If you have big dreams of home renovation or just being
debt-free quicker, it’s time to look into a home equity loan for your Ottawa
Between a Home Equity Loan and a Home Equity Line of Credit
Equity is the difference between what you owe on your
mortgage and the current market value of your home. If you’ve been paying your
mortgage for years, you could have amassed hundreds of thousands of dollars in
home equity – just by paying your mortgage each month! Given the increase in
property values in Ottawa since interest rates have lowered, it’s worth having
your home appraised by a real estate agent to discover its current value. That
will give you a good idea of your home’s equity.
Both home equity loans and home equity lines of credit
provide you with money based on that equity. Since you use your home as
collateral, you can get a lower interest rate.
A home equity loan is a fixed-rate loan that provides you
with a one-time payment of cash. In return, you pay a fixed amount each month
for a set term. Your interest rate remains the same throughout the loan’s term.
This is an advantage since you can budget for your payment each month without
having to worry about rising interest rates lifting your payment amounts.
A home equity line of credit (HELOC) functions more like a
credit card. You are assigned a maximum amount and can draw against that
amount. You can take as much or as little as you need. Your monthly home
equity line of credit
payment will vary depending on the terms you choose,
your current amount owing, and the current interest rate offered. An advantage
of a HELOC is that you get a much lower rate than your credit cards so less
money is spent on interest. A disadvantage is that the bank can cancel
the HELOC or reduce the limit.
Some of the Advantages of an Ottawa Home Equity Loan
Home equity loans are a great way to get the cash you need
for one-time expenses, such as a new car or family vacation. It’s also a great
way to get the funds you need for a renovation that will increase the value of
your home. You can also consolidate
There’s no need to pay high credit card or store credit card
rates when you can pay an interest rate that’s just above the prime rate. You
can take out a home equity loan to pay off your credit cards and use the money
saved on interest to pay down the principal faster. It can shave years off your
repayment plan. It also lets you combine multiple monthly expenses into one
lower payment, making it easier to track.
A home equity loan helps you avoid the added expense and
financial penalties that occur when you refinance a mortgage to include debt
consolidation. Use the equity you’ve built in your Ottawa home to qualify for a
home equity loan so you can renovate your home, travel abroad, buy a new car,
or find debt relief.