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Home Equity Loans in Kitchener – for Homeowners Considering a Refinance

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Some changes we embrace, some we rail against, some require money to deal with, but be assured, things will change. You can prepare for change, with a home equity loan that allows you to access the savings locked in your home, whenever, or wherever you need money. Change is unstoppable, but Kitchener homeowners can be ready for whatever life brings.

How Does a Home Equity Loan Work?

The lender registers a mortgage (a claim) on your property. If you already have a mortgage, the new loan may be used to pay off the old mortgage (called refinancing), or may be registered as a second mortgage. The total amount you can borrow is set at 85% of the value of the property being mortgaged.  Other conditions of the lender may include income or employment qualification, and a recent home appraisal or survey.  To find out how much you can borrow, check out this handy online mortgage calculator.

Accessing Your Home Equity Loan

Traditional residential mortgages advance all the money at purchase or refinance date and are used to buy properties, refinance existing debt or to advance funds for other purposes. Interest charges begin immediately. Mortgages registered as a line of credit allow the borrower to access only the funds they need, as they need them, and pay interest only on the portion used. It works like a very high-limit credit card with ridiculously low interest rates. Lines of credit are used for debt consolidation, home renovations, and new projects.

Types of Home Equity Loans for Kitchener Homeowners

First Mortgages – hold first position or claim if the property is sold. Commonly used for new home purchases offering terms up to 35 years, and interest rates that can be variable or fixed for 6 months to 10 years. Borrowers must qualify along with the property; and monies are advanced ‘all at once’, so interest charges begin ‘all at once’.
Second Mortgages – hold second claim, and are commonly used to access equity in a home. Second mortgages can sometimes enjoy most of the terms and rates of first mortgages, and again, borrowers and property must qualify. Equity is commonly accessed for debt refinancing or new projects.
Private Mortgages – can hold first, second or third position or claim on a mortgaged property. The lender is private, so lending conditions might not be as strict as a bank.  Private mortgages are used for unusual properties or borrowers who may not qualify under banking lending criteria.
Home Equity Line of Credit – can be registered as a first or second mortgage, and enjoys the secured low interest rates of a mortgage. Like any line of credit, it can be accessed or paid down, anytime. The ‘available’ amount is always accessible by you. It’s like having a pre-approved loan that you can access anytime. Plus, you only pay interest on amounts outstanding, so if your project is over time, you can access funds only when you need them, and incur interest only on monies you advanced.
TIP: The value of your home is based on recent sales of homes like yours in neighbourhoods like yours.  Contact your local Kitchener real estate professional to get an idea of the value of your home, and check out a home equity loan in with an experienced independent mortgage professional. 


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