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Each time you contribute to paying off your mortgage, the equity in your home continues to add up, meaning you technically own increasingly more of your house over time.

The best way to figure out the amount of equity in your home is to determine your home’s current market value, and then subtract the amount you owe on your mortgage. So, if, for example, you have a home worth $550,000 and have $250,000 remaining on the mortgage, your equity would be $300,000. It is important to grasp how home equity works to understand how to utilize this equity to your advantage.

One of the main ways to benefit from considerable equity in your home is to take out a home equity loan, which is also often referred to as a second mortgage.

With a home equity loan, it is possible to cash out 80% to 85% of the equity you have in your house, thus receiving a lump sum. This is a fixed rate loan that uses your house as collateral, and generally requires that you pay it back over a period of 5, 10, or 15 years.

How to Plan for the Future by Using Your Home Equity Loan as a Retirement Income Source

There are a number of different ways that a home equity loan can be used, such as to consolidate debt, pay for another property or for renovations to an existing property, or pay for your children’s university education.

However, another way to leverage a home equity loan for your benefit is by utilizing it to improve your financial security in retirement. After you retire and your main source of income no longer exists, it is crucial to be fully prepared financially to continue living comfortably without running out of money. One potential way to do that is by accessing the equity in your home through a home equity loan.

Everyone takes a different approach when preparing for retirement. Although consistently putting away money throughout your career to build up your savings and benefit from compound interest will definitely give you an advantage, not everyone can take this approach.

In fact, many people struggle to save any money at all, or they burn through their savings before reaching retirement due to unforeseen expenses. Fortunately for homeowners in such a predicament, this shortfall can be rectified with a home equity loan.

Other Ways to Access Home Equity in Retirement

If you have examined the numbers or have spoken to a financial advisor about your situation, and they have helped you to see that your income after retirement will not be sufficient, then it is a good idea to start looking into ways to access your home equity.

Aside from a home equity loan, there are other approaches you can take to tap into your home equity for retirement. The method that is best suited for you will depend on the specifics of your situation. The following are some of the other potentially viable options that you may have:

A Home Equity Line of Credit

Another way that you can utilize your home equity to stabilize your finances after retiring is by taking out a home equity line of credit (HELOC). This will provide you with a line of credit that you can tap into whenever you need, rather than a lump sum payment.

Most of the time, you can continue to draw from this line of credit for a defined “draw period,” which usually lasts about 10 years. As well, you do not have to pay back any of the money that you borrow until after this period has ended.

Generally, HELOCs are variable rate loans. This means that the interest you will be charged on the portions of the line of credit you use will be determined by the movement of the underlying benchmark index that your lender uses.

Although a HELOC is especially worth considering if you have a big expense or costs that suddenly arise in your retirement (and you want more flexibility), if you have planned expenses in your future, such as a home renovation, it may make more sense to choose a home equity loan.

A Reverse Mortgage

While reverse mortgages received a bad reputation in the past as a carefree or risky way to access cash, the market for this type of loan is different these days. As rules and regulations have been set in place, this has become yet another good method for generating income in retirement.

This loan also involves borrowing money in such a manner that uses your home as collateral. However, rather than making monthly repayments, interest and fees continue to add on every month, and the loan must be repaid when you no longer live in the home.

Since there are many specific requirements and details that pertain to a reverse mortgage, it is a good idea to speak to a financial planner about the particulars of what you must and must not do before taking this route to access your home equity.

How Canadalend Can Help You Secure a Home Equity Loan

If you would like to protect your financial well-being in retirement and you are interested in accessing your home equity in Ontario to make that possible, Canadalend would be happy to help you in this potentially confusing and complicated process.

We understand the importance of having financial security, and we fully grasp the ins and outs of accessing home equity to establish such security. Thus, it is our goal to aid our clients throughout this process in order to provide them with everything they need.

Unlike the big banks, we do not fuss over matters such as your citizenship, credit history, or income level, as all we are focused on is your home value and your outstanding loans.

We can simplify the process of accessing the equity in your home that you deserve to receive so that you can get your finances in promptly and without unnecessary delays.

Our experienced in-house team can provide as much help as needed if you are uncertain about what direction to take in order to tap into your home equity, and will base our guidance on the specifics of your personal circumstances.

We can help you secure a number of different loan types, including a home equity loan, a HELOC, or a reverse mortgage.

For more information about how we can help you access your home equity in Ontario, or to learn more about the various other types of loans that we are equipped to assist you with, call Canadalend at 1-844-586-0713 or contact us here.

Did you know that it is possible to access the equity you have built up in your home as you have paid off your mortgage over time?

It’s true! Whether you are looking to do some home renovations, purchase a new vehicle, enroll your child in university, or consolidate your debt, having a considerable amount of cash is likely going to be key.

One way of securing that money is through a home equity loan, which makes it possible to tap into the equity you have amassed in your home while you have an active mortgage loan.

This loan could come in many forms, such as a closed second mortgage, which involves receiving a lump sum of cash that you must pay back in increments over a set period ranging from 5 to 15 years, along with interest.

Another common type of second mortgage is a home equity line of credit (HELOC). This works like a credit card, as it is a revolving loan that allows you to draw from your loan whenever you need, pay it back, and then continue to draw from it over time.

Since second mortgages are secured loans, meaning they use your house as collateral, their interest rates tend to be much lower than unsecured loans.

What effects can a home equity loan have on your credit score?

Although a second mortgage has a variety of potential benefits, it is essential to have a complete understanding of such a loan before you apply for one.

One factor that is particularly important to know is the impact that a home equity loan could potentially have on your credit score. The following are a few of the main ways that applying for and receiving a home equity loan could affect your credit score:

1. The impact of credit inquiries

Any time you apply for some type of credit, whether a credit card, a loan, or another form, it is standard practice for the creditor to perform a hard credit inquiry into your credit history. Each of these inquiries can, unfortunately, result in your score dropping.

The specific amount of points that your score will drop due to such an inquiry will ultimately depend on your credit profile. Most of the time, though, your score will only decrease by five points or less.

It is necessary to keep this in mind if you intend to get quotes from several lenders, as having multiple inquiries could substantially impact your score.

However, if you decide that shopping around for lenders is worth taking this hit, do your best to meet with these lenders in close proximity to one another, as inquiries for the same type of loan made within 14–30 days are generally classed as one inquiry instead of as several separate ones. Thus, the impact on your credit score can be kept to a minimum.

2. New credit lowers your score

Taking out a loan like a home equity loan will appear on your credit report as a new credit account. When a new credit account is added to your report in this way, it generally affects 10% of your FICO credit score, which is the most widely used credit scoring model. Most of the time, this will cause your credit score to drop.

Fortunately, as your loan ages, your score will recover over time. Still, it is good to be aware of this impending drop following the approval of your loan so that it does not come as a surprise.

3. Your credit mix will change

When it comes to credit, the ideal situation is for your credit report to show a mix of different loans and credit cards because lenders like seeing that you can successfully handle multiple forms of credit.

The variety of credit that is included on your credit profile is known as your credit mix, and this determines another 10% of your FICO credit score. If, prior to your home equity loan, your credit mix is primarily or solely composed of credit cards, adding a home equity loan will improve your mix and may even consequently boost your score.

4. Consolidating credit could be advantageous

A big determining factor in how taking out a home equity loan affects your credit is what you use this loan for. One of the most common reasons that people get such a loan is to consolidate debt.

If this is how you decide to use the money from your home equity loan, it could have a positive impact on your credit score.

Since your credit utilization, which is the amount of available credit that you use, makes up 30% of your FICO score, consolidating credit card debt and getting rid of the balances owing on your revolving credit will likely cause the score to rise.

5. Boost your credit with on-time payments

The most significant impact on your credit is whether or not you pay off your debt with on-time payments, as this makes up 35% of your FICO score. Therefore, if you continue to pay your home equity loan on time each month over the course of its lifetime, you will generate a positive payment history. In turn, this will have a positive effect on your credit score.

How Canadalend Can Help You Protect Your Credit While Securing a Home Equity Loan

If you would like to benefit from 5-star customer service while securing a home equity loan for you to use however you please, Canadalend has you covered.

Not only will you have access to great rates when you secure a home equity loan through us, but you will also have access to a team of skilled and experienced industry experts who can offer you extensive guidance and support throughout the process.

After discussing your personal needs and financial factors with you, we will do our best to find you a home equity loan agreement that will serve your unique requirements.

Unlike most big banks, we do not focus on a long list of different factors, such as your citizenship, credit history, or income level, before issuing a loan. Rather, we concentrate primarily on your home’s value and outstanding loans.

With this approach, it is much easier to speed up the loan process so that you can gain access to the equity in your home quickly. Our licensed mortgage professionals make the lending process incredibly transparent and easy to follow so that you can progress through it with complete comfort and peace of mind.

For more information on how we can help you secure a home equity loan that will meet your needs, or to learn more about the other types of loans that we offer, call Canadalend at 1-844-586-0713 or contact us here.

Due to fluctuations in the housing market, the value of your home is likely always changing. Depending on how long ago you purchased it, the price you paid may be drastically different from what it is worth now.

To best determine the present value of your home while taking a wide number of factors into consideration, it is necessary to have a home appraisal performed. This is an unbiased estimate of the property’s value conducted by a licensed or certified appraiser.

In order to form this estimate, the appraiser must visit your property and go through several important steps as they formulate their evaluation.

In most cases, one of the first things that the appraiser will do is inspect the property to determine its condition, size, layout, and any unique features. During this inspection, they will compile a collection of photographs, measurements, and notes.

Next, it is necessary for the appraiser to do some thorough research into comparable properties (comps) in the area that have either recently sold or are currently on the market, focusing specifically on properties of a similar size, age, location, and condition.

The appraiser can then use a combination of the data they gathered during their inspection and the information they gleaned from their market analysis to determine an estimated value of the property.

Is a home appraisal necessary to secure a home equity loan?

If you are interested in tapping into the equity that you have amassed in your home as you have paid off your primary mortgage over time, applying for a home equity loan is the best way to do that.

A home equity loan can free up a significant amount of cash, which you can leverage for various reasons, such as consolidating debt, paying for home renovations, or funding a university/college education.

In order to secure such a loan, though, there are certain hurdles that you must first overcome, such as a home appraisal. Similarly to when you first purchased your home, it is standard for a home equity loan process to involve an appraisal of the property’s value.

After all, the amount your home is worth is a major factor in determining the size of the loan you are eligible for.

For a lender to assess the maximum amount they can loan you, they must multiply your home’s current value by 80%, as this is the combined maximum allowance for a mortgage loan that you can obtain according to Canadian laws. Then, they will subtract this figure from the owing amount you have remaining on your primary mortgage.

Are there alternative ways to determine the value of your home when applying for a home equity loan?

Most traditional lenders will require that you have a professional appraisal done to determine the market value of your home so they can ensure that the loan amount matches up with your property’s worth and their risk tolerance.

That being said, if you choose a less traditional lender when applying for a home equity loan, they may be willing to accept an alternative means of determining your home’s value without a complete appraisal process. However, such alternatives may come with limitations or conditions that are crucial to understand.

The following are some of the potential alternative ways of assessing your home’s value that a lender could accept:

1. An automated valuation model

Certain lenders may use an automated valuation model (AVM) to estimate your property's value, which uses data algorithms and an analysis of public records to generate this conclusion.

Although AVMs are much faster than traditional home appraisals (and less expensive), they may not be as accurate. Thus, the estimate generated by this type of model could end up being much lower or higher than your home’s actual value, which could lead to various issues with your home equity lending process.

2. A desktop appraisal

Another method that a lender may accept is a desktop appraisal. This process still requires that you hire a professional appraiser. However, the main difference is that they do not actually visit your property to conduct a physical inspection. Rather, as a part of this process, the appraiser will use photographs, data, and other information to remotely assess the value of your property.

Although this option is faster and cheaper than a full traditional appraisal, desktop appraisals are also susceptible to evaluation errors since they are nowhere near as comprehensive and could miss out on some of the nuances of your property.

3. Loan-to-value ratio

Instead of a full appraisal, some lenders may be okay with relying on a determination of the loan-to-value ratio instead. This is the ratio of a loan to the value of the asset purchased. To determine that value, various means can be used, such as tax assessments or recent purchase prices.

Yet again, while this method may simplify the process of determining your home’s value, it leaves a lot of room for important factors to be left out and should thus be used cautiously.

How Canadalend Can Help You Secure a Home Equity Loan

Whether you would like to consolidate debt, purchase a new home, start a home renovation project, or put your kids through school, gaining access to the significant chunk of money that a home equity loan can amount to can certainly help you meet your goals. Fortunately, Canadalend can assist you along the way.

Our team of licensed mortgage professionals understands that the process of applying for such a loan can often be rather overwhelming, which is why we are here to help you every step of the way.

We would be happy to answer your questions or concerns about the process, and could offer you some advice that is tailored to your personal financial situation and goals. We offer a range of financial solutions that are sure to suit your needs and will work with you to ensure you get the best rate for your home equity loan.

We are dedicated to top-quality customer service, which is why we even offer free personal consultations. If you want to secure a home equity loan without having to face all the challenges of this process on your own, our services are the answer.

For more information on how we can help you secure a home equity loan, or to learn about the requirements we have for home equity loans, call Canadalend at 1-844-586-0713 or contact us here.

Do you have a home with a primary mortgage that you have been paying off for some time and are looking for a way to access a significant sum of money to cover some upcoming expenses? If so, a home equity loan, also commonly referred to as a second mortgage, could be the perfect solution.

This type of loan allows you to access the equity built up in your home over time. If approved, you could receive a lump sum of cash that you could use for anything you want, such as home renovations, medical expenses, and debt consolidation. With a home equity loan, you can borrow up to 80% of the appraised value of your home, minus any outstanding debt you have.

As with a primary mortgage, if you want a home equity loan, you must apply and qualify for it. Once you receive the loan, you will need to repay this amount with either a fixed or a variable rate of interest over a set term. It will be your responsibility to simultaneously make regular payments on both your first and second mortgages.

What are the steps of a home equity loan application process?

If you have a decent amount of equity in your home, you can access a serious chunk of cash with a home equity loan. Before you receive that money, however, you must first go through a loan application process that is similar to the initial mortgage loan application you went through when you first purchased your home.

This process consists of various steps and involves your home equity loan broker doing an investigation into you and your finances to determine your eligibility for the loan and to figure out the size of the loan you qualify for. The following are some of the most common steps of the home equity loan application process:

1. Identity and proof of ownership verification

When applying for a home equity loan, one of the first steps involves verifying your identity and proving ownership of your house. In Canada, you must be 18 years old to receive a loan. You must also have citizenship or permanent residency in the country, which can be verified by providing a valid form of ID, such as your driver’s license or passport.

Since a home equity loan necessitates that you own a home, you will have to prove this by providing evidence such as the property title and/or utility bills with your name and the address of the property on them.

2. Property insurance verification

Another matter that most lenders will want to examine before approving you for a home equity loan is whether your property has sufficient property insurance. If your lender requests such verification, you can simply provide them with a copy of your home insurance policy.

Verifying that you have such insurance and that your policy is extensive enough gives lenders more peace of mind in knowing their investment will be protected if your home is damaged or destroyed.

3. Mortgage payment history verification

One more thing that your mortgage lender will likely want to verify before moving forward with your application process is that you have paid at least 25% of the property off. This is typically necessary to qualify for such a loan. You can prove that you have done this by allowing your lender to review statements of your mortgage balance.

4. A home appraisal

Once the factors mentioned above have been verified, one of the most important steps of the home equity loan application is getting your home appraised. Since it is necessary for the lender to know the current value of your home to determine the amount of money you are eligible to receive via a home equity loan, this step is a must.

In most cases, a home appraisal will involve an official home appraiser visiting your property for an hour or two to thoroughly inspect both the interior and exterior, measure the square footage, and evaluate the home’s various features before comparing your house to homes of a similar size and style that have recently sold in the area.

5. Income and employment verification

Another critical step in your application process deals with income and employment verification. In order to verify your current income and employment status, the lender will likely request recent copies of your bank statements, pay stubs, and tax returns. If there are multiple names on the deed of your home, the home equity loan broker will require such documentation from all parties.

6. A credit check

One more step that is usually part of a home equity loan application process is a credit check. Your credit score and credit history will provide a good indication of how likely you are to pay back the money they lend as agreed.

Therefore, when you apply for a home equity loan, the lender will pull your credit report and check if you have a history of making late payments or defaulting on loans. Generally, your credit score will need to be at least 620 in order for most lenders to consider approving your application.

How Canadalend Can Ease Your Home Equity Loan Application Process

The steps outlined above are followed by most traditional lenders when it comes to home equity loan applications. However, if you are looking for a home equity loan broker to help make this process quick and painless, Canadalend can help.

Unlike most major banks, we do not have a long list of different factors when considering our clients’ eligibility for a home equity loan. We do not focus on aspects such as citizenship, credit history, or even income level. The only factors that matter to us are your home’s value and your outstanding loans.

Since we do not fuss over all the details that most other lenders do, we keep the home equity loan application and approval process easy and streamlined. This way, you can unlock the equity in your home and access the funds you need much faster.

Our licensed mortgage professionals will gladly take the time to go over every aspect of the home equity loan process with you to ensure your understanding each step of the way.

In addition to working closely with you to make sure the loan is tailored to your specific situation in terms of the amortization period, interest type, and repayment plan, we will also keep things transparent by ensuring you are fully aware of any potential costs or penalties you can incur based on your loan’s terms and conditions.

For more information about why we are the best home equity loan broker in Ontario, or to learn more about how a home equity loan application works with us, call Canadalend at 1-844-586-0713 or contact us here.