Do you also have those days when you just imagine the things you will be doing to improve your home? Do you sometimes just sketch your ideas on how you could fix and remodel some parts of your home? However, all those thoughts just stay as thoughts because you’re not sure where to get funds. You’re still not done paying for your mortgage. On top of that, you still have bills to pay. All your plans for a home renovation just goes to the sideline.
You actually have a lot of options in order to make your home renovation and remodeling ideas a reality. One of the most feasible solution is for you to tap into your equity. With a home equity loan, you can borrow against the equity of your home.
Home Equity Mortgage vs. Second Mortgage
These two terms are often interchanged and confused by homeowners and potential borrowers. When you have an outstanding mortgage and access your equity for a loan, you home equity loan is also considered a second mortgage. Both types of mortgage utilize your property’s equity. However, in second mortgages, your loan is given in lump sum. The monthly repayment and amortization period is done in agreement with the lender at the very beginning. Nevertheless, these two should not be the cause of any confusion because a home equity loan is a type of home equity loan.
Why should I have a home equity loan?
Home equity is the current value of the interest of your property. You can get the total amount of your home equity when you subtract you existing mortgage balance from the current market value of your home. For instance, you have a home worth $300,000 and you still have an outstanding mortgage balance of $150,000. Then, the total amount you have for your equity is $150,000.
Your interest rates are lower when you get a loan that uses your home equity as collateral. Apart from that, you can increase the value of your home equity when you keep on paying your monthly mortgage payments. Over time, especially when the real estate market is good, the value of your equity also increases.
Why should I use my home equity loan for my home renovation?
Once you get your home equity loan, the best way to use it is to finance your home renovation. Determine the current residential trends in your home renovation. You can use it to upgrade your home and add another floor. Install a new roofing. Move walls and create a room for natural air and sunlight to come through. Add a swimming pool or grilling area in your backyard. Make your home more eco-friendly.
Whatever you do with your home renovation, it increases the market value of your home. So when you put your property up on sale, you are guaranteed that your home’s value has appreciated.
Where to get a home equity mortgage in Canada?
When you decide to get a home equity loan, you must make sure that you have already paid off a huge amount of your mortgage. You should also be financially ready to have a monthly payment for your mortgage and a payment for your equity loan.
Once you’re ready, you can shop from banks, traditional lending institutions, and even private mortgage lenders to find the best offer that fit your needs. Banks and traditional lending centers have more stringent regulations and standards. On the other hand, private mortgage lenders will offer a more flexible terms and rates, especially when you do not have an excellent credit score.
To know more about home equity loans, how to apply for it, and where to get the best rates, give us a call today! Our team of financial experts and mortgage brokers are willing to lend their ears to listen to you and their hand to reach out to whatever your needs are.