Home Equity Loan Toronto
As a homeowner in Toronto, you don’t have to settle for high interest loans and credit cards if you are looking to borrow money. Home values in Toronto have skyrocketed over the last several years, and that means you’ve been accumulating a lot of equity in your home. When you need to borrow money, why not do it in the form of a home equity loan? The application process is easy, and interest rates are low.
What is a home equity loan?
A home equity loan (sometimes referred to as a second mortgage) is a loan that you take out against the equity in your home. Most lenders will let you borrow up to 80% of your home equity. So this means if your home is worth $500,000 and you still owe $200,000 on it – you have $300,000 in equity and could potentially borrow up to $240,000.
You would then make regular payments on your home equity loan (just like your mortgage) until it is paid off or renewed. It is important to note that a home equity loan should not be confused with a home equity line of credit which works more like a credit card as it is a revolving line of credit.
Unlike other methods of borrowing against your home equity – such as mortgage refinancing – a home equity loan does not require you to break your current mortgage and there is therefore no financial penalty when you get a home equity loan.
Why should you choose a Home Equity Loan in Toronto?
There are many reasons why Toronto homeowners choose home equity loans. For those that need to borrow large sums of money, these loans can be a great resource if you are making home renovations or need start up capital for a business. Really however, the money can be used for any purpose that you wish – as long as you have sufficient equity in your home, it is there for you to borrow against.
They are also popular with people looking to consolidate higher interest debt into one easy to remember and low interest payment.
Toronto homeowners typically choose home equity loans for these purposes because:
- They are low interest.
- Allow you to borrow a large sum of money.
- The application process is simple.
- You don’t need to have perfect credit to qualify.
How to get the best rates for Home Equity Loans
Although interest rates on home equity loans are low, you are going to find that some lenders have better rates than others. To get the best rates you will need to get a loan from an “A” lender or a traditional lender such as a bank or credit union – and to do this, you will need to have good credit.
But regardless of your credit score, you will only get the best rates for your situation by working with a professional mortgage broker. This is because mortgage brokers work with literally dozens of different lenders and will be able to find the best deal for you.
Even if you have good credit and find a great advertised rate, chances are you will still do better when you work with a mortgage broker as they can often negotiate even better rates than what are advertised.
How to get Home Equity Loan even with bad credit?
One of the nice things about a home equity loan is that you can get them even if your credit isn’t perfect. Your mortgage broker works with a number of alternative and private lenders – many of whom specialize in helping people who have damaged credit.
Although these alternative lenders have slightly higher interest rates than traditional lenders, getting a home equity line of credit with them can still be a good idea – particularly if it is an alternative to a higher interest loan or if you are using the home equity loan to consolidate debt.
Advantages of Using a Mortgage Broker for Home Equity Loan
As mentioned, if you are considering getting a home equity loan, it is highly advisable that you work with a professional mortgage broker who can help you with the process. The advantages of working with a mortgage broker include:
- They can help you determine if a home equity loan is really the right product for you (in some cases another strategy like mortgage refinancing or a home equity line of credit might be more appropriate).
- They can compare lenders to help you get the best rates and terms for your home equity loan.
- They can help you with the application and any documentation you might need in order to apply..
- They can answer any questions you might have about your home equity loan.
Contact us today!
Are you interested in learning more about a home equity loan? If so, contact us today in order to speak to one of our brokers in Toronto.