An equity take-out mortgage allows you to access your home equity for a variety of reasons and there are many products and types that can suit your financial needs and goals. Take a minute to review a variety of forms, reasons and uses of a equity take-out mortgage.
Whether it be a new family member on the way, a business investment, home renovation or debt consolidation an equity take-out mortgage can help finance a future goal or get you through a difficult time. As an experienced mortgage brokerage we have helped many Canadians get the right mortgage for their financing needs.
Whether you're buying a new home, an investment property or a vacation getaway, you can borrow your down payment from your available home equity. Depending on how much your new property costs and how much available equity you have with your current home you can potentially borrow a down payment that'll significantly reduce the amount that you'll have to borrow for your mortgage on your second home, rental property or lake-side cottage.
Many Canadians have used the equity in their homes when faced with a large expense that their savings can’t quite cover. You may have to cover your child’s university costs or need the money for a home renovation project.
A HELOC is a form of equity take-out but rather than being a lump sum borrowed by a homeowner, it is a secured line of credit against a portion of the available home equity.
Simply the more home equity that you have in your home the more money that you'll be able to borrow through your equity line of credit. The most essential difference that a home equity line of credit offers in comparision to conventional mortgages is that the line of credit is a secured amount that instead of being borrowed and financed is an available fund of which a borrower can withdraw money from at any time.
No payments are required for a home equity line of credit, but the borrowed amount of equity will accumulate interest. It's also important to note that a HELOC is a demand loan, meaning the lender can demand repayment at any time, but probably won't.
A second mortgage is a common and popular equity take-out mortgage. Depending on how much available home equity you have, the amount you want to borrow through your second mortgage and considering you credit score the rate of your second mortgage will be determined. In any case the rate you qualify for on a second mortgage will carry a higher interest rate than the one you obtained for your first mortgage.
An equity take-out mortgage can be used for home renovations.
A lender will be more than willing to fund your ambition to improve your home. A home is security for your loan and given that you plan to add value to that home is an added security for a loan in the case of default.
Though a lender will not likely fund or approve a renovation that involves extreme changes or additions to a home.
A big project like adding another level to your home is a risky move for a lender, as such a project given unfinished or complications could harm the value of the home that a lender is using as security for your debt.
Having multiple debts can be a burden, an equity take-out mortgage can be a good way to consolidate that debt and simplify your life. Rolling your debts and loans into your mortgage can be financially strategic and beneficial.
Consolidating your debt is simply repaying debts with mortgage proceeds. Consolidation is when a debt is paid by another debt. The advantage to consolidation is that it brings a gross owed amount under one repayment and a single lower interest rate.
An equity take-out simply allows you to strategically target high interest debt with a consolidating payment of the debt and a replacement mortgage that consolidates debts under one repayment and interest rate.
An equity take-out is not the only way to access your home equity and more mortgage financing. Have you considered a refinance mortgage?
Feel free to send us an email with any questions you may have about the required documents for an equity take-out mortgage.
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We have a variety of useful guides that are essential and helpful for all your mortgage needs and questions. We cover everything from basic mortgage concepts to the functions and components of a mortgage to in-depth mortgage guides and strategies.
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We have a few excellent options to determine what you can afford to borrow. We offer an easy to use Mortgage Qualifier Calculator. Simply input the required information and let our calculator give you an idea of how much you can afford to borrow.
If you want to get the most accurate idea of how much you can afford to borrow, contact us or fill out our online mortgage assessment form.
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There are a variety of mortgage types and purposes. Deciding on the best mortgage for you is essential to getting the most logical loan for your financial needs, goals and future.
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