for people who just need a small loan to get through the month… they’re expensive but effective in the right situation. Here we’re going to talk about how they work, what you can do with them and if they’re the right kind of financing for you. To assess your situation, speak with one of our Toronto mortgage brokers and see what we can do for you.

What is a Home Equity Loan?

The first thing you need to know about a home equity loan is what a home equity loan is! Equity is what you actually own in your home. So if you have $1,000,000 home and you only owe $200,000 left on it, you hold 80% equity in your house. This means you’re going to be able to borrow up to 80% of this when you borrow on a home equity loan.

Home equity loans are often mixed up with home equity lines of credit. The difference between a home equity line of credit is that with a line of credit you can borrow again and again. A home equity loan can be a lump sum that you get, or you can convert it to a line of credit. To know which one is right for you, talk to one of our Toronto mortgage brokers. That way you’ll be able to get the best financing for your situation without worrying about getting the wrong one.

What are the Benefits of a Home Equity Loan?

  • Credit: If you have good or bad credit, it won’t matter. As long as you have equity you’re going to be able to get this kind of loan. You will have a varying interest rate depending on what kind of credit you have though.
  • Speed: You’ll be able to get the money you need much faster than you would if you were taking out a second mortgage on your home.
  • Savings: The savings, depending on the terms negotiated by your mortgage broker, can be much more favourable than those you’d face with a home equity line of credit. It’s important to talk with a mortgage broker before you choose which one is right for you.

Can You Afford a Home Equity Loan?

Figuring out how much you can afford should be done before you sign on for financing. We can help you with something known as a “good faith estimate” so you’ll know hat your repayment terms will be, how much and how long you’ll have to repay your loan for. A home equity loan can be taken out pieces at a time. If you need $3,000 here, $5,000 months later you may be able to depending on how your loan is structured. Let us help you find out if a home equity loan is right for you!

What You Need to Know About Home Equity Loans

If you need a steady flow of money but don’t want to go through the hassle of another mortgage, home equity loans is something that needs serious consideration. The costs of the loan can outweigh the benefits, so you’ll want to have a Toronto mortgage broker handy to help you understand the terms of your agreement. Most home equity loans will let you take out up to 75% of your home’s value.

What is a Home Equity Loan?

Most home equity loans will let you take out up to 75% of your home’s value. If your home is worth $100,000 and you can borrow 75% of the value, which means you can borrow up to $75,000. But if you already have a $10,000 mortgage (you’ve paid most of it off!) you’ll only be able to borrow $65,000. That’s the max; you may only be able to borrow only half to three fourths of that. Once you’ve found a good rate with your mortgage broker, you’ll have a line of credit that you can live with.

One thing to know about home equity loans are that depending on who you go through your credit rating may not matter as much with the loan amount. You may have a higher interest rate, but you’re using your home as collateral.

What Should You Ask When Shopping for a Home Equity Loan?

You need to ask if there are penalties associated with the home equity loan. Since this is one of the more creative loans out there for you to use, there may be tricky rules and terminology used in the contracts. Make sure you have a mortgage broker helping you shop for your home equity loan. Ask them if there is a prepayment penalty, and if you can pay it off within ten years or so. You don’t want to take too long to repay your loan, since even low interest rates can compound over time. Also make sure that you only spend what you’re going to pay back. You don’t always need to take out the entire credit limit against your home.

Is it Hard to Apply?

  • Ask how much the fees will be to have your home appraised.
  • How much will the application fee be, and will you be able to get it refunded if you’re rejected?
  • Who pays the closing costs on the loan, what will the taxes be and who is paying the title company? Is it all included, is it split up into different sections (some things may be covered in the closing costs and the rest on you)

These are things you need to think about before you apply. This is why you need an experienced professional to help you through the process. Do you have relationships with the banks and know how to read contracts? Mortgage brokers will be able to help you navigate the muddy waters of home equity loans and get you the best outcome possible.

Are You Ready for a Home Equity Loan?

home equity loanSometimes it’s hard to figure out if now is the right time to tap the equity in your home; after all, you need food and shelter, but your home is the only thing you can really leverage to raise money. It’s important they think about what you’re going spend your money on, have a plan for using it wisely, and understand if this is really the right decision. Working with one of our Canada mortgage brokers can help you understand the benefits and the pitfalls of borrowing against your home. You’ll want to have your first mortgage payoff is much as possible, be free and clear of any liens, and have good credit before you try and take out another mortgage on your home.

What is a home equity loan?

A home equity loan allows you to trade the equity in your home (known as collateral) for money from a lender. This is a secured debt, so if you default you run the risk of losing your home. It’s very important to borrow only what you can afford and to be very careful about how quickly you repay. Since you’ll be relying on the equity in your home, you can get underwater if you borrow too much at a high interest rate and just can’t repay it fast enough.

How much equity do you have?

You’ll need to figure out just how much equity you hold in your home before you start thinking about taking out a second mortgage. Check your monthly statement to see how much you owe (principal + interest!) and subtract it from the most recently appraised value of your home. This way you’ll be able to figure out just how much you own of your home and how much equity you have available. You can borrow up to 80% of your available equity, but most won’t want to borrow this much.

How quickly can you repay?

Before you take out a second mortgage or home equity loan, you’re going to need to make sure that you can repay your mortgage fast. Working with one of our Canada mortgage brokers we’ll help you create a payment schedule that will help you save thousands of dollars – but we’ll also be there to help you find the cheapest lender with the best service too. The last thing you want to do is take out a high interest second mortgage with a low loan to value ratio; if you want to best, work with us.

Should you tap into your equity?

This isn’t a question we can help you with until we speak with you. Give us a call today or contact us on our site to set up a free consultation about your home equity loan. We’re here to help you answer any questions you may have, and we’ll work hard to help you figure out if now really is the right time for you to start tapping into the equity in your home.

Home Equity Loans and Lines of Credit

home equity loanWhen it comes to making the most of your equity, a home equity loan (also known as a second mortgage) and home equity lines of credit can really help. You’ll want to be very selective about which lenders you work with, choose the right Toronto mortgage broker (us!) and make sure that the terms you’re getting are the best possible. After all, you’ve worked for years to build equity in your home, you don’t want to lose it overnight just because you didn’t know any better right?

What is a Home Equity Loan?

A home equity loan is a second mortgage – it allows you to draw on all that equity you’ve been saving up for all these years to fund all kinds of projects. You can remodel your home, you can put your kids in university or you can put it towards a new home in lieu of a bridge loan; whatever you want to do with it, always make sure it’s a wise investment. Once that equity is gone it can be extremely hard to get back, especially if you don’t get the best home equity loan available. That’s where we come in though! As Toronto mortgage brokers, we’ll scour the lists of local and national lenders to find you the lowest monthly payments and interest rates.

What is a Home Equity Line of Credit?

A home equity line of credit is different from a second mortgage because it is more like a bank account or credit card that you can draw on as time goes by. You won’t get one large lump sum that you have to spend right away. Hold onto your line for a rainy day and then use your equity when you have to, not before. It gives you more control over your spending than a second mortgage, and can be used for both big and small expenses. Many people use these to fund a new business or their retirement like a reverse mortgage.

Which One is Right for You?

It can be hard to figure out which one is right for you; after all, everyone is different and you really can’t just read an article online and figure out your financial future, right? You’ll want to talk to someone, one of our Canada mortgage brokers, one that can help you figure out how much you can expect to pay and how much you can expect to get from your equity.

You’ve worked hard for years to build up the equity in your home, you shouldn’t just barter it away without a fight. The market is in a great place right now, and lenders really want your business. Make them fight for it, make them give you the best deal. If you don’t know how, that’s where we come in! We’ll work with you to help you find the best terms for your mortgage. You don’t have to do it alone, you’ve got a friend in the mortgage business. 

Also, visit our home equity line of credit page today to learn more! http://www.homebasemortgages.ca/home-equity-loans/

Home Equity Loans Account for Most Canadian Household Debt

Are home equity loans accounting for most of the increases in household debt? Bank of Canada warns that Canadians may be taking on more HEL debt than they can handle.

A study of borrowing trends has confirmed that loans secured by the equity in homes are adding to the outstanding debt, and not home mortgages, as is commonly believed.

The country’s homeowners have been increasingly converting home equity to cash to pay for renovations and purchase of consumer goods. Latest reports from Statistics Canada reveal that average household debt has increased to 153 per cent from 110 per cent back in 1999, and 70 per cent of this is mortgage debt.

As home prices have scaled higher, debt-to-household equity has also risen. Bank of Canada says that a correction in home prices may affect Canadians. With the upswing in home prices, households are having to take out bigger home mortgages to fund their house purchases, and using the equity from rising home values to pay for their other purchases.

Should home prices reverse, values will drop while Canadians will still be saddled with significantly large mortgages, increasing debt-related stress. According to Statistics Canada, an economic downturn that leads to home price depreciation, can take a turn for the worse as consumer spending plummets.

An important reason for spending to drop is that home equity may fade away, diminishing the borrowing ability of homeowners. It is estimated that a price drop of 10 per cent can lead to a one per cent dip in consumption.

Also, visit our home equity line of credit page today to learn more! http://www.homebasemortgages.ca/home-equity-loans/

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! http://www.homebasemortgages.ca/home-equity-loans/

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!