If you don’t have any available savings, your home equity can provide an immediate source of funds.
Even the most responsible homeowners can find themselves faced with an unexpected home emergency repair or maintenance issue without the cash on hand to deal with it. If this is you, you are not alone. There are solutions available that can help you tap into your home equity to fund those projects without having to take out an expensive loan with the bank.
Consider a Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit enables homeowners to access up to 85% of the value of their home for what they need. If you have owned your home for a number of years, then you have built up equity that can be used as collateral.
A Home Equity Line of Credit is designed specifically to help homeowners cover these unexpected costs without worrying about their level of savings or credit score. Taking out a HELOC is a fast and convenient borrowing option because you can access the funds you need, pay it off and borrow again if needed.
To calculate your home equity, simply follow this equation:
The value of your property – the balance remaining on your mortgage = your home equity
In many cases, you will pay less to borrow against your home equity than if you were to get an unsecured loan or line of credit. When you choose to work with a mortgage broker instead of the bank, you can get access to more lending options and at a lower interest rate.
Take Out a Second Mortgage
Many homeowners are aware of HELOCs but haven’t considered that second mortgages are also an available option. Essentially, a second mortgage functions as an additional mortgage loan. Both mortgages will need to eventually be paid off but because they normally come with much lower interest rates than unsecured loans, they can be an appealing option to borrow much needed funds.
With the value of Ontario homes increasing due to the booming real estate market, many homeowners are using this opportunity to access the value of their home.
You can use your second mortgage for anything as long as you continue to make your repayments. So, if you have a home maintenance or renovation project in mind, then it’s a good idea to consider a second mortgage now instead of waiting until it becomes an emergency situation.
Work with a Trusted Mortgage Broker
A mortgage broker acts as the intermediary between the financial institution offering the loan and the individual seeking the loan to buy real estate. The mortgage broker works with both parties to ensure the loan gets approved. The main benefit of working with an experienced mortgage broker is that he or she can work with a wide variety of lenders to find the best terms and rates.
For those who are self-employed or don’t have stellar credit, working with a mortgage broker is advantageous because they are experienced at working with complex situations. This is especially critical for anyone who requires fast funding and has been turned down for a loan by the bank.
A mortgage broker like Burke Financial specializes in handing challenging applications and works with people who have varying needs and circumstances.
Regardless of whatever life problem you are facing, a mortgage broker can help you explore your options and find a solution to your problem so you can get back to other life tasks. For the Silo by our friends at Burke Financial.