The world economy is not yet in a good state and probably will not be back to normal for at least a few months or longer. Even economically strong countries like the United States and Canada are affected because of the crippling effects of the pandemic and other global issues. What does this mean and what can be done to alleviate this issue? One way to help the economy recover is for households to have more purchasing power so that they can use the money to help themselves and channel that money back into the economy. This is easier said than done since a lot of people have lost their source of income and many have still not yet recovered. So, where will the money come from?
Use Your Home Equity Now
A big part of the Canadian population are homeowners. Meaning, that a lot of people have home equity. Home equity is a financial asset that can be used as a source of funding or emergency funds. How can people access their home equity then?
Liquidating home equity is usually done by selling a home but that may not be easy to do now because of recent restrictions that were enacted in Canada to help control the housing boom as well as property prices. Because of this, there are a lot of mandates to navigate, requirements to meet, fees to pay, and needing to have at least a good credit score the qualify for certain things. For people who own home equity, refinancing their mortgage or getting a second mortgage might be an easier way to access their home equity through a home equity loan as opposed to selling their property.
Why Use Your Home Equity Now?
There is a lot of untapped value in terms of residential properties in Canada. The estimated value owned by homeowners sitting in property and houses are in the billions if not trillions of dollars. If a certain percentage of homeowners decide to tap their home equity, that will be money that can be re-injected back into the economy to restart businesses and help things move along as people are still reeling from the economic effects of the pandemic.
There is talk that using home equity could be a bit difficult or challenging for some people, but the truth is that some lenders have come up with less strict requirements these days. One thing to watch out for, though, would be the possibility of shifting policies and other regulations that the government may come up with in response to today’s trying times.
Does it Make Sense to Apply for a Home Equity Loan Now?
Interest rates remain at a historical low which means that the current terms are a lot friendlier for homeowners who might want to get a home equity loan such as A HELOC. With today’s interest rates of only around 4%, it means that someone will only need to pay around $33 in monthly interest if they owe about $10,000 for a HELOC. This figure will slightly vary based on specific home equity loans but gives one an idea of what to expect in terms of paying interest. This is a small amount considering the financial benefits of having an extra $10,000 to use for important matters.
If you’re thinking of using your home equity in 2022, do not hesitate to contact us whether you might be planning to refinance your mortgage or wanting to get a home equity loan. At Mortgage Central Canada, our offices are open to answer your questions and meet your needs. Contact us today.