Home Equity Loans in Ontario

There are a wide range of home equity loans in Canada, which can make it tough to decide which are the best equity home loans. We can assist you by presenting you with a borrowing plan that is affordable and meets your specific needs.

 

How Can We Help You.

 

Homeowners of all income levels and financial situations have benefited from our expertise in getting them lower home equity loan interest rates:

Bad Credit Home Equity Loans.

If you need a home equity loan and have a bad credit rating, relax we provide bad credit loans in Ontario on a regular basis. First off "Bad Credit" is not a major factor when you are applying for a home equity mortgage. Most financial institutions have different lending criteria for home equity loans in Canada; our Ontario based home equity mortgage lenders know and understand your local market conditions and can react faster to your needs. Bad credit does not mean that you can not a home equity loan but it probably means that you will be paying a higher home equity interest rate. You could use your home equity to get a bad credit personal loan in Ontario, which could be used to pay for a wedding or your child's education. Many loans for people with bad credit in Ontario can be completed in less than a week, if the client has all the required paperwork. Remember bad credit is not a crime it just means that you will need to be better prepared.

An Example.

 A client wanted a bad credit loan in Toronto, Ontario, his credit score was 540 which is low, the total LTV would be 70%, which is good. The bad credit rating came from not paying some credit cards on time and having a high balance on the cards. By paying off the credit cards we can now repair the clients credit, in about one year the client will be able to go back to a traditional lender and pay a lower interest rate. In this case we provided short term loans for people with bad credit in Toronto, so that over the long term they can lower their monthly finance costs.

In a November, 2007 report, the Canadian Association of Accredited Mortgage Professionals stated that in the previous 12 month, 17% of present mortgage holders also took out a home equity loan or increased their mortgage. The average home equity loan was $35,400.00. As you can see home equity refinancing is now a fairly common practice

 

What Are Home Equity Loans?

Home equity is the difference between the market value of your home and what you still owe on your existing mortgage. So if your house is valued at $400,000 and you still have $360,000 outstanding on your first mortgage, the value of the equity in your home would be $40,000.

A Ontario home equity loan would enable you to borrow against the remaining equity. Home equity loans are also known as second mortgages or as a home equity mortgage because they are a second loan (the primary mortgage being the first) that uses your house as collateral. Home equity financing

How Much Can You Borrow?

As with most home equity loans in Canada you can borrow anywhere up to 85% of the amount of your home equity. For the case above, with $40,000 in equity, the homeowner could borrow $34,000.

Some home equity lenders have more generous options, even offering to lend 100% of the amount of equity in your home.

How is a Home Equity Line of Credit Different?

A home equity line of credit (HELOC) is much the same as a standard line of credit, but it uses the equity in your house for security. With a HELOC a person can typically borrow up to 90% of your houses equity. With $40,000 in home equity, you could obtain a HELOC for $36,000.

With a HELOC, you do not have to use all the money at once. You can borrow the funds as they are needed and pay back any borrowed funds whenever you want, just like a standard line of credit. In contrast, a home equity loan is a one-time, lump sum loan. If you require more funds, you will need to take out another loan.

In  general a HELOC is best suited for those people who need access to varying amounts of money for ongoing expenses, whereas a home equity loan is better suited to those needing a specific amount for one large expense, like a home renovation.

What About Interest Rates?

In Canada home equity loans typically have fixed interest rates, while a HELOC will have a variable rate of interest. The interest rates for both are typically pegged to a financial institution's prime rate or the Bank of Canada's prime rate, and the interest rate is often significantly lower than those charged for vehicle loans, credit cards and personal loans.

What is Mortgage Refinancing?

With a home mortgage refinancing, you can pay off your existing mortgage and obtain a second mortgage for a lower interest rate. With a home mortgage refinance you can also borrow more than what you owe on your current mortgage. You can then take the extra money and use it for expenses like tuition, home improvements, weddings and so on. Home mortgage refinancing may include extra costs such as mortgage broker fees appraisal fees and prepayment penalties.

What are the Pros and Cons?

On the plus side, home equity loans in Ontario provide access to low-cost credit for important expenses. In extreme cases, the risks are that the housing market slows and the value of your home may fall, this could result in you owing more than the value of your home, or that you overspend and default on your home equity loan, which can result in the loss of your home.

For many people the pros outweigh the cons. To confirm that a HELOC or loan is right for you, it is recommended that you consult with a professional mortgage broker in your local market.

The Solution!

If you are looking for an unbiased analysis of your financial situation and the potential gains that a home equity loan provide or a line of credit can offer you, call 416-499-2122 today to get a free, no-obligation quote.