Unlock the equity in your home to enjoy more flexible life choices!
We’ve empowered thousands of Canadian homeowners to leverage home equity through loans, lines of credit, and reverse mortgages. With our great rates and information, making the right choice is simpler than ever.
A Simple Guide to Tap into Your Home Equity
Home equity takeout involves taking out a new loan secured against the equity built up in your home.
Estimate your Home Equity
Home equity refers to the portion of your home that you fully own, separate from any loans against the property. Essentially, it’s the current value of your home minus what you still owe to lenders.
Wondering how much equity you have available? Figuring out precisely requires taking a few steps:
- Determine your home’s current market value
- Calculate your total loan balance
- Subtract total loans from current value
Being aware of your accumulating equity puts you in a position to consider borrowing against your home later on through a mortgage refinance or home equity loan.
Built up substantial equity in your home? Take advantage now!
What are your options for a Home Equity Takeout?
Second Mortgage: Access a Lump Sum
A second mortgage can provide a large lump sum of money by tapping into your equity as collateral. You take out an additional loan behind your existing first mortgage. Lenders will permit borrowing up to 80% of your home value minus your first mortgage balance.
HELOC: A revolving credit
A home equity line of credit (HELOC) works similarly to a credit card or personal line of credit, providing flexible access to funds against your home equity. You’re approved up to 65% of your home value. You can draw money as needed until reaching your limit and pay interest on the amount borrowed.
Home Equity Loans: One-Time Cash Options
Home equity loans are best for large, specific borrowing needs. They provide a one-time lump sum of cash, up to 80% of your home value, with fixed monthly repayment installments.
Reverse Mortgages: Special Option for Seniors
Reverse mortgages allow homeowners aged 55+ to access tax-free funds against home equity without making monthly payments. Reverse mortgages permit borrowing up to 55% of your home’s appraised value, which allows seniors to access equity without repayment burdens.
Compare Your Equity Release Options
If you’re still unsure which borrowing method best suits your needs, this comparison table can help:
| Product | Interest Rate | Access to Funds | Credit Limit |
|---|---|---|---|
| Second Mortgage | Fixed or variable, 0.5-2% higher than first mortgage | One-time lump sum | Up to 80% of home value minus first mortgage debt |
| HELOC | Variable rate tied to prime rate | Revolving credit line | Up to 65% of total home value |
| Home Equity Loan | Fixed or variable rate | One-time lump sum | Up to 80% of home value |
| Reverse Mortgage | Fixed or variable, typically higher than traditional mortgages | Lump sum or installments | Up to 55% of home value |
Dive Deeper with our Home Equity Guide
Explore our Home Equity Guide to gain confidence in your decision
Borrowing against your Home Equity with Best Mortgage Online
Our simple approval process makes borrowing against your home equity straightforward:
- Meet with our mortgage experts to evaluate your goals and options.
- Confirm your property’s value and available equity through an appraisal.
- Check your credit score – we can advise ways to improve it.
- Choose us as your lender and provide the required documents.
- Complete a detailed application for review.
- Get approval and close on your preferred equity release solution.
Unlock your Home Equity now!
Tapping into your home equity can provide access to funds when needed. However, there are multiple options, each with unique pros and cons. Consider all alternatives and weigh the risks before choosing the best home loan or line of credit for your situation.
Leverage your equity with confidence with Best Mortgage Online today!
FAQs
How much home equity can I borrow against?
You can typically borrow up to 80% of your home's equity value. The amount will depend on your credit score, income, and mortgage balance.
What are the risks of borrowing against home equity?
Risks include accumulating more debt against your home, potential foreclosure if you can't repay, and less equity available later for other needs.
Where can I get a home equity loan or line of credit?
Major banks, credit unions, mortgage lenders, and brokers offer home equity lending options. Compare rates and terms across multiple lenders.
Why might I be rejected for a home equity loan?
Low credit scores, high debt levels, insufficient income, and lack of adequate home equity are common reasons for denial.
When should I tap into home equity?
When you need a large lump sum for expenses like home renovations, debt consolidation, major purchases, or personal investments.
Do home equity loans have early repayment penalties?
Most lenders don't charge prepayment penalties on home equity loans or lines of credit but check the terms first. Paying early can save on interest.
Can I get a home equity loan with bad credit?
While ideal credit scores are 700+ for the best rates, you may still qualify for a home equity loan with a score of around 580-630.