There are many ways Brampton homeowners
can use the equity they have accumulated in their home. Whether planning to pay
for a child’s education, pay off high interest debt, or looking to do
substantial upgrades to your home, tapping into your biggest asset is one of
the best ways to fund some of the bigger financial obligations in your life. If
you are considering using some of your home’s equity, there are a few ways to
approach the situation. Here are some of your options and why second mortgages
in Brampton make the most sense.
Home Equity Line of Credit
Home equity line of credit (HELOC) are
one way to refinance your mortgage. HELOCs have many benefits such as being
able to take up to 65 per cent of your home value, and since it is a line of
credit, you can withdraw from it as needed. There are also no feeds involved
and homeowners only repay a variable rate plus the premium. To qualify for a
HELOC, you only need 20 per cent equity in your home and can gain access to up
to 80 per cent of the value of your home.
HELOCs are usually best suited to
situations where you are not sure how much your costs are going to run you
thin. For example, if you are using it for home renovations, costs could end up
being more than you had originally planned for. A HELOC is a great way to have
enough money available without having to take out more than you actually need.
If you know exactly how much money you
will need, a refinance could be
in your best interest. Much like a HELOC, you only need 20 per cent equity in
your home and have the potential to access up to 80 per cent of the value of
your home. When you refinance, you get
on lump sum payment instead of a revolving line of credit, with the option of a
fixed or variable rate.
The biggest difference between a HELOC and a refinance is how interest is
calculated. On a HELOC, you are only charged interest on what you use versus a
refinance charges you interest on the entire loan.
There are fees and penalties associated with a refinance as well as prepayment penalties,
which can equal up to three months of interest. However, in some cases, the
monthly payments may be lower for a refinance and is often the best option for
those who need to borrow money for a large expense like a child’s education.
Second Mortgages in Brampton
A second mortgage is often the best
option for homeowners with less than 15 per cent equity in their home. Like a
first mortgage, a second mortgage is a loan from a lending institution. In this
case, your home is used as collateral for your second mortgage. The second
mortgage will give you a lump sum of cash that can be used to cover an
emergency, buy a second home, or anything else you see fit.
a mortgage professional assess your personal situation to decide if second
mortgages in Brampton are the best option for you.