Home equity loans help in times of need

Home Equity
By: Simon Cunningham

Sometimes life can get difficult, and finances can get tight. You may need money to consolidate debt, or to pay for a child’s education. Or you may be retired and be house rich and cash poor. There are many circumstances that call for you to look at taking a home equity loan to take care of your financial needs.

What is a home equity loan?

A home equity loan is a mortgage that you take out against the equity that you have built up in your home over time. One positive aspect of home ownership is that while you pay for shelter that you need, you own an appreciating asset that generally increases in value over time while also gradually paying off the mortgage that you took to buy it. As your equity increases, it’s often not easily accessed unless you refinance your home to take out the equity, or you increase your mortgage at renewal.

What kinds of home equity loans are there?

There are several ways to get a home equity loan.

  1. A traditional mortgage refinance or renewal. This can be done through your current lending institution or can be arranged through another lender via a mortgage broker.
  2. A home equity line of credit (HELOC). This is a good home equity loan option for those with a large amount of equity. It is a mortgage, or part of a mortgage, that operates like a line of credit, meaning you can pay it down and borrow it again later. HELOC mortgage rates are based on the Bank of Canada prime rate, and act in a similar fashion to a variable rate mortgage when it comes to the interest rate.
  3. A second mortgage. If circumstances dictate that either of the first two options for a home equity loan are not possible, this is a viable short-term alternative that can get you the money you need. This is a second charge against your property that goes behind your first mortgage. From a lender perspective, second mortgages are a higher risk, and most second mortgage lenders are private lenders. Because of both of these factors, pricing for a second mortgage is substantially more expensive than a traditional institutional mortgage.

How do I get started in getting a home equity loan?

The process of getting a home equity loan is easy. I have a simple, 2 page application form to complete, after which I will go about finding you the best deal possible for your circumstances. We will get you an approval and you would just get some basic documentation to satisfy the conditions of the approval. You make a visit to a lawyer and sign the mortgage documents, and pick up a cheque.

If you need money and would like to look into home equity loan options, contact us today. We are available by phone or email, or you can fill out the simple form to the right of the page. We will be in touch with you quickly and keep you well-informed throughout the process. Contact us to get started on your home equity loan approval.