Access Cash Quickly when you need, with a Home Equity Line of Credit (HELOC)
Home Equity Loans
Home Equity Line of Credit
Financial flexibility at a lower interest rate will complete your financial toolkit. A Home Equity Line of Credit, or HELOC, provides homeowners open access to the value of their home, with the flexibility to borrow money when they need it. Securing a HELOC gives borrowers access to revolving credit to make home improvements, increase financial investments or have available in case of an emergency while enhancing financial security.
Square Capital works both with prime (bank) lenders and private mortgage lenders to offer innovative mortgage solutions. When banks cannot qualify you, we work with private lenders to provide borrowers with a lower rate, fast 24-hour mortgage funding options (subject to terms and conditions).
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Home Equity Line of Credit (HELOC)
Home equity lines of credit are an important part of Ontarians’ overall financial strategy. HELOCs provide the ability to leverage equity built up in your home while only paying interest on the amount when it is used. HELOCs enable homeowners’ freedom and flexibility with how the money can be used. For example, if interest rates are low and you want to take advantage of an investment opportunity. A home equity line of credit can also provide financial security as a result of job loss to provide access to cash until you are back on your feet. HELOCs also provide stability to small businesses. The COVID pandemic is a good example of leveraging home equity for emergency situations and helping businesses through tough times. Home equity lines of credit can be leveraged by businesses to build or expand while providing a reasonable rate of interest to start from. Homeowners have choices and can consider options to leverage their home equity.
There are different products that provide flexibility for the most suitable mortgage loan options such as home equity lines of credit or HELOC. A HELOC still enables access to the home’s equity, just in a different way. Instead of a single (or lump sum) payment, a HELOC provides ongoing access to a certain amount of money, similar to a credit card, with a lower interest rate. The amount of the HELOC depends on the value of the home.
The benefit of a home equity line of credit is that payments are interest-only payments and homeowners can access it when needed. Downsides include variable interest rates and access to the total amount of the HELOC, which could lead to more unwanted mortgage debt. That being said, there are opportunities to lock in fixed rates to protect monthly mortgage payments.
Borrowers should contact a mortgage broker about how to qualify for a home equity line of credit. Typically, borrowers are required to have a good credit history with sufficient equity to be qualified with prime lenders such as banks. Our team of mortgage broker specialists has access to alternative lenders including private lenders that may provide alternate solutions. They will work with borrowers in situations with high debt levels, bad credit or are self-employed to discuss lending options.
Advantages of Home Equity Line of Credit (HELOC)
- Availability of cash – Access to cash when you need it, from emergencies to home improvements.
- Interest may be tax-deductible* – Using HELOC equity for investments such as rental properties or businesses may provide you with a tax deduction.
- Interest-only payments – Borrowers only need to pay the interest portion of the HELOC.
- Borrow what you need – Only make payments based on how much you borrow.
- Lower interest rate – compared to other loans and revolving credit options such as car loans and credit cards, interest rates are usually lower for HELOCs.
Disadvantages of Home Equity Line of Credit (HELOC)
- Loss of equity – Homeowners will have reduced access to equity in the home, while there is a home equity line of credit.
- Risk of overspending – Ease of access to HELOC funds make it easier for borrowers to spend more than they made need to.
Questions about Home Equity Lines of Credit (HELOC)
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Other Mortgage Options
Other mortgage options
Homeowners have choices and can consider options to leverage their home equity. Depending on the product, these options may have slightly higher interest rates.
Private Mortgage
When homeowners cannot qualify for a mortgage to refinance through a bank mortgage debt consolidation or a home equity line of credit (HELOC), private mortgages may be an alternative. Since private mortgage lenders will secure a mortgage debt consolidation against a home, the interest is usually lower than high-interest debts like credit cards.
Private lenders usually charge a higher interest rate and fees than a bank, given the higher level of risk, however, this option still reduces interest costs over time. This is because these lenders understand that situations exist such as quick turnaround for financing, bad credit, stated income, and non-conventional properties.
Typically, private mortgages are shorter-term products and only require the interest portion to be repaid. Private lenders evaluate risk differently than traditional lenders and will consider the borrower’s ability to repay which is beneficial to self-employed and people with bad credit. Private lenders can also provide debt consolidation options through second mortgages.
Second Mortgage
Borrowers unable to qualify for a mortgage refinance leveraging equity, could consider a second mortgage. A second mortgage will provide the option to consolidate loans with higher interest into a lower rate option. While interest rates for second mortgages tend to be higher, it will save money on interest costs over time. Speak to a mortgage broker to understand the costs associated with a second mortgage.
Reverse Mortgage
An option available to homeowners 55 and older is reverse mortgages that provide access to the home’s equity without having to sell. Reverse mortgages allow homeowners to borrow up to 55% of the value of the home. The concept of this mortgage is essentially a reverse loan that means there are no payments required. Payments will be made either in monthly payments or in a lump sum payment to homeowners. Homeowners will pay the reverse mortgage loan when they move, sell or the last borrower dies. Typically, the interest rate is higher, and there are fees additional associated with reverse mortgages.
Debt Consolidation Mortgage
To understand if a debt consolidation mortgage or a HELOC could be suitable options to consolidate debts, and help get your life back on track, contact Square Capital Mortgage Brokerage. We understand each case is unique and there are many factors to consider including homeowners with bad credit or low income. Unlike traditional lenders like banks and financial institutions, with very strict lending terms, Square Capital works with over 50 lenders, including private lenders, to find the right solution for our clients. Our expert mortgage brokers and agents will help to find solutions to lower your monthly payment and reduce or stop the interest on your debt. Lower monthly payments every month reduces the chances of financial default while improving your credit and managing your money wisely.
Budget Planning and Expense Tracking
While products like debt consolidation mortgages, HELOCs, and private mortgages are tools to financial freedom, managing debt is the key to success. Practicing better money management in daily life like budgeting, monitoring spending, and saving. There are many free online apps that can support homeowners to achieve financial freedom and get better at managing money.
Get Started with your Home Equity Line of Credit
To get started with your Home Equity Line of Credit, contact Square Capital Mortgage Brokerage. We understand each case is unique and there are many factors to consider . Unlike traditional lenders like banks and financial institutions, with very strict lending terms, Square Capital works with over 50 lenders, including private lenders, to find the right solution for our clients. Our expert mortgage brokers and agents will help to find solutions to lower your monthly payment and reduce or stop the interest on your debt. Lower monthly payments every month reduces the chances of financial default while improving your credit and managing your money wisely.
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Contact us today to get a free quote. We will help you understand the current market conditions affecting the mortgage market! Prequalify without affecting your credit!
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