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.