Home Equity Loans.

A home equity loan is secured against a homeowner’s property, allowing them to access their equity for many purposes. The phrase home equity loan is loosely tossed around and sometimes causes confusion and leaves homeowners to believe they can automatically qualify for a home equity loan by having equity in their home. While, to some degree, this is the case, traditional (A-lenders) and alternative (B-lenders) have stringent underwriting requirements and policies. While homeowners with equity are candidates for home equity loans, approvals are subject to homeowners’ income and credit profile and other factors, such as the location and condition of their property, to determine whether they qualify for traditional, alternative or private mortgage financing, the latter being a costlier, short-term option. At the end of the day, home equity loans are essentially mortgages, as they’re loans secured against real estate, as first or second mortgages with traditional and alternative lenders or in third position by private lenders. Home equity loans are an efficient method for homeowners to access funds for many reasons, including home renovations, consolidating higher interest rate debt, emergency expenses and business operating capital for self-employed individuals. Home equity is the difference between the fair market value of a homeowner’s property and the balance of any outstanding mortgages. For instance, if a client’s property is worth $500,000 and they have an existing 1st mortgage of $250,000, there is $250,000 of home equity. Homeowners can usually obtain home equity loans up to 80% of the appraised value of their property. Using the previous email, if the homeowner’s home appraises for $500,000, they might qualify to obtain a home equity loan up to $400,000, an additional $150,000 on top of the existing $250,000 mortgage. While real estate values in Canada have grown quite rapidly, thus providing an enticing borrowing option for homeowners, there are many worthy points of consideration that DV Capital, an experienced firm, assists its clients in understanding while exploring an array of home equity loan options from traditional (A-lenders), alternative (B-lenders) and equity-based approvals from private mortgage lenders even if homeowners have been turned down elsewhere. For a cost-free, confidential discussion and to learn more about home equity loans, please do not hesitate to contact DV Capital for assistance across Ontario, British Columbia or Nova Scotia.