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The Benefit of a Home Equity Loan in Oshawa

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If a home renovation or debt consolidation is your top priority, taking out a home equity loan on your Oshawa home may help you unlock the funds you need.

Home Equity Loan vs. Home Equity Line of Credit

Home equity loans and home equity lines of credit are similar since they both provide cash based on the difference between what you owe on your mortgage and the market value of your home. This difference is referred to as equity. If you’ve been paying your mortgage for years, you may be surprised to find out how much equity you’ve built in your home.
With a home equity loan, you get a lump amount of cash that you can use for anything you want. In return, you agree to pay a fixed amount each month for an agreed-upon term. The interest on your loan never changes – a real benefit if you lock in at a low interest rate. This allows you to plan your budget since your monthly payment never changes.
A home equity line of credit (HELOC) is like a credit card. As long as you make your monthly minimum payment, you can continue to withdraw funds until you hit the maximum. A HELOC doesn’t have a fixed payment; it varies depending on how much you owe, the current interest rate, and whether you pay interest only once or more each month.
One of the advantages of a home equity line of credit is that, as long as you’re below your limit, you always have money available in case of emergency – and that money is available at a much lower rate than on a credit card or store credit card. A disadvantage is that the bank can lower your line of credit maximum or even cancel it without much notice.
If you’re looking for debt relief but don’t want to incur the penalties that come with refinancing your mortgage, a home equity loan or line of credit may be for you.

Benefits of a Home Equity Loan

Home equity loans are great for accessing cash for a one-time expense, such as buying a car or paying for a home renovation. Since the loan uses your home as collateral, you get a lower interest rate than you would on most loans. That means you can consider renovating your almost perfect house so it transforms into your dream home, or you can try that cruise you’ve never been able to book in the past.
If you decide to consolidate your debt, you will get a lower interest rate, especially if you’re transferring your debt from high-interest credit cards. This translates into lower monthly payments, so you’ll have extra money to pay down the principal faster or to help with your monthly bills. Debt consolidation lets you combine multiple monthly payments into one easy-to-track monthly payment. When you unlock the home equity in your Oshawa home, you can use a home equity loan to help you afford life’s extras or for debt consolidation.


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