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IS IT DIFFICULT TO GET A HOME EQUITY LOAN in 2020?
A home equity loan is a great way to borrow against the equity you’ve built up in your home. Against the backdrop of a robust Canadian housing market and near record-low interest rates, it continues to be an excellent time for property owners to consider taking out a home equity loan.

Common Myths about Home Equity Loans
There are many misconceptions about what a home equity loan is and how it can be used.

Myth #1: A Home Equity Loan and Home Equity Line of Credit Are the Same
A home equity loan and home equity line of credit (HELOC) might sound alike, but they are very different financial products, even though they both use the equity you’ve built up in the property.

For starters, “home equity” is the difference between the value of your home and the remaining balance on the current mortgage—every time you make a mortgage payment, your home equity increases. Your home equity also increases as the value of your home increases.

A HELOC is a revolving line of credit that lets you borrow against the equity in your home. You can withdraw money when needed, and you only pay interest on the amount you borrow.

A home equity loan works like your primary mortgage and is sometimes referred to as a second mortgage. You receive a fixed amount that is payable over a predetermined period time with a fixed interest rate and set monthly payments. You start to pay interest on the entire amount as soon as you receive the home equity loan.

Myth #2: You Can Only Use a Home Equity Loan for Home Improvements
The money you secure for a home equity loan can be used for whatever you like. Many people take out a home equity loan for home improvements, but you could use the money to buy a second property, pay for a college education, consolidate debt, or anything else.

Myth #4: Approval Is Guaranteed
Just because you have a house does not mean you’re guaranteed to get a home equity loan. A lender might approve you for a certain amount, but they could back out of the home equity loan or renegotiate the terms after they take a closer look at your financial situation.

How Do You Get a Home Equity Loan?
The requirements for getting a home equity loan can vary depending on who the lender is. The bigger the lender (i.e. Canada’s big banks), the stricter the lending rules.

Canadalend Can Help You Get A Home Equity Loan Even If:

• - You are self-employed and cannot verify your income
• - Your credit history has weakened
• - You have taken on too much additional debt
• - The value of your house has dropped

Where there is a will, there is a way with Canadalend. We don’t let the small things get in the way of making sure you get the best mortgage product at the best price.

FAQ about Home Equity Loans

Q. Is It a Good Idea to Take Out a Home Equity Loan?
A. YES! There are many advantages to taking out a home equity loan. One of the most significant benefits is the lower interest rate. If you’re consolidating debt, credit cards can charge interest as high as 30%. A home equity loan will also have a lower interest rate compared to loans that are not backed up by the equity you’ve built up in your home.

Q. Can I Get a Home Equity Loan if I’m Unemployed or Have Unreliable Income?
A. YES! If you go to one of Canada’s big banks and ask for a home equity loan while unemployed or have unreliable income, chances are you’ll get turned down. Even if you are self-employed, the big banks can discriminate against you. But not at Canadalend. We specialize in working with the employed, self-employed, even client’s that are in-between jobs.

Q. Can I Get a Home Equity Loan with Bad Credit?
A. YES! Canadalend can help you.

We work with all incomes and credit scores to help secure home equity loans for our clients. There are many reasons why your credit can take a hit, and it’s not always your fault, but banks don’t care. Even if a traditional lender does offer you a home equity loan, they won’t be giving you their best rates.

The same thing applies if you have declared bankruptcy and want to take out a home equity loan. Traditional lenders see you as being a risk and could charge you a premium for a home equity loan, but not at Canadalend.

Q. Is it true that Canadalend has access to more lenders and more products than any bank or financial institution?
YES! Canadalend has access to private and alternative lenders, banks that specialize in providing home equity loans, and even caters to those who are self-employed, have unreliable income, or bad credit.

Private lenders do not have to follow the same strict lending guideless that Canada’s big banks and trust companies do. Unlike big banks, private lenders provide you with more freedom, flexibility, and options. At Canadalend.com, we have access to hundreds of different lenders. That means we can find you a lender that will provide a home equity loan.

It’s your equity, and you should be able to take out a home equity loan on your terms. If you’re a homeowner and are looking to take out a home equity loan, contact Canadalend.com today or apply online. A Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

Apply online in 60 seconds & get approved now!
Call us for more information 905-881-0242
Canadalend.com, Helping Homeowners Get a Home Equity Loan

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A lot of Canadians are house rich and cash poor; meaning, they’re good at paying down their mortgage, but at the end of the day, don’t have a lot of disposable income. That can make it difficult for the average Canadian to come up with the much-needed funds for an unexpected expense, purchase, renovation, debt consolidation, etc.

Two of the most popular ways for homeowners with more than 20% equity in their homes to free up some cash is with either a home equity loan or home equity line of credit (HELOC). They sound alike, but they’re very different; understanding these differences will help you decide which one is right for you.

What Is a Home Equity Loan?

A home equity loan, often referred to as a second mortgage, is secured against your property. It acts like your primary mortgage and is second in line to get paid off should there be a default.

After you are approved for a home equity loan, the lender will send you a one-time lump sum payment that is paid off over a set period of time with a fixed interest rate, and predetermined monthly payments. Just like the primary mortgage, you are charged interest on the total amount of the home equity loan as soon as you receive it.

Credit Limit with a Home Equity Loan

With a home equity loan, you can borrow up to 80% of your home’s appraised value, minus the unpaid balance on the primary mortgage.1 The interest rate can either be fixed or variable. While the interest on a home equity loan is generally higher than on the existing mortgage, it is a lot lower than other types of loans.

Uses for a Home Equity Loan

Anything! It’s your money, you can use it for anything you like, including renovations, debt consolidation, paying for tuition, a wedding, investing. The sky’s the limit!

What Is a Home Equity Line of Credit (HELOC)?

Like a home equity loan, a HELOC is secured against your house and allows you to access the equity you’ve built up in your property from paying down the mortgage and as the price of the home has increased.

A HELOC is a revolving line of credit with an adjustable interest rate that goes up and down with the markets. As a line of credit, the money is deposited into an account that you can access as little or as much as you want, whenever you need it. Unlike a second mortgage, there are no fixed repayment amounts; the lender usually only requires you pay the monthly interest on the money you use.

Credit Limit with a HELOC

The credit limit on a HELOC combined with a mortgage is 65% of the home’s purchase price or market value. You can increase the credit limit on a HELOC to 80%, but only if it is combined with a regular mortgage.

Using a HELOC to Pay Down a Mortgage

You can use your HELOC for anything you like. You can even use a HELOC to pay down a mortgage. The interest rate on a HELOC is blended or the same as your usual mortgage. Because it can be blended, a lender can change the HELOC rate at any time.

Does that mean you shouldn’t use a HELOC to pay down your mortgage? Not necessarily. The interest on a HELOC might be a little higher than the interest on your mortgage, but you’re only charged interest on the amount you actually borrow from the HELOC, not the entire amount—like you are with a mortgage.

The same payment using a HELOC compared with a mortgage actually pays down more principal; the mortgage then gets paid down a little faster and with less interest.

A Home Equity Loan or HELOC: Which One Is Right for You?

That’s something only you and your lender can decide on. But there are times when one might make more sense over the other.

For example, a home equity loan might be a good choice for homeowners who need upfront money for a one-time event (renovations, wedding, etc.) and like the idea of a fixed-rate loan.

If, however, you want to have access to the money over a longer period of time, a HELOC might be a good idea. Especially if you can pay the amount you borrowed back right away; this would mitigate any costs associated with a variable interest rate.

Or, if you’re a homeowner with bad credit or only have less than 20% equity built up in your home, you might want to look at getting a home equity loan from a private lender. Private lenders do not have to follow the same strict guidelines that Canada’s big banks do. Instead of hurdles, private lenders provide you with more options, freedom, and flexibility.

Canadalend.com, Helping Ontarians Access Their Home Equity

The vast majority of Canadians have not saved up money for a rainy day. That’s why more and more homeowners are accessing the equity they’ve built up in their homes; either with a home equity loan or HELOC. And no one is better at helping property owners tap the equity they’ve built up in their homes than Canadalend.com.

Unlike the big banks, which only try and sell you their own financial products, the licensed mortgage professionals at Canadalend.com are independent. We have access to hundreds of different lenders. That means Canadalend.com can find you a lender that will provide a home equity loan or HELOC that the big banks can’t.

Apply online in 60 seconds & get approved now!
Call us for more information 905.881.0242

If you’re a homeowner and are looking to take out a home equity loan or HELOC, contact Canadalend.com today. We’ll evaluate your current financial situation and help you find a lender that can provide you with a financial product that suits your needs. Or apply online and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

Sources:

“Borrowing against home equity,” Government of Canada, January 31, 2018; https://www.canada.ca/en/financial-consumer-agency/services/mortgages/borrow-home-equity.html.

If you’re considering going to school or need an influx of cash to pay for your child’s educational expenses, you’re probably already well-aware how much it costs to go to college or university.

In Canada, tuition for an undergraduate program for full-time students is, on average, $6,571. The average cost for a graduate program is $6,907. Toss in residence and food, etc., and a four year-university degree can cost as much as $60,000.1 For a child born today, it could cost as much as $140,000 to put them through college or university.2

It’s not just a post-secondary education that is costly. If you’re thinking of sending your kids to a private school, it can cost even more. A lot of private schools have tuition starting at under $4,000 per year for elementary years. Tuition for going to a private high school, generally range from $6,000 to $12,000 per year. If you want your kids to attend Ridley College or Upper Canada College, you’ll need to come up with around $35,000 a year.

Options for Financing an Education. Whether it's through a Registered Education Savings Plan (RESP) or a Tax-Free Savings Account (TFSA), some people find it easy to set aside that kind of money for a post-secondary education in Toronto.

But not everyone.

A study conducted by the Bank of Montreal found that 45% of parents with kids under the age of 18 expect to foot anywhere from 50% to 100% of their child’s post-secondary education. But not even that will cover all the expenses. To cross the finish line, student loans and scholarships will be needed to make up the difference.3

If you’re a homeowner, you have a secret weapon that can help pay for college tuition. It’s the equity in your home. Not only can a home equity loan give you the flexibility you need to help pay for a post-secondary education in Ontario, it also provides the peace of mind you need to focus on studying.

What Is Home Equity?

Every time you make a mortgage payment, or the value of your property increases, you build up equity in your home. The longer you own your home and pay your mortgage, the higher the equity in your home is.

For example, if you purchased a home for $400,000 and it has been appraised at $500,000 and you still owe $150,000 on the mortgage, you have built up $350,000 in home equity.

If you need to come up with money for tuition costs and you have built up more than 20% equity in your property, a home equity loan may be the best route to take. Not only is the Toronto housing market solid, interest rates remain low, and Ontario’s economy is strong.

Borrowing with a Home Equity Loan

Home equity loans are secured against your property. But banks will not let you borrow against all the equity you’ve built up. The maximum you can borrow with a home equity loan in Toronto is 80% of the appraised value (minus the unpaid balance of the existing mortgage).4

Once approved for a home equity loan, the lender will give you a one-time lump sum payment that gets paid off over a predetermined period, just like your mortgage does.

Just like your mortgage, you get charged on interest on the total amount of the home equity loan as soon as the lender gives it to you. And, just like your first mortgage, with a home equity loan, you are now responsible for two monthly mortgage payments.

Does Everyone with a Home Qualify for a Home Equity Loan?

No. Just because you have a home does not mean you automatically qualify for a home equity loan. Even if you’ve built up considerable equity in your property, Canada’s big banks might think there’s a good chance you’ll default on a home equity loan.

Why would big financial institutions do that? Maybe things have changed since you qualified for your first mortgage. If you’re now self-employed and cannot verify your income, it will be difficult to get a home equity loan.

If your credit has taken a hit or taken on too much additional debt, major lenders might turn down your request for a home equity loan. On top of that, Canada’s new stricter lending rules have made it much more difficult for the average home owner to secure a home equity loan.

If, for some reason, the value of your property has dropped, the equity you’ve built up in your home will have shrunk, further diminishing the chances of getting a home equity loan.

Canadalend.com, Helping Ontarians Access Their Home Equity

Unfortunately, the cost of living and unexpected expenses mean most Canadians have not saved up enough money to pay for a post-secondary education; whether it’s for their kids, grandkids, or themselves. If you’re a property owner, Canadalend.com can help you get a home equity loan with the best terms and conditions.

How can Canadalend.com provide better service and options that Canada’s big banks? Big banks will only try and get you to buy one of their financial products, whether it’s in your best interest or not.

Because the licensed mortgage professionals at Canadalend.com are independent, we have access to literally hundreds of different lenders. Many are non-traditional lenders that are not regulated by federal or provincial regulations.

If you’re a home owner and are looking to take out a home equity loan to help pay for tuition, or any other reason, contact Canadalend.com today. We’ll evaluate your current financial situation and help you find a lender that can provide you with a financial product that suits your needs. Or apply online and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

When your finances do not measure up to the standard requirements of being pre-approved for a mortgage, some people may not know where to turn. Acquiring bad credit can be detrimental to various aspects of your life, but especially when striving to obtain a home equity loan.

Although individuals with bad credit may not qualify to go the traditional route with a large bank, there are mortgage brokers, financial institutions and private lenders who work with people in these specific circumstances. They offer enhanced flexibility and freedom, in fact.

It is recommended to check your credit score before seeking a mortgage or home equity loan if you are worried that yours may be low; this can be done free of charge in Canada through TransUnion and Equifax, as well as some newer service companies like Mogo Mortgage and Borrowell. Someone with bad credit typically has a credit score below 600 out of a possible 900 (the lowest is 300).

While technically considered average, a score between 600 and 700 can be eligible for a bad credit mortgage if an individual has solid income sources—which is more difficult for those who work on commission or work for themselves, but still possible to determine a projection of how much you will make based on your averages.

A reputable lender can provide a bad credit mortgage or home equity loan despite their client having a lower credit score. However, it is equally important for that individual not to look far beyond one’s means for a home to avoid being unable to make mortgage or home equity loan payments moving forward.

Someone with bad credit must have solid approval of their property to assure it is in average to good condition. Although individuals can still obtain a bad credit mortgage, they may be sanctioned with greater interest rates and extra fees from lenders and mortgage brokers as a result. Whether good or bad, a person’s credit is considered a direct reflection of how risky they are considered to loan money to.