Canadians today have more options than ever before when it comes to second mortgages and home equity lines of credit; if you want to get the one that’s right for you you’ll want to work with one of our Toronto mortgage brokers. Here we’re going to go over the things you need to look at when comparing different HELOCS so you can get the best deal. From interest rate margins to annual percentage rates, there are things you need to sort out before you settle on just one!
Why is Interest Important?
Since home equity lines of credit are long term arrangements, interest rates play a “vary” (who could resist the pun?!) important part in the agreement. You’re going to want to have the lowest rate possible, down to a fraction of a percentage point. When you work with one of our Toronto mortgage brokers you’re going to have someone on your side who will help you get the lowest interest rate.
1% of $100 is a $1. So if your mortgage is $500,000 at 15% a year… that adds up to $75,000 A YEAR in interest if you only pay the bare minimum payment! That’s an extra $25,000 to $50,000 that you just don’t need to pay, and it all boils down to percentage points. If you want to be able to get the loan that’s right for you, you want someone who can get you a low interest rate. When you have a smart Toronto mortgage broker on your side, you’ll get the lowest possible interest rate and the best terms.
Interest Rate Index
There are more than one interest rate indices available, and different lenders will use different ones. You’re going to want to have someone who uses a common one like the LIBOR or COFI; there are many others but it’s important that they don’t use something that they made up arbitrarily to get themselves more money on the whole. Interest rates (as of September 2012) are quite good, as low as 3% depending on who you borrow from. If you’re paying 15% for a mortgage or a HELOC there are better offers out there. Let us as Toronto mortgage brokers help you find them.
What Are Interest Rate Margins?
Interest rate margins, also referred to as points in your home equity line of credit contracts, are the padding that the lender adds on to make more money. So if you have a mortgage that is signed at 3% with an interest rate margin of 3% added on, your total in interest will be 6%. This sounds bad, and it can be depending on how your HELOC, private mortgage or second mortgage is calculated. Let us help you find the right second mortgage for you.
Everything boils down to how it’s handled in the beginning. Why refinance if you can get a great loan at the beginning? With a Toronto mortgage broker like us you’ll get everything you need to get the right home equity line of credit for you.
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