Home Equity Loan
A home equity loan is a loan in which the borrower uses his or her home to guarantee the loan. The borrowers can use their properties as additional collateral when applying for a home equity loan.
Owning your own home has many advantages when applying for a home equity loan. The most popular of all is the possibility to borrow money quickly. Since your house acts as collateral, banks are more willing to approve your application for a home equity loan, irrespective of the current state of the economy or your employment status.
You can also use this option if you want to get into real estate investment without having to spend too much money. Borrowing some cash against your equity can be very useful in situations like these, it is also an easy way out when faced with sudden financial emergencies.
Borrowers do not need a perfect credit history to qualify for a home equity loan, most people need a home equity loan in conjunction with their first or second mortgage. Other advantages of a home equity loan are that it can be used to pay off high interest debts like credit cards and borrowings from family members can also be easily replaced.
Home equity loans provide an opportunity to take out money when you need it most, and they can be used for anything.
A Home Equity Loan (or HELOC) is a type of loan which uses the value in one's property as collateral.
Home equity loans come in many forms, with the most common being a first mortgage. Homeowners can also get second mortgages or even third mortgages or a HELOC—which stands for "home Equity Line Of Credit."You may be interested in refinancing your property to take advantage of lower interest rates.
There are many options to choose from when applying for a home equity loan, you can apply through Banks and B-lenders such as Credit unions and trust companies or you can approach a mortgage investment company ( MIC) or go with Private lending companies.
Most people looking for a home-equity loan are normally looking to take money out of the available equity they have in their home, second home or rental property, or other properties such as a cottage.
There are endless reasons as to why and where to spend money you receive from a home equity loan.
The most common reasons are debt consolidation or to make new investments. Some people pay for their children's University or College tuition with a home equity loan. Others might have tax arrears that need to be paid. A world trip might be your reason on taking out a home equity loan.
Home equity loans are secured by the available equity available in your home. Home equity loans usually fall in second or third position behind your first or second mortgage, sometimes even a third. It falls behind all existing mortgages you have on your property. Lenders, investors and private mortgage lenders see this as a riskier investment than first or second mortgages and charge a higher interest rate on fixed and variable mortgages along with added fees. When Private mortgage lenders take on most of the risk associated with a home equity loan in second or third position, they make sure that they are compensated for the associated risk by charging a little bit more than they would on a regular home mortgage.
It is a lot easier and quicker to get an approval for a home equity loan, because the borrowing is based more on an asset-based lending criteria, the turn-around time and approval rates are in favour of the borrower.
In the larger cities in Ontario such as all of the GTA, Toronto, Richmondhill, Thornhill, Mississauga, Oakville, Burlington, Vaughn, Markham, Scarborough, Ajax, London, Kitchener, Barrie, Cambridge, Ajax, Milton, Brantford, Ottawa, Waterloo, Oshawa along with other densely populated cities have more real estate value and a steadier real estate market. Private mortgage lenders love to lend out their money in high demand and densely populated areas. Private Mortgage lenders would also lend out more money in terms of a higher Loan to value LTV in these steady real estate markets.
A borrower who lives in a major city or close to a major city in Ontario can qualify for a home equity loan up to 95% Loan to Value (LTV) although 85%LTV is the average.
Areas like Niagara Falls are good examples of developing real estate markets. A Private mortgage loan in an area like Niagara Falls would be more attractive to private mortgage lenders and would qualify a borrower at a much more competitive rate. One advantage that borrowers have for Private mortgage loans is that the number of lenders who lend out private money are increasing rapidly which creates a more competitive market and lower rates. Steady markets like in Ontario, is a very attractive province for Private lending companies due to the fact that home prices are less likely to drop which allows private mortgage lenders to offer lower rates to borrowers.
Our private mortgage brokers at Toronto Private Mortgage will help you structure the funds made available to you so that you have a plan in place on how to manage and payback the loan to your advantage.
We are mortgage matchmakers, we will find you the most suitable lender with the lowest rate and best terms so you can enjoy all the benefits and perks that we provide for you for years to come. We guarantee our services to you, we don’t stop working until we have met all of your needs. Over the years, we have seen many different scenarios that our clients have had to face and we have been through thick and thin with them. We have come up with creative solutions that at times seemed impossible to achieve. Our experiences through the ups and downs of the Mortgage industry has provided us with the expertise and knowledge to close any loan and open many doors for our clients.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
Owning your own home has many advantages when applying for a home equity loan. The most popular of all is the possibility to borrow money quickly. Since your house acts as collateral, banks are more willing to approve your application for a home equity loan, irrespective of the current state of the economy or your employment status.
You can also use this option if you want to get into real estate investment without having to spend too much money. Borrowing some cash against your equity can be very useful in situations like these, it is also an easy way out when faced with sudden financial emergencies.
Borrowers do not need a perfect credit history to qualify for a home equity loan, most people need a home equity loan in conjunction with their first or second mortgage. Other advantages of a home equity loan are that it can be used to pay off high interest debts like credit cards and borrowings from family members can also be easily replaced.
Home equity loans provide an opportunity to take out money when you need it most, and they can be used for anything.
A Home Equity Loan (or HELOC) is a type of loan which uses the value in one's property as collateral.
Home equity loans come in many forms, with the most common being a first mortgage. Homeowners can also get second mortgages or even third mortgages or a HELOC—which stands for "home Equity Line Of Credit."You may be interested in refinancing your property to take advantage of lower interest rates.
There are many options to choose from when applying for a home equity loan, you can apply through Banks and B-lenders such as Credit unions and trust companies or you can approach a mortgage investment company ( MIC) or go with Private lending companies.
Most people looking for a home-equity loan are normally looking to take money out of the available equity they have in their home, second home or rental property, or other properties such as a cottage.
There are endless reasons as to why and where to spend money you receive from a home equity loan.
The most common reasons are debt consolidation or to make new investments. Some people pay for their children's University or College tuition with a home equity loan. Others might have tax arrears that need to be paid. A world trip might be your reason on taking out a home equity loan.
Home equity loans are secured by the available equity available in your home. Home equity loans usually fall in second or third position behind your first or second mortgage, sometimes even a third. It falls behind all existing mortgages you have on your property. Lenders, investors and private mortgage lenders see this as a riskier investment than first or second mortgages and charge a higher interest rate on fixed and variable mortgages along with added fees. When Private mortgage lenders take on most of the risk associated with a home equity loan in second or third position, they make sure that they are compensated for the associated risk by charging a little bit more than they would on a regular home mortgage.
It is a lot easier and quicker to get an approval for a home equity loan, because the borrowing is based more on an asset-based lending criteria, the turn-around time and approval rates are in favour of the borrower.
In the larger cities in Ontario such as all of the GTA, Toronto, Richmondhill, Thornhill, Mississauga, Oakville, Burlington, Vaughn, Markham, Scarborough, Ajax, London, Kitchener, Barrie, Cambridge, Ajax, Milton, Brantford, Ottawa, Waterloo, Oshawa along with other densely populated cities have more real estate value and a steadier real estate market. Private mortgage lenders love to lend out their money in high demand and densely populated areas. Private Mortgage lenders would also lend out more money in terms of a higher Loan to value LTV in these steady real estate markets.
A borrower who lives in a major city or close to a major city in Ontario can qualify for a home equity loan up to 95% Loan to Value (LTV) although 85%LTV is the average.
Areas like Niagara Falls are good examples of developing real estate markets. A Private mortgage loan in an area like Niagara Falls would be more attractive to private mortgage lenders and would qualify a borrower at a much more competitive rate. One advantage that borrowers have for Private mortgage loans is that the number of lenders who lend out private money are increasing rapidly which creates a more competitive market and lower rates. Steady markets like in Ontario, is a very attractive province for Private lending companies due to the fact that home prices are less likely to drop which allows private mortgage lenders to offer lower rates to borrowers.
Our private mortgage brokers at Toronto Private Mortgage will help you structure the funds made available to you so that you have a plan in place on how to manage and payback the loan to your advantage.
We are mortgage matchmakers, we will find you the most suitable lender with the lowest rate and best terms so you can enjoy all the benefits and perks that we provide for you for years to come. We guarantee our services to you, we don’t stop working until we have met all of your needs. Over the years, we have seen many different scenarios that our clients have had to face and we have been through thick and thin with them. We have come up with creative solutions that at times seemed impossible to achieve. Our experiences through the ups and downs of the Mortgage industry has provided us with the expertise and knowledge to close any loan and open many doors for our clients.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
Is it difficult to get a home equity loan?
The options for getting home equity loans in Ontario are very limited. Most home equity loans are obtained through Private Lenders. These types of loans pose more risk to the Private lenders and because of the higher risks the lenders take on, it is very common for home-equity loans to have a higher interest rate than traditional loans do. That is the trade off. Private Lenders are willing to carry the risk for a higher fee and higher interest rates.
On the flip side, borrowers are approved a lot easier since private lenders don’t require you to provide a bunch of documents and have no interest in your credit score or income. Private mortgage lenders main concern is the actual property they are lending the money on and how fast they would be able to sell it in the case a client would default on a mortgage. They want to be sure that the property can be sold at a good market value and reasonable speed to cover the remaining outstanding balance of the mortgage and interest and to cover the associated legal costs.
On the flip side, borrowers are approved a lot easier since private lenders don’t require you to provide a bunch of documents and have no interest in your credit score or income. Private mortgage lenders main concern is the actual property they are lending the money on and how fast they would be able to sell it in the case a client would default on a mortgage. They want to be sure that the property can be sold at a good market value and reasonable speed to cover the remaining outstanding balance of the mortgage and interest and to cover the associated legal costs.
What is the minimum credit score required for a home equity loan?
Lenders have a variety of standards and criteria when lending out money. Institutional lenders such as banks, credit unions and trust companies will always require more documents and a higher credit score than private lending companies do.
A Private lender who invests their own money directly into funding the loan, will most likely not ask you about your credit score. Private lenders require a lot less documentation from the borrower, but at higher interest rates and fees than institutional lenders would.
In order to qualify for the lowest possible home equity line of credit, you would need a credit score that is above 680. Having a good credit score in only half the battle as you would have to hope that the institutional lender that you have your current first mortgage with offers a product such as a home equity loan or a HELOC (home equity line of credit).
Private mortgage lenders might come with a higher price tag but are always available to you with a lot less hassle and restrictions.
A Private lender who invests their own money directly into funding the loan, will most likely not ask you about your credit score. Private lenders require a lot less documentation from the borrower, but at higher interest rates and fees than institutional lenders would.
In order to qualify for the lowest possible home equity line of credit, you would need a credit score that is above 680. Having a good credit score in only half the battle as you would have to hope that the institutional lender that you have your current first mortgage with offers a product such as a home equity loan or a HELOC (home equity line of credit).
Private mortgage lenders might come with a higher price tag but are always available to you with a lot less hassle and restrictions.
Do I need a Home line of credit (HELOC)?
A HELOC is a revolving loan, you can make interest only payments as you would with a credit card but at much much lower interest rates than a credit card carries.
The primary advantage of a HELOC is that you can only withdraw the amount of money you need. You never have to pay the full amount of interest that is normally associated with a regular mortgage. You can choose not to use funds for a year and it would not cost you a cent. You can access the funds as many times as you like as it is revolving like a credit card.
You can withdraw up to the amount that you are qualified for as many as times as you like as long as you make the interest payments.
Other benefits of a HELOC are, the monthly due amount is a lot lower than a traditional mortgage, even with the lower interest rates traditional mortgages carry. HELOCS allow for a lower monthly payment because you are only paying the interest portion rather than having blended payments of the principal amount with added interest costs on top that traditional mortgages carry.
A home equity line of credit is also less expensive than a personal loan, as personal loans have no security attached to them which are perceived as riskier loans to lenders thus the higher interest rates.
The primary advantage of a HELOC is that you can only withdraw the amount of money you need. You never have to pay the full amount of interest that is normally associated with a regular mortgage. You can choose not to use funds for a year and it would not cost you a cent. You can access the funds as many times as you like as it is revolving like a credit card.
You can withdraw up to the amount that you are qualified for as many as times as you like as long as you make the interest payments.
Other benefits of a HELOC are, the monthly due amount is a lot lower than a traditional mortgage, even with the lower interest rates traditional mortgages carry. HELOCS allow for a lower monthly payment because you are only paying the interest portion rather than having blended payments of the principal amount with added interest costs on top that traditional mortgages carry.
A home equity line of credit is also less expensive than a personal loan, as personal loans have no security attached to them which are perceived as riskier loans to lenders thus the higher interest rates.
Do HELOC’s have any disadvantages?
The only major disadvantage that home lines of credit carry are the fact that the interest rate is higher than that of a conventional mortgage loan. Banks usually charge between 0.30% to 1.5% higher rates than the bank’s posted prime rate compared to a conventional mortgage that is 1-1.5% below prime.
Another drawback of a HELOC is that it can be harder to qualify for at banks and institutional lenders.
Private mortgage lenders and mortgage investment companies (MIC’s) are individuals who lend out their own private money and are a lot easier to qualify for but at higher rates. Always remember, when it comes to any kind of investor, the riskier the borrower the higher the rates. The less documents required to qualify, the higher the rates. The quicker and easier the approval process, the higher the rates.
There is a reason why banks offer lower rates, they pick and choose who they lend to and can back out of the approval at the last minute usually at the expense of the borrower.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!
Another drawback of a HELOC is that it can be harder to qualify for at banks and institutional lenders.
Private mortgage lenders and mortgage investment companies (MIC’s) are individuals who lend out their own private money and are a lot easier to qualify for but at higher rates. Always remember, when it comes to any kind of investor, the riskier the borrower the higher the rates. The less documents required to qualify, the higher the rates. The quicker and easier the approval process, the higher the rates.
There is a reason why banks offer lower rates, they pick and choose who they lend to and can back out of the approval at the last minute usually at the expense of the borrower.
If you're denied for any reason, don't hesitate to reach out - we'll work with you and come up with the right plan in 48 hours!