You may be planning to get HELOC to pay for school, finance a home renovation project, or just want access to your home equity for emergencies and the like. For a lot of homeowners, a HELOC is a good borrowing option with relatively low interest as compared to other types of loans. Having a low-interest rate is possible for a HELOC because the money you borrow is secured by the home equity you’ve built up in your home.
Do you know that close to half a million Canadian homeowners have a HELOC? There is no doubt that getting a HELOC is becoming increasingly popular for Canadians. If you want to know how you can get a HELOC in Canada, then read the following steps below.
Know Your Purpose for Getting a HELOC
No matter how we look at it, a HELOC is still a loan that uses your home equity as collateral. This means that not paying it back can result in you losing your home. Because of this, it is very important to truly have a reason for getting a HELOC. Once you have a reason in mind, you can better assess if the fees and time you’ll spend on getting a HELOC will be worth it.
Understand How HELOC Fees Work
Getting a HELOC comes with fees. This may include administrative costs, appraisal fees, legal costs, inactivity fees, title search, and discharge fees. You need to know when these fees can be charged to you and if there are ways to reduce the cost. By understanding HELOC fees, you won’t be caught out in the cold when your bill comes. Alternatively, you can get the help of a mortgage professional who specializes in HELOCs to make sure that you truly understand the terms for your HELOC.
Know the Minimum Home Equity Requirement to Apply for a HELOC
As much as it is great to know that a HELOC charges only a minimal amount for interest once you qualify for it, you also need to know about the minimum qualifications to make sure that you can qualify. Most lenders have a specific minimum home equity requirement while some need additional data such as proof of verifiable income and good credit score from the borrower. You’ll need to prepare these data before applying for a HELOC.
Learn More About What is a HELOC and Associated Rates
You need to understand how a HELOC works as well as the expected fees and interest you’ll have to pay. This way, you’ll be better equipped to understand what you’ll be getting yourself into and can hold your own when discussing payment and other terms.
Find the Right Lender
Different lenders have different terms for approving a HELOC application. You need to find a lender with favourable terms and willing to work with you so that you can be in a better position to pay your debt in the future. This can be very challenging but not impossible especially with the help of trusted mortgage professionals.