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Home improvement with home equityHome equity loans
Home equity loans are a convenient way to pay for home renovations, a child's education, a big wedding, or a down payment on an investment property without paying the fees to refinance your mortgage.
Discover the equity in your home.
Applying for a home equity loan.
A home can be a source of great pride and satisfaction. A home equity loan can make it possible for homeowners to use the capital they have invested in their home by borrowing against their house's market value – this can be a convenient way to pay for home renovations, a child's education, a big wedding, or a down payment on a second home without paying the fees to refinance your mortgage.
- Why get a home equity loan?
- Has a lower interest.
- It's often better than a line of credit.
- Allows you to consolidate your debt.
- An unexpected emergency
Why do people opt for home equity loans over other types of loans?
Simply put: the interest is lower. A home equity loan is secured against the equity in a home. This means lenders can offer a bigger loan (up to 80% of existing home equity) at lower interest rates than they might have if the loan were unsecured. The rate for a home equity loan is often better than that for a personal line of credit. The rate you get will depend on your credit history, your earnings and whether you have existing assets with a particular lending institution. A home equity line of credit (or "HELOC") works like a cross between a bank account and a credit card. It has a maximum limit – usually 75-85% of the equity in a person's home – and can be drawn on as needed. Only interest has to be paid until the loan comes due (usually 5-25 years), at which time the loan must be paid back in full.
Differences between a home equity loan and a home equity line of credit.
The difference between a home equity loan and a home equity line of credit is that with a loan, once you've used a percentage of the loan, you won't be able to access it again. For example, if you took out a $5,000 loan to fund a vacation, whether you've repaid a fraction or the entire sum, you have to re-apply to get another loan. With a home equity line of credit, once you've used it, you can spend as much as you've paid back. If you used $8,000 and repaid $5,000, you have access again to $5,000.
Reduce your interest to better consolidate your debt.
Given the reduced interest, many people use a home equity loan to consolidate their debts. They utilize it to settle their other arrears (credit cards and lines of credit) and combine their entire debt load and refinance it at one reasonably low interest rate. The home equity loan or line of credit must be tied to your principal residence. The loan is generally repaid in monthly installments, and must be entirely settled when you move out of the house.
Our broker network of lenders benefits you.
Given the wide range of home equity products, it can be tough to decide which option is best. Global Mortgage brokers can help you choose a borrowing plan that is affordable and responsive to your specific needs.
Global Mortgage brokers do not deal with one financial institution, but rather with a network of lenders across Canada. This network assures you unbiased, expert advice and access to exclusive loan products available through non-bank lenders. Our network of lenders offers a wide selection of loan products, flexible amortization schedules and higher income allowances than those typically found at a bank.
Talk to a certified Global Mortgage broker today about a home equity loan or line of credit (HELOC).