Home Equity Loans

A home equity loan is financing that is based primarily on the equity you have in your home — the difference between the value of your property and the amount you already owe against it.

Unlike a traditional mortgage, greater emphasis is placed on the property and your available equity, and less emphasis may be placed on your income or credit history. Some lenders can be very flexible when it comes to income and credit.

This means that even if your bank has turned you down because of income or credit issues, you may still have financing options if you have sufficient equity in your home.

There is no single rate for a home equity loan. The rate depends largely on how much you are borrowing compared with the value of your property, also known as the loan-to-value ratio (LTV).

The lender may also consider the location and type of property, whether the loan will be a first or second mortgage, the length of the term, and the overall risk of the application.

Generally, the more equity you have in your property, the better the rate and terms available to you. A first mortgage will also generally have a lower rate than a second mortgage.

For stronger applications with substantial equity, private mortgage rates can sometimes be only a few percentage points higher than traditional mortgage rates. More challenging situations can be considerably more expensive.

Because home equity loans can accommodate such a wide range of circumstances, rates can vary significantly from one borrower to another. Contact me for a quick estimate of the rate and terms that may be available for your situation.

In addition to the interest rate, a home equity loan will generally have lender fees, broker fees, legal costs and an appraisal fee.  In many cases, you will also be responsible for both your own legal costs and the lender’s legal costs.

The appraisal is usually the only cost that needs to be paid upfront. The other costs can often be deducted from or added to the loan at closing, depending on how the financing is structured.

Lender and broker fees vary depending on the size and risk of the loan. A first mortgage will generally have lower fees than a second mortgage, while smaller loans may be subject to minimum fees. Legal costs will also vary depending on the lawyers involved and the complexity of the transaction.

If you are uncertain how long you will need the financing, renewal costs are also important. These can vary considerably between lenders, so I take them into account when comparing your options.

What matters is not simply the interest rate or any one particular fee. It is the total cost of the financing over the period you expect to need it.

Home equity loans can be used for many different purposes. Common reasons include consolidating high-interest debt, helping a family member, investing in or expanding a business, paying tax arrears, covering major home repairs or dealing with an unexpected financial need.

The important question is not simply whether you can borrow the money, but whether using the equity in your home makes financial sense for what you are trying to accomplish.

“Home equity loan” is a broad term rather than one specific type of mortgage. Depending on your circumstances, the financing could be structured as a first mortgage, a second mortgage or another type of alternative financing.

That is why it is important that you give me the full picture of your financial situation. The more I understand about your circumstances, your goals and how long you expect to need the money, the better I can determine which options are worth considering.

Home equity loans can be expensive, so it is important to structure the financing properly and choose the right loan the first time. The lowest interest rate does not necessarily mean the lowest overall cost, particularly when lender fees, broker fees, legal costs, renewal fees and potential payout penalties are taken into account.

There are many lenders in the market, and different lenders specialize in different types of loans and borrowers. I choose to work with professional, reliable lenders who conduct their business with integrity.

My goal is not simply to find you a loan, but to find a financing solution that makes sense for your situation.

The next step is simple: give me a call or send me a note using the form below.

The home equity lending market is large, and different lenders specialize in different types of loans. Some may offer their best terms on single-family homes, while others may favour larger properties, condos, second mortgages, construction financing or commercial properties. Finding the right lender can make a significant difference in both the cost and structure of your loan.

That is where I can help. I will take the time to understand your goals, review your complete financial situation and approach the lenders that are best suited to your circumstances.

Want to see how this works in a real situation? Read one of my case studies [here] to see how I helped a client find a financing solution when conventional financing wasn’t available.

My job is to navigate the market for you and find the best financing solution I can.