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Mortgage Lenders in Oshawa Can Help You Borrow Against the Equity in Your Home

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You are in a unique borrowing position as a homeowner. With the right approvals from mortgage lenders in Oshawa, you can borrow against the equity in your home with a home equity line of credit. The equity you have in your home is the difference between the current appraised value of the home and the amount owed on the first mortgage. A home equity line of credit is similar to a second mortgage in that the security for the loan is the borrower’s equity in their property.
 

What Makes a Home Equity Line of Credit Different?

 
A home equity line of credit is different from a traditional loan in that the borrower does not receive the entire loan up front. Mortgage lenders give the borrower a line of credit which can be used any time the borrower requires money. The concept of a home equity line of credit is similar to a credit card. You qualify for a set spending limit that you can access at any time. Your repayment schedule is based on the amount of money you use, the type of home equity loan you have, and any fluctuations in the interest rate.
 

Why Choose a Home Equity Line of Credit?

 
A home equity line of credit is a financing tool with readily available funds that carries no interest when unused. A home equity line of credit is often used for debt consolidation or as an emergency fund or for everyday expenses, but there are always advantages and disadvantages associated with any financial product.
 

Pros of Home Equity Line of Credit:

  • Homeowners are able to consolidate debt that has a high interest rate into one low interest rate monthly payment
  • Using the equity you have built up may be one of the most cost effective ways to lower your borrowing costs
  • By paying off outstanding debt, you will improve your credit score
  • The home equity loan can be spread out over the lifespan of your mortgage, which is often up to 25 years
  • Provides access to credit for unexpected expenses, home improvement projects, or major purchases
  • Great way to finance a small business in a cost effective manner
  • Helps pay for children’s education
  • Helps to repay mortgage and tax arrears
  • Gives you disposable cash on hand

Cons of Home Equity Line of Credit:

  • You are risking your home if you cannot pay the loan back
  • When you borrow against your Oshawa home, you lose equity or ownership in the home, thus putting more equity back in the hands of the mortgage lender
  • Once you get the loan money, you may be tempted to spend it instead of paying off your debts if you decided on a home equity line of credit for debt consolidation
  • You will need to pay closing costs on the loan which may include a home appraisal

If you have the discipline not to use it unnecessarily, a home equity line of credit can be an ideal financing option. If you are considering a home equity line of credit in Oshawa, mortgage lenders will evaluate your current financial situation and help you decide if this type of loan is best for your financial situation and lifestyle needs.

 

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