Finishing Your Basement – What Is The Impact on the Value of Your Home?

Finishing your basement isn’t just about increasing your living space, it is an investment in home improvement that can significantly affect you home’s value and increase your home equity when done right.

You have to make sure that you take certain precautions to ensure that your new finished basement will result to a livable space that’s not prone to leaks, water damage, and other issues. Below are some tips to remodel your basement in a way that maximizes function and gives you the most bang for buck.

Don’t Forget to Waterproof

Basements tend to be damp places even for homes that are not subject to flooding. It is not uncommon to find damp areas of moisture on the walls or get a musty odour even for basements that do not have any water leaks. This is why a complete waterproofing is the first step in remodeling or reconstructing your basement. You can DIY this but it will be much better to hire professionals to save yourself from future issues.

Design or Plan According to Your Needs

The cost of your basement remodel will vary depending on what you plan to add in it. A bedroom or new living area would be a little less pricey compared to a home theatre. You might also want to look into creating a walkout basement if your home is on grade. Another popular addition is setting an area aside for storage and utility space.

Get It Done

After coming up with the final vision for how you would want your finished basement to be, it is time to turn it into reality by researching the best team for the job. Go ahead and seek out the right plumber, carpenter, contractor, and other home remodeling professionals that you might need. Decide which projects you’ll be able to DIY and which ones are better left to professionals then get things done!

Reassess and Enjoy

Remember that finishing your basement is an investment in your home. More than enjoying its new functionality, you’ll also enjoy a substantial increase in your home’s value and therefore your home equity.

By how much?

There are a lot of factors involved in determining the increase in your home’s value after finishing your basement. What is known, though, is that a 2010 study showed that homeowners were able to recover 74% (of what they spent on average) when selling their home after finishing their basement. This is really good, considering that a finished basement will also allow you to save hundreds of dollars a year in energy savings.

Do not forget to install heating and get permits if you want your new finished basement to be officially recognized as a living space more so if you have plans to put your home on the market in the future. This is also a great selling point when the time to sell your home comes.

Investing in home improvement projects that add value to your home not only increases your home’s value but your equity as well. If you’re strapped for cash but want to pursue finishing your basement, we can help you tap your existing equity through a home equity loan. Contact us today so we can discuss with you what you’ll need for your loan application.

Home Equity Facts: What You Need to Know

Homeowners refer to their hone equity as wealth, but what does it have to do with building your net worth? What is home equity and how does it contribute to your wealth?

What is Home Equity?

Home equity is the value that you have built up in your home. If you still have some mortgage left to pay, it is the current market value of your home minus all the money you still owe.

Because of the above, your home equity is very much like a type of bond because it locks up your money with your property. There are ways to tap your home equity; however, note that the longer you let it sit (without real estate depreciation), the more it can create more wealth for you as your paid for percentage of your home increases.

Building home equity is a slow process unless there is a sudden increase of real estate prices in your area because of housing demand or some other factor. Note too that it can suddenly fall if home in your area lose their marketability. This is why it would be wise to be picky when it comes to choosing a property’s location.

Significance of Your Home Equity

Your home equity can be tapped once you meet the requirements set by lending institutions, companies, or private lenders. It serves as a financial resource that grows and increases value over time as  the homeowner continues to pay mortgage payments.

In a way, you can look at home equity as some sort of a forced savings account. This is because building equity on a home isn’t like spending money on material things like cars that lose value while you are still paying for it. If your property is in a good location, then you can build up quite a lot of wealth in home equity.

How to Grow Your Home Equity

Growing your wealth through home equity takes time. The longer you stay in your home and keep up to date with mortgage payments, the bigger your home equity will be (unless you live in a housing bubble). Once your mortgage has been paid for, your equity continues to grow with the property’s value.

Using Your Home Equity

You can tap your equity wealth by applying for a home equity loan. By doing so, you will be borrowing money against the value you’ve built up. You can choose to go for a home equity loan that will allow you to get money in a lump sum, or choose a HELOC or a home equity line of credit. A HELOC will let you take out as much or as little as you wish within set limits.

Note that a HELOC and a home equity loan are far from the same although they might sound similar. Both have pros and cons that should be weighed carefully depending on your needs and means.

Want to know more about how you can tap into your home equity? Contact us at Homebase Mortgages so we can assist you in home equity loan application.

4 Smart Uses of Home Equity Loans

Some people apply for a home equity loan just because they qualify for it and not for any smart purpose or reason. Sure, it is quite nice to have access to some cash that you can use to buy or pay for some things you may like now, but you have to remember that a home equity loan comes with obligations and interest that you will have to pay on top of your loan. It is therefore wise to apply for a home equity loan if you know how to use it to get the most benefits! Below are 4 smart uses for home equity loans and why.

Spend the Home Equity Loan on Home Improvement

Do you know that you can raise the value of your property by a significant percentage if you target certain home improvement projects for your home? The thing is, home improvement and minor home renovations can cost quite a bit of cash that not everyone may have. That’s where funds from a home equity loan can come in hand.

Certain additions such as remodeling the kitchen or upgrading appliances can increase the fair market price of your house. Not only that, but carefully planned and professionally executed additions can make living in your home a joy. You might even forgo selling once you’ve got your home improvement projects done!

Just some things to think about though, lenders might add additional fees if they know that you will be putting your home on the market. Also note that if your purpose is to sell, you must make enough profit to cover the cost of your first mortgage plus the home equity loan.

Use the Home Equity Loan for Debt Consolidation

Paying off a lot of loans with various due dates and interest rates can be tricky. You might fall behind on payments or end up paying a lot more because of missed payments and high interest rates plus fees. By using a home equity loan to pay off existing loans, you end up consolidating your loans into one loan that has a lower interest rate and is less of a hassle to keep track of. Smart!

Buy Something Expensive That You’ve Been Wanting for a Long Time

While a home equity loan shouldn’t be used for buying frivolous goods, it can be used to pay for a dream vacation, the car you’ve always wanted, or pay for a huge medical bill for a procedure that can save your life. Just do not go overboard and remember that the money you spend from your home equity loan should be paid back because your home is on the line.

Pay for College or Post Graduate Studies with a Home Equity Loan

Education can get very expensive but the cost shouldn’t be a hindrance if by getting higher education means getting more out of life and reaching your dreams. You can use your home equity loan to pay for your kid’s education or your own so that you can have a better and brighter future. Remember that a good education means better compensation in whatever field so this investment will surely pay for itself.

Need help applying for a home equity loan? Contact us at Homebase Mortgages so we can guide you with your loan application. We can also help you get approved for other types of loans more so if you have a bad credit history! Inquire today!

Second Mortgage Loans vs. Home Equity Loans

Most people get confused when referring to home equity loans and second mortgages because some websites may use the terms interchangeably, so how are they different?

A second mortgage is actually a type of home equity loan. When mortgage professionals bring up the term home equity loan, they are usually referring to a HELOC or a home equity line of credit. Both loans allow you to use the equity you’ve built up in your home to your advantage but subtle differences may make one better than the other for your needs.

To make it easier for you to pick whether a second mortgage or a home equity loan would be better for you, we’ll have to touch up on their basics so you can have a clearer understanding of each loan type.

A Look into HELOCs

An easy way to describe a HELOC is to compare it to a credit card. Your current equity is a determining factor in setting your credit limit but just like a credit card, you can use a HELOC for both big and small purchases as long as you do not exceed your limit. Interest is charged just like a credit card but only to the amount you’ve taken out of your equity via your HELOC. The limit of your HELOC’s credit is based on your credit worthiness and the equity value you’ve built up.

A Look Into Second Mortgages

A second mortgage allows you to tap into a set amount of money that you will have to pay according to the schedule set out by your mortgage lenders. This is not the same as refinancing because unlike it, a second mortgage does not replace your first mortgage.

A second mortgage usually last for 15 to 30 years and offer you a fixed interest. The interest will be based on your credit history so the cleaner your record is, the lower the interest rate you will have to pay. The price of your home and the current market’s interest rates are also factored in.

Note that although the above means that your second mortgage will have a higher interest than your first one, the fees that you will have to pay are generally lower.

Should You Go for a HELOC or a Second Mortgage?

The main factors that will determine whether a second mortgage or a HELOC is better for you are your financial needs and your financial capabilities. If you need a substantial lump sum of cash, then a second mortgage will be best for you. On the other hand, if you are someone who needs small amounts of money on a recurring basis, then going for a HELOC would be better for you. Beware though that if you’re the type that gets easily tempted with purchases that you do not need, then getting a HELOC may not be the best idea.

To help you decide which loan can answer your needs, it would be in your best interest to talk to professional mortgage brokers who can help you choose your loan and connect you with refutable lenders.

Ready to apply for a loan? Contact us today at Homebase Mortgages!

Home Equity Loans – What You Need to Know

Second mortgages or home equity loans are getting popular once again. It fell back a bit after the recession, but as people are making moves now to take charge of their finances once again, interest in various loan options are picking up. If you want to find out more details about home equity loans and whether you might qualify for it, you’ve come to the right place.

How to Qualify for a Home Equity Loan

The first thing you need to be eligible for a home equity loan is that you need to have equity. In layman’s terms, this is the value of the portion of the home that you already own and paid for versus the portion that is still owned by the bank. The amount of your equity in this scenario is also known as your loan-to-value ratio – the balance that you still have to pay for compared to the total value of your property.

According to the report posted by on the Home Buying section of Fox Business, lenders generally want you to have a loan-to value ratio of at least 80% after your home equity loan. In other words, you will need a minimum of 20% ownership to qualify for this type of loan.

This applies as follows: If you have a $500,000 home and you want to qualify for a $50,000 home equity line of credit or home equity loan, you will need at least 30% equity, or a loan balance of no greater than $350,000.

2 Types of Home Equity Loans

Home equity loans have 2 types, a standard home equity loan and a HELOC or a home equity line of credit. In a HELOC, you can use up your loan in smaller increments very much like how you use your credit card’s credit limit. In a standard home equity loan, you borrow a lump sum and can’t borrow more than the set limit.

Both loans have specific terms and interest rates plus limits to until which you can borrow before having to pay it back. You can choose which of the two types of loans would suit you best based on the amount of money you need now and future ability to pay back.

Getting a Home Equity Loan

Most people who need a huge amount of money to pay for home renovations opt to get the lump sum type of home equity loan. It is also the second mortgage of choice for people who want to use their equity to consolidate debts. Consolidating debts is a smart way to use your home equity loan because the payments are much more manageable and the interest rates are not as high as credit card interest (although typically higher than your mortgage’s interest).

In comparison with the above, people with a variable need for funds favour getting a HELOC because it allows them to only borrow what they currently need until a certain limit is reached.

Keep in mind that no matter what type of second mortgage you choose to go for, it should be one that you are sure you can pay off. You also have to be fully informed of the risks and fully understand the terms you are getting yourself into before signing anything. This is the service that professional mortgage brokers give you – we make sure to look out for you so your loan will help you manage your finances, not cause you problems. Need a second mortgage? Contact us at Homebase Mortgages today!

Pros and Cons, a Look into Home Equity Loans and Lines Of Credit

More and more homeowners are looking into being able to sell homes for profit, unfortunately, whatever you can gain from doing so is often left far from your reach unless you are able to access it using a HELOC or using a home equity loan.

So which one then is better?

A home equity loan and a home equity line of credit are types of second mortgages that you can gain access to if you have a certain built-up amount of equity in your home. More often than not, financial planners would advise you against using the equity you’ve built up unless you are doing so for purposes that can further increase your home equity. That is a smart way of using it after all.

A Look into Home Equity Loans

It would be easier for most people to budget around a home equity loan since it has a fixed interest and fixed payment every month. The thing to remember is that the fixed value for your home equity loan is something that you will have to pay on top of your mortgage. It is also a good source of funds for big expenses because it allows you to take out money in a lump sum.

A pro for a home equity loan include an interest rate that is tax deductible and has a fixed rate. A con would be that should the property values in your area suffer from a decline, going for a home equity loan can work against you as you might end up owing more money.

A Look into Home Equity Lines of Credit

HELOCs or Home Equity Lines Of Credit are similar to home equity loan because both are ways to tap into your home’s equity. It also differs in the sense that it operates more like a credit card with a pre-determined credit limit or credit ceiling. A good thing about this type of second mortgage is that you will only have to pay interest on the amount that you’ve withdrawn, and you can borrow as much or as little as you need as long as it does not exceed the limit.

Furthermore about interest rate is the fact that with HELOCs, the interest rates usually start small and then becomes variable or is adjusted according the movements against the benchmark. This detail means your monthly payment is also variable.

Some lenders can allow you to convert a part of your HELOC into a fixed rate while allowing a part of it to still be used like a credit card limit.

Pros about a HELOC include interest-only payments during your draw period, being allowed to pay interest on just the amount you’ve withdrawn, and the fact that interest paid is often tax deductible. Cons include increasing interest rates that will increase the amount you have to pay and possibly falling victim to your own overspending due to how flexible a HELOC is.

Ready to apply for a HELOC or a home equity line of credit? Contact us at Homebase Mortgages today!

Best Home Renovations to Increase Your Property Value

Let’s be honest with ourselves, the most compelling reason why homeowners choose to go forth with having a home renovation is not for aesthetic reasons but for increasing the home’s value. In today’s blog post, we are sharing with you some of the best home renovations that can drum up a return of investment that is up to 5X the cost of the renovation undertaken. Bring out your pen and be sure to take notes!

Flooring Upgrade

The floors are the biggest area of your home that gets the least attention when it comes to maintenance and repair but do you know that by just installing hardwood floors, your home’s value can soar up a significant percentage? Another good news is that if you have existing hardwood floors but they have seen better days, refinishing them can even net you more return of investment as older hardwood floors have a charm of their own!

Bathroom Makeover

The bathroom is typically the room in the house that dates it or shows the most wear and tear. If you can give an existing bathroom a makeover or manage to add even just a half bath to your property, your home’s market value will rise dramatically. A dead space in your home such as under the stairs can be converted to a powder room, an extra shower room, or a full bath. You can make the area seem more spacious by using glass for the shower.

Kitchen Touch-Up

A desirable modern kitchen can make buyers put in an offer right then and there, so why not invest in a kitchen renovation? You can start with the cabinets and lighting, perhaps even replace the backsplash if it looks too old. There are plenty of affordable kitchen solutions for countertops and cabinetry that won’t sacrifice on function and construction. You just have to look around!

Replace Fixtures

Okay, perhaps you don’t have that big of a budget to go on full room makeovers, but that doesn’t mean there is nothing you can do. By simply replacing fixtures such as cabinet hardware, doorknobs, faucets, light fixtures, and countertops, you can modernise your home with just a few hundred or few thousand dollars worth of cash. How’s that for a truly smart home renovation trick?

Plan for an Income Suite or a Basement Apartment

There are so many reasons why building an income suite or a basement apartment will increase the value of your home. One is that home buyers will see it as a bargain because they will be getting two properties for the price of one. Another is that an income suite will surely appeal to families that are looking for a home that offers them the opportunity to have a grandparent’s suite or an apartment for a child who wants to be independent but can’t buy a home yet. Let us also not forget that an income suite will help prospective home buyers pay off for the mortgage should they decide to rent it out.

Loving all the ideas for home renovation in here but don’t have enough funds to go forth with these ideas? Why not apply for a second mortgage as a smart way to afford a home renovation? You can use the funds from a second mortgage to make your home renovation dreams a reality. Contact us for details.

Smart Ways to Afford a Home Renovation

There is no such thing as cheap home repair or home renovation. Even if you’re the absolute best when it comes to seeking bargain deals, the cost is bound to be more than what most people can freely spend. There will be materials, labour, plus some other extra costs that are bound to be a part of having your home in tip top shape.

There is no denying it. A major home project like a renovation is worth a substantial amount of your yearly income; won’t you want to know ways on how can you fund it without letting go of the other things that you enjoy? Lucky for you, you’re at the right page!

Start a Savings Fund

This would be the most obvious in this list but we all know that a huge percentage of people dip into their savings fund and end with very little savings at all. For this to work, you have to set up a dedicated savings fund that is solely for home renovation projects. If you’ve got a little bit extra left from your weekly or monthly budget, this might be the easiest option to fo fund your home renovation.

Get a Personal Loan

A personal loan is an unsecured loan. This means that you won’t need to have any collateral for the money you borrow. Because the lender will be left with nothing if you fail to pay, the qualifications for this loan is often very strict. A personal loan also comes with a high-interest rate and a relatively lesser maximum amount compared to other options for financing.

It should be noted that a higher interest rate means that the overall cost of your home improvement projects will be increased by the same interest rate so choosing this option isn’t that attractive unless you can reap tremendous benefits from the home improvement. Be sure that the terms set by your lender will be compatible with your financial means.

Opt for Home Equity Loans and Lines of Credit

If you’ve already built up quite some equity on your home, a HELOC or a home equity loan would be a great way to use that to your advantage.

Home equity loans lets you borrow a specified lump amount from your equity. There will be terms of repayment that you will have to agree to, then you’ll be lent some money, and then you repay the borrowed amount according to the terms of the loan including the interest.

As for a HELOC, it’s like a credit card in the sense that it has a revolving line of credit. You can reuse or withdraw from the determined amount as long as you pay before the credit expires. If you need money now and is sure that you have some more incoming in the future, this might be worth looking into.

Just note that both home equity loan and HELOC must be fully paid back with the interest. The amount you pay will usually be set per month so you need to ensure that your cash flow will allow for this. Failing to pay on time can result in the lender foreclosing your home.

Interested in getting a HELOC or a home equity loan? Contact us so we can answer your questions and help you be on your way to a home renovation that you can afford.

Consolidate Your Debts with a Home Equity Loan

Having a lot of loans can be a pain to keep tab of when it comes to making sure that you’re paying them off before each of their monthly due dates; not to mention that each loan will have dizzying interest rates that will keep on eating on your finances if the loans are not paid off as soon as possible. This is why consolidating debt is an attractive aspect of debt management.

Managing your finances will be a lot easier when your debts are consolidated. Doing so will mean that you will have fewer things to mind when it comes to bills.

The thing is, consolidating debts usually means taking out another loan, using the funds from that to pay off your other debts, and ending up with just one debt to mind. Sounds easy but can be a bigger problem if you take the wrong kind of loan. You better do your research and know which type of loan is the most advantageous for your financial situation.

Home Equity Loan to help You Consolidate Debts

Taking a home equity loan can be a great solution for managing your debts. It is a type of mortgage loan that uses your home’s equity as collateral. The amount that you can borrow from this loan is determined by a percentage of your home’s equity and the terms of the mortgage company or private lender that will be providing you with the loan.

Because a home equity loan is a type of mortgage, the interest rates will be far better than other types of loans that you can get from a bank or other lenders such as a credit card, a personal loan, or an unsecured debt.

Will It Be Smart to Use a Home Equity Loan to Consolidate Debt?

As long as you can pay off the minimum payments set by the lender, you’re not in a hurry to sell your home anytime soon, and you’ve got considerable debts with huge interest rates that will benefit greatly from being converted into just one loan, then the answer is yes.

Think about it, if the interest rates of your existing loans are so expensive that you’re often simply paying for the interest each billing period, you’re basically throwing money away and will end up paying a total of twice or more the value of your original loan by the time you pay it off. That couldn’t be good. If you use a home equity loan to pay off your current loans, you will still pay some interest, of course, but it will be nowhere near what you are currently paying now.

There is one thing you have to be really sure of before getting a home equity loan. You have to be sure that the terms you agree to will give you a monthly bill that you can afford to pay. Note that failing to pay the minimum amount on time could mean losing your home to the lender. If used correctly, though, a home equity loan can improve your financial position significantly.

Interested in applying for a home equity loan but is not sure how to go about it? Contact us at Homebase Mortgages for professional assistance with your home equity loan application.

Improving Your Financial Position with a Home Equity Loan

Improving one’s financial situation is usually the farthest thing from a person’s mind whenever loans are mentioned, but not all loans are created equal. When you’re in a bind, having an emergency, or perhaps just out of luck, tapping into your home’s equity via a loan could help you out.

That’s where home equity loans come in!

But first, what is a home equity loan?

A home equity loan is a type of loan one can avail of against the value of the house one owns. The money from such a loan can be used to pay for emergency or extra medical expenses, needed house renovations or appliance upgrade, or for paying off tuition fees.

Although a home equity loan isn’t available in all parts of the world, the majority of developed nations have some form of it or another. It certainly is an option for you if you are from Canada and own your home.

Home Equity Loans in Toronto

There are two kinds of home equity loans that you can apply for if you’re from Toronto – Home Equity Line of Credit and Fixed-Rate Loans. These loans have become popular because of the type of advantages that they offer, namely:

  • You will have the option of getting quite a huge amount of money depending on how much equity you have in your home.
  • People with bad credit ratings are not excluded from those who can avail of a home equity loan.
  • Compared to other types of loans, the interest rate usually applied to home equity loans are quite small.
  • Payment can be tax-deductible.

There is one clincher to the advantages above…that is, if you fail to comply with the lender’s stipulations, then the lender will be free to sell your property. This is where mortgage professionals come in. They advise you on what you need to know so you won’t end up losing your home.

How to Get A Home Equity Loan The Smart Way

There are a number of lenders as well as mortgage companies that can help you apply for and get a home equity loan. The challenge lies in finding mortgage professionals that care about you and lenders who are not out to take advantage of your dire financial situation.

It would be best to do a bit of research before settling for a lender or a lending brokerage to help you out. Take note that some will not have your best interests at heart and will exploit you.

You may try for a second mortgage or go for a home equity loan line of credit depending on which one is more convenient for you to pay off and will meet your current financial situation.

Remember that what may seem like a great deal now can be tomorrow’s burden so plan wisely. Think of your financial situation a few months and a few years down the road, and make the best decision for yourself, not based on what someone else wants you to do.

Contact Homebase Mortgages for inquiries about Home Equity Loans and we’ll surely help you out.