Home Equity Line of Credit
Home Equity Line of Credit is a credit vehicle many homeowners use to leverage the available equity from appreciation to multiply their wealth or pay down high-interest personal debts to be debt-free sooner. Most lenders will allow borrowers to take out mortgages up to 80% Loan-To-Value (LTV).
Use HELOC to tap into the available equity from real estate appreciation as a revolving credit line and use the fund for any reason, such as home renovation projects or a down payment to buy another passive income property.
There are a few things that borrowers would want to know more about this mortgage solution. Contact your local mortgage broker or book a free consultation with one of ours for more details.
Line of Credit
HELOC is a line of credit whereby borrowers are preapproved and pay interest only for the amount of credit borrowed. Pay interest only on the amount borrowed.
Bruised Credit Not A Problem
Borrowers with bruised credit can qualify for a Home Equity Line of Credit as long as they have plans on improving their credit score going forward, sufficient equity in the real estate property, and the debt-to-income ratio is in line with the lender's guidelines.
Simpler Cost Structure
With HELOC, there is only one closing cost at the time of registering the HELOC against the property. Subsequent withdrawal from the line of credit does not incur additional closing costs such as legal costs, broker fees, etc.
At Richmond Hill Mortgage Broker, we work with lenders who are reputable and have established outstanding levels of customer service, integrity, and compliance with regulatory authorities.
Benefits of HELOC in Richmond Hill
If you want to make home improvements, consider a Home Equity Line of Credit (HELOC) to fund the project. HELOCs operate as a line of credit against the available equity in the property and are similar to credit cards, with a few exceptions.
In addition to being an excellent way to finance your dream home remodel, a HELOC may also help you save money by deducting the interest on the loan as expenses.
The amount of money you can borrow from a HELOC varies, depending on how much available equity in the property and the household debt-to-income ratio. You want to get pre-approved by a mortgage broker to know how much you can afford to borrow. However, you can generally expect to borrow around 80% of the current appraised value of your home. A typical repayment period is ten years, though lenders can be flexible with the amortization period. You should consider the interest rate because you want to be sure that the borrowing cost is affordable throughout the borrowing period until you are ready to pay everything in full with interest.
There are several ways to obtain a HELOC, including through a mortgage broker, online lender, or direct from your local credit union. All of these options require a decent credit score and reliable payment history. Be aware that a HELOC can cut into your profits if you decide to sell your home.
While a home improvement project is the most common use for a HELOC, there are many other uses for this type of financing. It can help you pay off your credit cards or even finance a new business venture. For example, you can take out a loan to cover the cost of tuition when you're ready to attend college. Or, you can use the money to improve your home's energy efficiency. These improvements can give you tax credits, rebates, and lower utility bills.
One of the best features of a HELOC is its ease of use. Unlike a traditional mortgage, a HELOC is a revolving line of credit, so you can access the funds you need when you need them and can pay it off in full at any time without incurring a prepayment penalty. You'll need to apply for a loan and submit your Notice Of Assessment and supporting documents to verify your household debt-to-income ratio. Once approved, you'll have access to the line of credit via online banking, which you can transfer money in and out of the account easily. Depending on the contract agreement, some lenders allow you to pay only the interest portion of the amount borrowed. Other lenders will require you to pay both the principal and interest component monthly.
Of course, if you don't pay off your HELOC, you could end up in foreclosure. That's why it's essential to weigh the costs and benefits of a Home Equity Line of Credit before you take out this loan. Make sure you consider the costs of upgrading your property, the cost of the home improvement, and the cost of interest. By using a HELOC, you have the flexibility of a revolving line of credit at the low-interest rate of a mortgage (unlike the high-interest rate of a credit card).
FAQ on Home Equity Line of Credit
What Are the Dangers of a Home Equity Line of Credit?
If you've been considering a Home Equity Line of Credit, there are some things you should know. The first thing to remember is that the interest rate can be variable, which means that your debt payment amount may increase during the draw period. So ensure you have enough to pay the debt amount every month to avoid accruing interest on the interest portion.
Also, remember that the interest you pay on a HELOC is only tax deductible if you use the money for specific purposes. Therefore, planning your use of the funds is essential to avoid surprises from the CRA regarding your tax returns.
Last but not least, you'll want to ensure that you use the money responsibly where you plan to carry the debt burden until you fully pay off the debt. Otherwise, you could be digging yourself into a big debt problem.
If you have any questions about your HELOC, contact us to discuss your HELOC in Richmond Hill. Our mortgage brokers can also help you determine which HELOC options are the best for you.
How Much Can I Borrow?
A Home Equity Line Of Credit, or HELOC, is a type of loan that allows you to borrow money against the value of your home. These types of loans typically have lower interest rates than other types of unsecured debt. You can use these funds to repair, pay for home improvements, or even consolidate other high-interest debts. Depending on the lender, you can borrow up to 85% of the value of your home
HELOCs are available from many lenders. However, you would want to discuss with a mortgage broker to determine your best deal. Also, make sure to compare rates and fees before you apply. Finally, your credit history, income, and debt-to-income ratio will all affect how much you can borrow from a HELOC.
Most lenders have a loan-to-value cap that will limit the amount you can borrow, and qualifying for a HELOC is easy. A Home Equity Line Of Credit calculator can help determine how much you can borrow. It also allows you to estimate how much your home is worth and the amount of your credit.
Otherwise, work with a mortgage broker to give you a more accurate assessment to determine how much you can borrow. Mortgage brokers will use the information you provide about your monthly gross income and expenses to calculate the debt-to-income ratio. If you have a low or high debt-to-income percentage, you will likely qualify to borrow a smaller HELOC than someone with a lower debt-to-income portion. In every case, having a good credit score is essential to getting the best interest rate and qualifying to borrow the maximum amount.
Is a Home Equity Line of Credit a Good Idea Right Now?
It is possible to borrow against your home's equity with a Home Equity Line of Credit even when the real estate market correction is happening. While there are many benefits of a HELOC, there are a few things to know before you decide to borrow against your home.
A HELOC can be an excellent way to get out of debt. But, it is not a foolproof emergency fund. There are risks involved in taking out a loan, including foreclosure. And the cost of interest could grow more expensive as interest rates rise unless you have secured a HELOC with a Fixed Term rate.
A HELOC is not for everyone. You may only be able to qualify for a HELOC if you are already a homeowner and have a stable income. Another reason you might need more time to be ready for a HELOC is if you have a bruised credit score. You may not qualify now, but you can use the time to build up your credit score and reapply a few months later.
Another reason it's not a good idea to get a HELOC right now is if your current property value had dropped lower than the most recent valuation when you secured the mortgage. A dropping valuation means less available equity for a HELOC.
Do not delay. Now is a great idea to discuss with a mortgage broker your plan to take out HELOC in Richmond Hill or other cities in Ontario.
Justin W, Richmond Hill
As a first time home buyer I was very nervous about buying a home. The professional staff at Matrix Mortgage Global took the time to answer my questions even after hours. I was very pleased with the service and how I was treated.
Jignesh S, Toronto
I'm a self-employed cab driver. I was devastated when my bank, with whom I've been banking with for years turned me down for a mortgage. My business is mainly cash, and I didn't meet the bank's criteria for proving my income. I found Matrix Mortgage Global online and decided to give them a call. I was surprised that I got approved. I thought that if my bank turned me down everyone would. Thanks!
Andrea C, Markham
I had 2 yrs left on my consumer proposal, with the 2nd mortgage offer by Matrix Mortgage Global I was able to pay off the proposal and re-establish my credit
You Can and You Will Be Approved
Experience brings wisdom.
This is why you work with a 5X Broker of The Year.
We have a history of total funded mortgages of over $2.3 billion since 2008 and counting.
Recognized by Authorities
RECA, FSRA, FSCO, BCFSA
Proven Track Record
Since est. 2008
Canadian Mortgage Brokerage
Serving Richmond Hill, and neighbouring cities in Ontario.
2018-2022 Mortgage Brokerage Of the Year from Canadian Mortgage Awards
You deserve a mortgage that is customized to you.
And there is a mortgage brokerage that believes that too.
One that has been helping clients get approved since 2008.
Over $2.3 dollars of mortgage funded in history working with you.
Matrix Mortgage Global mortgage agents and brokers understand the significance of responsible borrowing and lending. Unfortunately, it was an expensive lesson many learned from the Global Financial Crisis in 2008 that happened because irresponsible mortgage lending qualifications were unchecked.
Enjoy the peace of mind from knowing that you are working with someone who has a deep understanding of the mortgage industry and will work smart to get you the best possible deal.
Gain Access to Top Conventional and
Alternative Mortgage Lenders in Canada
Qualifying for a mortgage used to be easier than it is now.
But it doesn’t mean you can’t get professional help to qualify.
Reasonable mortgages are accessible to borrowers today.
Stay Up to Date With The Latest News & Updates
You'll receive a weekly newsletter that is customized to your interests.
Mortgage Learning Hub
SOLUTION-BASED LENDING READING ARTICLES
The smartest way to find a mortgage that works for you.
A Mortgage for All Life Situations
Better Options with
Consolidate to an all-in-one mortgage to cut down the mortgage payment amount and increase your cashflow.
Tap into the available equity from appreciation as a revolving credit line and use the fund for any reason, such as home renovation projects or buying passive income properties.
Going through a relationship breakup is hard enough, but trying to find the best mortgage solution on top of that can be difficult. Work with professionals who emphasize client-relationship confidentiality.
Renegotiate the terms of your mortgage and draw the available equity from the property.
Get approved for special programs and incentives exclusive for First Time Home Buyers.
Get approved for special programs and incentives exclusive to New to Canada residents.
Compare best mortgage rates and lending terms with insights from mortgage brokers who are professionals in the industry.
Get approved based on your business gross income and bank statements. Don't let the bank stop you from having the best mortgage.
Qualify for the best mortgage terms from lenders who are supportive of real estate investors owning up to four rental doors.