• how can i access my home equityHow Can I Access My Home Equity?

    Many of our clients will ask us for a “home equity loan”, not realizing that a home equity loan is any loan that uses your home as security or “collateral” as many people call it. Rephrased, they could ask the question: how can I access my home equity? Here are some of the ways.

    1. Mortgage

    A mortgage is the most well known “home equity loan”. You borrow the money using your home as security on the loan. You receive it as a lump sum and you generally pay a very low mortgage interest rate on it because it is considered low risk.  Why would you need a mortgage? There are many reasons such as:

    • You would like to purchase a home. In this case, you can borrow as much as 95% of the value of the home. The value is usually based on the purchase price especially if it was listed on the market.
    • You would like to refinance your home to pay off other debts. In this case, you can borrow as much as 80% of the value of your home.
    • Refinance to invest.
    • Refinance to purchase something.
    • Refinance to renovate.

    2. Secured Line Of Credit

    A secured line of credit is another option when considering how can I access my home equity. A line of credit is good for “temporary” needs. In other words, a line of credit is there when you need it, but generally you pay a higher rate than a mortgage. If you don’t use it, you don’t pay. A mortgage is more like a long term commitment to a lump sum that you won’t pay off quickly. An example of a good use of a line of credit would be to use it to contribute to your RRSPs knowing that you will pay it back in a month when you get your tax return.

    3.  Lien

    There is another type of loan that will get you a better rate than a credit card, but a worse rate than a mortgage or secured line of credit. This loan uses your home as security but in the form of a lien. The advantage of this type of a loan is that it does not appear on your credit bureau, does not require lawyers, and the lender has less power when it comes to collect.

    Of course there are also combinations of the above but those are the main ones. It just depends on your needs which we would be happy to discuss, advise and point you in the right direction!

    Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

    If you would like to apply for a mortgage online, please follow this link.

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