What is it? And can it help you?
Home equity loans are loans that are mainly qualified based on the equity in your home. It places a lot less emphasis on your credit condition or your income level. In fact some lenders do not look at credit and income at all. So your bank may turn you down, but if you have enough equity then you can get a home equity loan.
How much equity do you have?
For instance, if your home is worth $500,000 and you owe the bank $100,000. You have $400,000 of equity. That is, if you sold your home and paid off the bank, you would have $400,000 in your pocket. However, you don’t want to sell your house. You want the house to continue to appreciate but you want to get some of that equity to use? Well, you need a home equity loan if you want to use the house as collateral and your income and/or credit condition does not allow you to qualify at a bank.
Is the rate a lot more expensive?
The rate varies based on how much you are borrowing relative to the value of your home. The higher the amount, the higher the rate. In 2020, the rate starts at 4.99% for a first mortgage and 7.99% for a second mortgage. This seems more expensive then the average mortgage rate, but when you compare it to certain business loans for example, it is very cheap. So it really depends on what you need the money for.
What can I use the money for?
Basically, you can use the money for anything you wish, but common reasons for home equity loans are:
consolidating debts – using a home equity loan to pay off higher interest rate debts like credit cards can save you a lot of money in interest. It also allows you to have more money each month because a home equity loan consolidates all the debts into a smaller monthly payment;
starting a new business – because it is difficult get a business loan and often the rates are much higher;
building a new home – because conventional construction mortgages are very difficult to get;
investing – depending on your expected return, a home equity loan can be part of your financial planning;
helping out family members, dealing with household emergencies and relieving various cash flow issues.
What do I need to do?
All you need to do is to call 604-831-4437 and ask for John to get the process started. There are many equity lenders out there and their rates and terms can differ greatly. Here is where the help of an alternative lending specialist is crucial in getting the right loan and saving you headaches and money at the same time. And consultation is always free and confidential.
Regardless of your financial situation, if you are looking for a home equity loan, contact us today to see what your options are.
Related:
The cost of a home equity loan
Alternative Lending.ca helps people get mortgage loans outside of the bank. We are non-bank lending experts. This means we are also experts in second mortgages, home equity loans and private lending. Though our office is in Vancouver, we can help individuals in all parts of BC and various locations in Alberta, Manitoba, Saskatchewan and Ontario. If you have any questions please call 604-831-4437 or contact us here.