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When the time comes to consider a secondary loan, it may be worth considering your home equity position. Equity builds up in your home, or other property, over time, as you pay off a loan secured on it. This equity is the percentage of the property you own through repayments of the first loan.

It has become increasingly popular for borrowers to utilize this equity as a form of guarantee on a second loan. Home Equity Loans can be used for a variety of reasons. Depending on what you want, the loan is for will determine what type of home equity loan you should be considering.

Home Equity Loan

The standard Home Equity Loan (HEL) works much like a regular loan. You and the lender agree on a schedule for repayments along with interest rates, penalties, etc. On the whole, you may find the interest rate on a home equity loan is slightly higher than a standard loan. This is because it is the second loan on the same property. In the event of your bankruptcy, the first lender will be paid first from the sale of your estate. If there's nothing left after that, the second lender doesn't get paid.

To minimize the potential for paying a higher rate, borrowers are best advised to shop around. The major banks are a good place to start, but it’s also worth seeing what an alternative lender might have to offer. They can often equal, if not beat, bank rates and can be more flexible on terms, fees, and penalties.

Home Equity Loans are often used as a way to pay bills. If this is the case for you, keep in mind that most banks will want to see a good credit score and predictable future earnings.

Home Equity Line of Credit

A home Equity Line of credit functions in the same way as a HEL, the equity in your property determines how much you can borrow. However, instead of the loan amount being made available to you as a lump sum at the start of the schedule, it instead forms a pool of money you can draw from.

This form of loan is particularly useful for borrowers that want to undertake a period of repairs to their home. This may be part of ongoing regular maintenance and upgrades, or it might be in the year or so before putting a property up for sale.

Having a pool of money that you can borrow from as and when you need to allows borrowers to plan with confidence without the worry of how they will pay any particular bill for works as and when it comes. They can simply release funds from the line-of-credit pool, and know they're not going to overspend the initial borrowing figure.

Home Equity Lenders

As previously mentioned, Home Equity Lenders can sometimes get the worst part of a bankruptcy situation. When dealing with banks, their inclination is to penalize the lender with higher rates. This is their way of protecting themselves against the worst, even if it doesn't happen.

Many Canadians who take out Home Equity Loans find a better deal through alternative lenders such as credit unions or other financial institutes. The advantage of these lenders is their flexibility, where banks tend to lean towards rigidity. The downside? There are only a few major banks; there are a lot of alternative lenders.

At Canadalend, our independent experts have access to hundreds of different lenders and their financial products. Unlike advisors at a bank, they don't get incentivized to sell you a certain product. Their sole concern is finding the lender and product that meets your needs, whether that's a Home Equity Loan or a Line of Credit.

To find out how you can make your home equity start working for you and your future, contact Canadalend.com today and talk to one of our experts.

With the country still dealing with the COVID-19 pandemic, it is getting increasingly difficult for Canadians to meet their monthly financial obligations. Working through a job loss or reduction in hours has affected many of us, and government funded programs – like the Canadian Emergency Response Benefit (CERB) – can only cover so much. Households are finding it tough to keep food on the table, let along pay down their mortgages and other high-interest debt, such as credit cards.

Homeownership at times like these have its benefits. You can use the equity you have built over the years to consolidate some of your high-interest debts into one, easy to manage monthly payment. Even in a risky financial climate, like this one imposed by COVID-19, you can pay down your debts as well as cut down your overall monthly expenses. Interest rates are also currently at a record low, so it has never been a better time to start looking into consolidating outstanding debt. 

What Is Home Equity & How Can You Access It?

The difference between the current value of your home and the unpaid balance of your mortgage make up your Home Equity. Over time, your equity grows as you make more and more of your mortgage payments, and the percentage of ownership rises. Other factors, such as market activity, can also substantially increase the amount of equity that you have access to and can leverage. 

Homeowners looking to access their Home Equity have two options for financing: A Home Equity Loan or Home Equity Line of Credit (HELOC). A Home Equity Loan, or Second Mortgage as its often referred to as, allows you to withdraw a lump sum of money based on your available equity. You would then make monthly payments at a locked interest rate until the time of renewal. This is great if you are looking for a larger sum of money – anywhere from $20,000 to even a $1,000,000 depending on the home value.

If you choose to refinance, or take out additional equity, can use this extra money for anything from debt consolidation, investments, home renos, education, or other life expenses.

Borrowers looking to access their available home equity also have the option to pursue a Home Equity Line of Credit (HELOC). This allows you to withdraw cash from the line of credit and repay it as you find necessary, as long as the minimum monthly interest payments are made. You do not need to take out the whole line at once, it can be used more like a credit card, but at much lower interest rates. Like Second and Third mortgages, homeowners with multiple high-interest credit card debts, or high-interest loans find HELOC’s very appealing. This ability to allow the borrower to pay only one interest-only payment, at a much lower interest rate, can make monthly financial obligations much more manageable. 

Advantages Of Consolidating Debt Through A Second Mortgage or Mortgage Refinance:

Increased cash flow: Multiple high-interest debts consolidated into one lower interest rate can increase your available monthly income and help you save money over time.

Customized financial plan: Our Mortgage Professionals can help you create a loan and debt repayment plan, spread over a 2-5-year period, to help reach – and maintain – your financial goals.

Streamlined payments: Multiple larger monthly payments can be combined into one single lower monthly payment with a lower interest rate that can help you pay down your debts faster.

Credit score: Individuals with a poor credit score can qualify for a second mortgage. This can help Borrowers to pay off their high-interest debts and start rebuilding their credit. When applying for a future mortgage or refinance, these factors can make all the difference.

Principal repayment: When individuals are forced to pay off high levels of credit card debt using only their income, they are often not able to pay the whole sum. Instead, they are left paying the minimum payments which often pay solely for the interest itself. This endless loop can leave someone in a great deal of debt, stress, and substantially limit their financial standing. A Second Mortgage, or HELOC, can allow you to pay the total sum of your credit card debt and only worry about making the appropriate monthly payments.

As you can see from the examples above, tapping into your home equity through a Second Mortgage, or Refinance, can be quite advantageous. A Private Mortgage is also a great option for potential borrowers with bad credit that are worried about the often complicated approval process. Since homeowners are using the equity built into their home, they are seen as less of a risk to potential lenders. The application process becomes much quicker and more streamlined. Home Equity Loans can also be very beneficial to self-employed individuals who have a difficult time with reportable income.

If you are interested in accessing your home equity and consolidating your high-interest debts, the trusted Mortgage Brokers at Canadalend can help get you approved quickly and easily. With access to a very large pool of private lenders, banks, and credit unions, Canadalend will work tirelessly to get you the best mortgage rate for your individual needs.

Call Canadalend today at 905-881-0242 or email us at info@canadalend.com to speak with an experienced Mortgage Broker who can help you get out of debt faster.

A home can be a great place to live as well as a valuable asset. Being one of the larger investments one can make, if you are in need of cash, your home can be used to secure funds for a range of financial situations. This is usually done by homeowners looking to take out a home equity loan or refinancing their current mortgage.

What is a Home Equity Loan?
A Home Equity Loan can also be seen as a second mortgage. These are great when you are looking to update your home through renovations or pay off outstanding high-interest debts from credits cards or car loans.

In order to be eligible for a home equity loan, you need to have paid down some of your mortgage. The difference between the appraised value and the amount left on the mortgage make up your home equity. Even if you just started paying down your mortgage, you could have a few thousand dollars of equity available.

Why a Home Equity Loan?
Home Equity Loans have very low interest rates compared to other unsecured loans. In most cases, it would cheaper to get one for your next car rather than financing through the actual dealership. If you are stuck paying high-interest credit cards, using a Home Equity Loan to consolidate will not only get the debt paid quicker, you could save thousands in interest.

What Does It Mean to Refinance Your Home?
By Refinancing your mortgage, you are essentially negotiating a new loan – usually with better rates and terms – to pay off your existing mortgage.  

Why Refinance Your Home?
There are several reasons why someone would want to refinance their home.

• To make the payments easier. If you are able to get a better interest rate, your monthly payments drop.
• To change the terms of the loan. For example, a mortgage term can last up to 30 years. If you wanted to pay it off sooner, you could refinance to a 15-year term at better rates.

How Should You Choose?
The best way to sort out your options is to speak to a licensed mortgage professional from Canadalend.
He or she can talk to you about your options and what your payments are going to look like so that you can make an informed decision that works best for your situation.

For more information call Canadalend.com today or better yet, Apply Online and one of our Agents will contact you!

With the current record-low interest rates, borrowers and homeowners find it more beneficial than ever to refinance. Even with a reduction of half a percent, Refinancing could save you thousands over the life of your term!

With the lower monthly payments and increased savings over time, even the smallest drop in your mortgage rate can be felt almost instantly. Depending on the size of your mortgage, Refinancing can free up hundreds of extra dollars every month to not only alleviate financial stresses but also make your payments easier to manage. 

While the instant savings is a great reason to refinance, the advantage comes from what you can do with those savings. Many homeowners find that Refinancing has helped them with much-needed home repairs or renovations, even business investments! Every dollar you save is one less that you need to pay the bank, and if you choose to invest, the combined savings and extra investment income could mean tens of thousands added to your portfolio.

As the months go by, and the equity in your home grows, you become eligible for a Home Equity Loan. Like Refinancing, you can tap into your equity to unlock funds for all of the above reasons, but at much lower rates. For example, if you take out a Home Equity Loan to upgrade your home, by the time you have paid it back, your home will have generally gone up in value because of it.

Again, there are many compelling reasons to take advantage of refinancing your mortgage. Everything from home repairs to monthly mortgage payments could be costing you more the longer you wait to get them done. There is no time like the present to start doing today what will benefit you tomorrow. 

Don’t worry; you won't be doing this alone. Either call today or Apply Online for a free consultation. One of the mortgage experts at Canadalend will walk you through the entire process and answer any questions you may have around mortgage refinancing and the equity available in your home.