Home Equity Loan
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What is a Home Equity Loan?
For many Canadian homeowners, one of the best ways for them to obtain a sizable mortgage at a low-interest rate is to borrow against their home equity, because one’s home is considered as the most valuable asset, and getting a loan from your home equity can help you finance your investments. Using your property as collateral to guarantee the loan enables the person to borrow a substantial amount of money, and the best part of it all is that the interest rates are very low. It is much lower than the interest rate on credit cards or other personal lines of credit.
Selecting the right lender for a home equity loan is a stressful and complicated process; that is why at Harpreet Puri Mortgage, our team will determine the right loan that suits your needs. Contact our team today to find out more details or for further enquiries.
How It Works
Why should one choose a home equity loan?
If you have a poor or a low credit score
Individuals with a low or poor credit score due to economic troubles or the recession can still qualify for a home equity loan instead of other types of loans. For borrowers that find it extremely difficult to borrow money or looking for a loan with a lower interest should consider getting a home equity loan.
Option to consolidate high-interest debt
If you are an individual carrying debt with a high-interest rate, you can take out a loan based on your home equity and save a lot of money on interest if your credit score is decent. This will allow you to pay off your debts quicker.
You are eligible for a tax deduction
Another significant benefit of choosing a home equity loan is that the interest you pay on the home equity loan can be tax-deductible. You have to check with the advisors at Harpreet Puri Mortgage.
If you want a lower interest rate
One of the main reasons to choose a home equity loan is that banks and other financial lenders approving loans based on one’s home equity guarantees them the surest return, including offering the clients the lowest interest rates to other loan options. If your interest is high on your credit card debt, you can refinance your high-interest credit card debt with a home equity loan as the rare low and tax-deductible.
You want to borrow a substantial sum of money
It does matter if the borrower has an excellent credit score and they are looking to take a loan against their property's valuation to obtain a large sum of money. If you find yourself in a position that needs to borrow a substantial amount of money, a home equity loan is a fantastic option for you to opt for.
How to get the best rates for a home equity loan?
- Ensure that you are taking out the loan for the right reasons, such as home renovations and improvements, student loans, etc.
- Try to maintain a good credit score. Before applying for a home equity loan, you must check your credit report and determine if there are any errors.
- It is vital that you calculate your loan-to-value ratio.
- Try to compare interest rates from various lenders or speak to the experts at Harpreet Puri Mortgage.
- If you are unable to get approved for a home equity loan, consider getting a home equity line of credit.
How to get approval for a home equity loan with bad credit?
All lenders love home equity loans as there is guaranteed collateral, i.e., your house. It gives them peace of mind knowing that there is an asset backing their loan. Even if the borrower has a poor credit score, lenders will still look at their debt-to-income ratio to determine if you are eligible. It is how much money you owe, divided by how much money you will bring in. Lenders would prefer if the borrowers maintain a DTI ratio in the 40% area. If you have several debts to pay but your DTI ratio is low, you are still eligible for a home equity loan.
Over time, the price of your property will increase. Even if your credit score is not all that good and you wish to apply for a home equity loan, you must determine how much equity your home has. Are you aware that you can borrow up to 80% of the amount based on your house’s value through an equity loan? This metric is known as the loan-to-value ratio.
Cash-out refinance is a combination of a home equity loan and refinancing. This involves refinancing your current mortgage and taking out money based on your home equity. It is an ideal option for borrowers who wish to lower their interest rates to save money in the long term. Borrowers must have a minimum credit score of 580 to refinance, but this score differs with each lending institution.
Advantages of using a mortgage agent for a home equity loan
- They give you the freedom to compare and shop for the right home equity loan from various lenders as they contact many different lenders.
- A mortgage agent acts as a liaison between you (borrower) and the lender. It makes paperwork less stressful at the time of closing.
- They work on your behalf and look after your interest by helping you find the best deal on your home equity loan.
- A mortgage agent from Harpreet Puri Mortgage will go the extra mile to find you the right home equity loan to suit your specific needs. From application to approval, they will guide you every step of the way.
If you are based in the Brampton area and are looking to apply for a home equity loan, get in touch with our team today at 416 543 9000 to schedule an appointment or for further information.