How to Leverage Your Home Equity to Cope with COVID-19

With how the whole world is trying to cope with the effects of COVID-19 these days, it is still too early to tell how everyone will get through the long-term financial ramifications linked with it. Unemployment is still rising and plenty of people are having a challenging time paying bills and staying afloat in Canada. In our neighbour country below, people are facing unemployment rates of as high as 30% and things are still escalating. How can people recover from COVID-19’s effect on their finances?

The good news is that for homeowners, the money paid towards their mortgage goes to their home equity. The more payments that has been done, the bigger the home equity is going to be. This translates to more than $6 trillion available equity for the 45 million Americans who are homeowners and the Canadian figures are likely to reflect this as well. If you’re a homeowner, now is truly the best time to tap your home equity and make it work for you.

Leverage Your Home Equity

With job loss and businesses closing causing loss of revenue, now is one of the best times to leverage the value that you’ve built up in your home in the form of a HELOC, a second mortgage, or a home equity loan.

You may want to get a HELOC if you will be using the funds from your home equity for small but frequent purchases and expenses, such as bills, medications, and necessities. A home equity loan or a second mortgage can be better choices if you want a one-time access to a huge amount of cash.

HELOC or a Second Mortgage?

A HELOC would be great if you’re after flexibility and want the option of having access to cash but is not sure how much you will need or how often you will need it. It allows you the freedom to take as little or as much of your funds as needed and only charges interest for the withdrawn amount. This will allow you to save a lot of money and ease some of your worries should the lockdowns extend for a few weeks or months longer.

A second mortgage would be great if you coincidentally also have large expenses ahead, such as needing an expensive surgery that is not covered by the usual channels or need to pay for home repairs that can’t be put-off. The interest will be more substantial as compared to a HELOC but you get to enjoy access to almost all of your home equity without having to sell your home.

Unlock Your Home Equity

Know that no matter what option you choose to unlock your home equity, you’ll have to consider multiple pros and cons and it will be best to consult mortgage professionals for you to make a better-informed decision. There are many ways that you can make use of your home equity during COVID-19 and you must weigh your options with an eye towards the future. Contact us at Mortgage Central Canada if you have any questions about using your home equity during a pandemic.

 

Try These Affordable Renovation Ideas to Boost Your Home’s Value!

Homes are expensive. For most people, buying a home is the most expensive purchase they will ever make in their life and is a huge investment. It only makes sense to want to protect that investment and want it to grow. But how do you grow a home investment and how do you protect it? Aside from having home insurance, a home needs to be taken cared of and updated every few years for repairs and features enhancement. Careful planning of home improvement projects and home renovation ideas is a must! Below are some of our affordable recommendations for those who want to increase their home’s value!

Colour Scheme Revamp

A colour scheme revamp is only as expensive as the cost of paint. Repainting a room can instantly refresh it and cost only a few hundred dollars but can increase a home’s value by a few thousands. Good colour emphasizes features, improves lighting, and smoothens wall imperfections.

Think About Landscaping and Curb Appeal

Curb appeal sells. A little tender loving care for the lawn can improve home value by three-fold compared to the cost of lawn care expenses. Additional structural improvements such as walkways can add thousands to a home’s value. You can also go for a garage door repainting or replacement, try painting the front door, adding lighting, and upgrading the house number and mailbox. First impressions make a huge difference when it comes to home value. The key is to not go over the top and make universally pleasing additions that make the home more attractive.

Replace Old Windows

Replacing old windows usually costs around $3,000-$10,000 but the energy savings per year can recuperate that amount in just a few years. More so, new windows add a lot of cosmetic value to a home plus bring more sunlight inside. A home that is energy-efficient, pretty, and has good lighting usually sells for a lot more. A good market price means bigger home equity for the homeowner too.

Energy-Efficient Upgrades

Under insulation can rack up thousands of dollars in energy bills but the cost of adding extra insulation is usually at just around $1,000-$2,000 for an average-size home. If the home is in a particularly cold location, the right insulation can bring significant savings that are very attractive for possible future buyers.

Go Hardwood

Lots of people are worried about installing hardwood floors thinking they are not only expensive to install but also a pain to maintain. While it is true that installation can go around $10,000, there are many finishes available these days that make maintaining hardwood floors easier. More so, if computing cost per square footage, going for a hardwood floor may turn out to be cheaper than opting for carpeting.

Want to boost your home’s value with affordable renovations but currently low on funds? You can use your existing home equity to fund home renovations! Contact us so we can tell you more about how to accomplish this with a home equity loan as well as the possible long-term benefits for you.

 

Ways to Pay for Home Improvement for Better Home Equity

One of the best ways to increase home equity is to go for home improvement projects that bring additional value to a home. Unfortunately, home improvement costs can add up quite fast, leaving those with no extra cash having to take loans. Luckily, homeowners have the option to tap existing home equity by means of a mortgage refinance, home equity loan, or a home equity line of credit to pay for home improvement. If you’re planning to use your existing home equity to improve the value of your home, then you’ll like this article we’ve prepared for you!

Why Use a Home Equity Loan

If your home improvement projects will cost a lot of cash upfront, then a home equity loan might be for you. It allows homeowners to take out a lump sum that they can pay later. This loan has a lower interest rate than traditional loans and gives more flexibility with the types and extent of home improvement projects the homeowner can start with.

Why Consider a Home Equity Line of Credit

If your home improvement project will take some time and is more of a series of expenses rather than one big project, then a HELOC might be for you. A HELOC allows the homeowner access to funds within the set draw period, giving the homeowner plenty of time to get projects done while saving on interest rates. This is because interest is only charged to the borrowed amount at any given time, not the ceiling value of the loan. A Home Equity Line of Credit typically has a long draw period, giving borrowers a long time to prepare and plenty of time to break even before payment is due.

Should You Go for a Mortgage Refinance?

A mortgage refinance will allow you to re-do an old mortgage for more favourable current market rates and give you extra cash to fund improvement projects. This also means lower monthly payments and interest rates, thereby saving you money which you can also use for home improvement. You can opt for cash-out refinance which will allow you to access as much as 80% of your home equity. This will mean using your home equity as collateral. Better make sure to consult mortgage experts before choosing a cash-out refinance.

How About a Personal Loan?

A personal loan can be good for those who can pay back as soon as possible, have impressive credit score, and don’t mind a higher interest rate than the previous options. The trade-off is having better control.

Increasing home equity is possible without plenty of savings if you’re open to options that can make your existing home equity work for you. By accessing your home equity or using it as a leverage to get a hold of some cash, you’ll be more free planning and implementing home improvement projects that can place you in better financial standing in the future with the help of boosting your home’s value. We’re here to help you at Mortgage Central Canada. Contact us today!

 

Is It A Good Idea to Pay for A House Remodel Using a Home Equity Loan?

One of the smartest things to do before selling a home is to make sure that things are in great shape before listing the home for sale. Doing this will make sure that the home will fetch a good price. However, this is not easy to pull-off for those who do not have plenty of cash that can be used to pay for a house remodel. This is where having a substantial amount of home equity helps. Homeowners with a high home equity can pay for a house remodel using a home equity loan. The question is, is this a good idea?

Why Go for a Home Equity Loan?

Unlike other loans, a home equity loan uses the value that a homeowner owns in a home as collateral. Because a home equity loan is a secured loan, it is easier approved and comes with a lower interest rate than unsecured loans. It is true that tapping home equity can be scary for some, but know that with proper planning and money management, using a home equity loan to pay for a house remodel is not only a good idea, it is a great one!

Nobody wants to sell a home for less than the price that it was bought for. The hard fact is that this is the case for a lot of people more so if the location turned bad or if the home was poorly maintained. To make sure that the home’s value does not depreciate, regular repairs must be done and some features should be upgraded periodically.

When to Use a Loan

Paying for home improvement in cash is ideal but not everyone has a large sum of money that can be used however and whenever. Using a low-interest loan like a home equity loan is the best-case scenario for a lot of people instead of taking a loss by not upgrading or taking out an expensive personal loan. Note that one should be careful with spending even when using funds from a loan secured by home equity.

Take into account that using a home equity loan to pay for a house remodel is an investment and not really an expenditure. After some much-needed remodeling and improvement, an old and dilapidated home can turn into a beautiful and functional home with a high resale value. Even an emergency remodeling or repair can turn into a sound investment when chosen wisely and done the right way.

Important Things to Note

Keep in mind that home’s value can play a huge part in what becomes of the home equity. There are many factors that are related to property value aside from renovations. With this said, using a home equity loan to pay for a house remodel that will, in turn, further increase home equity is certainly a good idea.

If you’re seriously considering tapping into your home equity, be contact professionals like us in Mortgage Central Canada. We’ll be happy to answer your questions as well as guide you in in choosing which home equity loan product is best for your needs.

Get Rich with Home Equity

Do you know that just by owning a home, you are significantly wealthier than someone who makes the same but is renting? This is because any money you pay for your mortgage goes towards increasing the value of your home equity. Your home equity is essentially your deposit or ‘forced savings’ in the form of real estate. Once you’ve paid off your mortgage, then you have a huge nest egg or savings that you can access using home equity loans when needed. Yes! You can access your home equity without having to sell your home!

Once homeowners become aware of how rich they are through their home equity, a lot of them get tempted with accessing their home equity via a loan. Note that while it is smart to use home equity for investments, improving one’s financial status, consolidating loans, and funding home renovation projects, some uses for home equity is not as smart as other uses because they don’t add value to the home, yourself, or overall financial status. It is better to be careful than sorry. Now that we’ve got this part covered, how does one get rich with home equity? Find out below!

Try Not to Move Often

Buying and selling homes come with costs. If you move houses every few years, the cost can quickly add up. By not moving too often, you save money that you can towards paying off your mortgage and therefore increasing your home equity.

Choose an Equity-Rich Home

An equity-rich home is a home that has a huge potential to increase value after a bit of improvement or one that is located in a sought-after neighbourhood with increasing property prices. An equity-rich home will allow you to grow home equity fast and for much less money, time, and effort.

Plan Improvements Wisely

There are home improvements that are nice to have and some that really make your home more desirable and valuable. You’ll have to learn to differentiate and try not to go overboard with customizations. A home with extra functionality but has room for more has more value than an overly-customized home that nobody else wants because buyers feel like they are intruding.

All About the Location

Choosing a home location isn’t just about convenience but also planning for the future. If you can, move into a neighbourhood that has better long-term forecast than another that you might really like. It is also best to choose a home in a location that can accommodate your changing needs down the road so you won’t have to move again after just a few years.

Look Forward to Being Equity-Rich

There is nothing wrong with wanting to increase your home equity and planning accordingly. There is nothing wrong with treating your home equity as a timed savings account that you can use later such as when you plan to retire. It is great to be equity-rich because you will have much more financial room for maneuvering should the need arise.

Do you need more ideas about increasing your home equity? Or do you want to use your existing equity to further boost your home’s value? Whatever you may have in mind, we can help! Contact us at Mortgage Central Canada and we’ll surely answer your questions to assist you towards better financial decisions.

 

The Most Popular Reasons to Get a Home Equity Loan in Canada

More Canadians are getting home equity loans in recent years to make use of rising home prices and low-interest rates but these are not the only reasons why they are tapping into their home equity. Below is a compilation of the top reasons why people get a home equity loan in Canada.

Home Equity for Debt Consolidation

Getting a debt consolidation loan tops the list of uses for home equity in Canada. People go for it because loans that are tied to residential equity have a significantly lower interest rate as compared to other types of loans. By using home equity for debt consolidation, homeowners can manage their various debts faster as well as save money on interest.

Home Equity for Paying CRA Tax Money

A borrower who owes back taxes will not be lent new loans by banks unless the homeowner applies for a loan backed by their home. A short-term loan like this can help someone sort out their taxes and manage their financial issues.

Home Equity Loan for Spousal Buyout

A divorce often means dividing conjugal assets so that each party walks away with their half. This isn’t very easy to do when most of the couple’s assets are tied to their property. A home equity loan will allow one spouse to keep the family home and pay-off the other party for a clean break.

Home Equity for Home Renovation

A huge percentage of home equity loans taken in recent years were made for the purpose of funding home renovations. By using home equity for home renovation, a homeowner can have access to funds to improve their home and increase their property’s value. By doing this, it will be easier to refinance mortgage later or take out some other loan when needed.

Home Equity for Business Loan

It takes money to start or expand a business. However, it is often not easy to sway investors to want to put their money in someone else’s business. By tapping home equity for this purpose, a homeowner can take advantage of using what he or she already has and with friendlier payment terms to as compared to other business-related loans.

Home Equity Loan for Big Purchases

Trying to purchase a home or a car with a loan when you’re self-employed can be very challenging in Canada. Luckily, homeowners can take advantage of the different types of home equity loans to buy a home, a rental property, or a dream car. This is great news for the approximately 15% of Canadians who are self-employed!

Home Equity for Construction Loan

Building a house from the ground up is very expensive. The good news is that if you’re building your second home you can make use of your current home’s value to help fund the construction.

If you’re interested to apply for a home equity loan in Canada, you’re at the right website! Contact us and we’ll walk you through with what you need to know and help you get your loan approved!

Is a HELOC a Good Choice?

Getting into debt is unavoidable these days. Although most people wish that their debt will always be within their control and remain manageable, circumstances can change to make managing finances a lot more challenging. This is why one of the most popular types of home equity loans is getting a HELOC.

A HELOC is popular because it is a very flexible type of home equity loan. It allows homeowners to borrow money from their home equity at a very reasonable rate and terms. Perhaps the only con with a HELOC is that it is not as easy to apply for as other types of home equity loans. The good thing about it is that since it gives homeowners access to a revolving line of credit, borrowers can attain a certain degree of freedom without having to keep applying for a loan.

Different Home Equity Loans

Home equity loans come in two forms, as a HELOC, and as a fixed-rate loan. A fixed-rate home equity loan means that an outstanding HELOC’s balance is locked to a fixed interest rate for a term of 1 to 5 years. Some homeowner choose this type of home equity loan because they like having peace of mind knowing that they won’t have to deal with increases in mortgage interest rates. A HELOC or a home equity line of credit works like a credit card in the sense that a homeowner is given a credit limit and the credit in it can be reused for a specific time frame because it is a revolving type of credit. The repayment is based on fluctuations in mortgage interest rates and the type of HELOC a homeowner can qualify for.

Most of the time, home equity loans are taken as loans with fixed interest rates or as a home equity line of credit. They differ in structure and in how the homeowner can access the funds. Fixed-rate home equity loans are given as a lump sum while a homeowner can access funds from a HELOC as often as he/she wants.

Is a HELOC a Good Choice?

Because a HELOC comes with a fixed spending limit based on the homeowner’s equity on a specific property and is a revolving type of credit, it is easier to control and can be used as needed. It also gives homeowners a more flexible repayment schedule with rates that are based on current market interest rates. Borrowers like the zero time-based limitations plus the freedom a HELOC provides.

With other types of home equity loans, it is easy for homeowners to rely on debt and just fall into a cycle of borrowing and spending. A HELOC helps with preventing that. Of course, a HELOC may not be the home equity loan of choice for everyone. This is why it is best to consult with mortgage professionals like us in Mortgage Central Canada to assess which type of home equity loan might be best for your specific financial needs. Contact us at your earliest convenience and let’s discuss what we can do for you to access your home equity the smart way.

How to Use Your Home Equity in 2019

People have been using their home equity as a source of emergency funds or as a backup savings plan for years, but not a lot understand how it really works. If you haven’t tapped your home equity yet, 2019 might be the year to consider tapping your home equity for huge bills, consolidate loans, or pay for expenses that your savings or income can’t cover.

Building up your home equity by diligently paying your mortgage is a smart move that builds up this asset of yours over time. Once you’ve accumulated a significant amount of home equity, you can use it for any of the following!

Debt Consolidation

Consolidating your debts to start the year is a smart move towards better management of your finances. By consolidating your debts, not only will you make it easier for you to get your debts paid but you will also save money on interest. You can use your home equity to finance your debt consolidation. Just ask us how!

Home-Equity Line of Credit (HELOC)

A HELOC is a line of credit that acts like a credit card but instead of a credit limit, you are given access to a certain amount of your home equity. You are free to use as little or as much of the HELOC as you want as long as you are able to make payments according to the terms. New terms are currently in the works for HELOCs these days so be sure to consult with us whether a HELOC will be advisable for you.

Refinancing Your Mortgage

Refinancing your mortgage involves renewing your current mortgage so that you can use your home equity to access a cash amount. For instance, you have an initial mortgage of about $500,000 and you were able to pay about 70% of it, that will give you $350,000 in home equity. However, if the real estate prices in your area have increased, your home equity can be a lot more than that. In this situation, refinancing your mortgage makes sense to create a new mortgage loan to replace your current one in order to access some of your home equity as well as make payments easier for you. Know that specific steps have to be carried out to refinance your mortgage (like getting a home appraisal), and there are other fees that you’ll have to pay too.

Second Mortgage

A second mortgage might be a good option for you if you have an existing mortgage but don’t want to refinance. In a second mortgage, your house is your collateral and you still have to pay off your primary mortgage so you have to be sure that you can afford paying two mortgages at the same time to avoid possibly losing your home to foreclosure. We have some articles on what you have to know about second mortgages but feel free to reach out to us should you have additional queries.

Use Your Home Equity in 2019

It is up to you to determine which is the best way to access home equity for yourself this year based on your financial situation and other personal factors. If you need professional help to assist you in assessing your options, contact us at Mortgage Central Canada and we’ll surely help!

Planning on Getting a Second Mortgage or Applying for a HELOC? Read This!

If you’re a homeowner, it may have crossed your mind to use your home equity to get a second mortgage or perhaps apply for a HELOC; but how possible is it for you to get one? Are you sure that you can get HELOC or second mortgage approval with the recent changes in interest rates and mortgage rules? Do you know that getting a HELOC is not the same as applying for a second mortgage because they are entirely different types of home equity loans? We’ll talk about what you have to know regarding HELOCs and second mortgages in this write-up.

Both Second Mortgages and HELOCs are Secured Loans

Your home equity serves as the loan security or collateral when you decide to go for a second mortgage or a HELOC. The difference is in how you can access the funds. With a second mortgage, you can get the funds as a lump sum while with a HELOC, you can access as little or as much as the whole predetermined amount for a set span of time. With this difference, payment for a HELOC usually fluctuates on a monthly basis while payment for a second mortgage is a fixed monthly rate.

Missing Payments Can Mean Losing Your Home

The terms of both second mortgages and HELOCs state that the lender has a right to your home equity if you fail to make payments. To access your equity, the lender will liquidate your home. With this in mind, you have to be extra careful before signing up for these loans or risk losing your home if you default.

The Most Common Reason for Both Remains to Be Home Improvement

Most people get a HELOC or a second mortgage to finance home improvement or home renovation. Lately, more people are using HELOCs for debt consolidation too.

HELOCs and Second Mortgages Need Financial Planning

Because missing payments on second mortgages and HELOCs can have serious effects on your finances and life, you have to at least have a general idea of your cash flow so that you’ll be able to manage payments and other expenses in the future. Know that just because second mortgages and HELOCs are easier to apply for than primary mortgages do not mean that repercussions for nonpayment are less severe.

Be Ready for Pitfalls

HELOCs and second mortgages come with pitfalls too. One wrong decision can mean financial ruin more so if you simply decide to get one without guidance from mortgage professionals. For instance, a lot of people have the wrong notion that they can max out their home equity and things should be fine but that is not the case. Note that the bigger the amount you take out from your home equity, the bigger the interest rate and consequences for nonpayment and delayed payment will be.

Are you ready to get a second mortgage or are you planning to apply for a HELOC? Contact us today so that you can get answers for your home equity loan questions straight from mortgage professionals!

Get to Know Home Equity Loans in Canada

Financial stress is a real challenge for many homeowners in Canada. There are home expenses, work, living expenses, possible maintenance medications, and other expensive needs. No wonder homeowners are getting more interested with the idea of tapping their home equity to give them financial relief when needed. But how can home equity be used this way? What makes this possible?

Using Home Equity for a Loan

Home equity is the value that a homeowner owns in a home. If a homeowner has been making payments towards a home, then over time, a larger portion of the home is truly owned by the homeowner. This value can be computed as the difference between existing debts and the home’s current market value.

If there has been a recent development in the area, then the home equity could be a lot larger than the sum paid over the years. Home equity loans allow homeowners to use their home equity for expenses that they cannot cover with their income or savings.

A home equity loan in Canada means any type of loan that makes use of the home’s equity as collateral. Compared to unsecured loans such as credit card loans, home equity loans have higher limits and lower interest rates plus offer better payment options.

To get a home equity loan in Canada, you can either approach a mortgage professional to connect you with private lenders or go to banks in your area. Note that applying to banks will often require more work as well as a great credit score whether you’ll be applying for a second mortgage or a HELOC.

Types of Home Equity Loans

Home equity loans are usually divided into reverse mortgage, second mortgage, and HELOC. We will only tackle HELOCs and second mortgages in this article.

A second mortgage is a home equity loan that is second in position to a primary mortgage. In the event that the homeowner fails to make payments and the home goes to foreclosure and sold, the primary mortgage will be the first mortgage to get paid followed by the second mortgage. This is why second mortgages have higher interest than primary mortgages. People who have a bruised credit or in a financial bind have an easier time getting a second mortgage than to qualify for a personal loan same as those with an excellent credit score; hence, homeowners opt for a second mortgage when they need extra funds. Funds are released as a lump sum for a second mortgage.

A HELOC is a home equity loan where a borrower is given a revolving credit with a certain limit. The funds can be accessed when needed and can be re-accessed after payment until the terms of the loan are up. Interest is only charged for the actual amount borrowed for any given month. Generally speaking, a HELOC is the most challenging to qualify for among all the types of home equity loans. There is a possibility that you can still get a HELOC even with a bruised credit if you borrow from private lenders with the help of mortgage professionals.

Do you want to know more about second mortgages and HELOCs? Are you still on the fence about applying for a home equity loan? Contact us and our mortgage professionals will be happy to answer your questions.