What is Home Equity?
A common question by many home owners is “what is home equity?” Simply put, it is essentially the difference between any existing mortgages (or other encumbrances) and the appraised value of your home. In other words if you have a home with a 1st mortgage of $100,000 and the appraised value of your home is $250,000, this would mean that you have $150,000 worth of equity!
Many homeowners, especially in Brampton and Mississauga, look to their available equity to help them with their short term financial goals. These can include but are not limited to the following circumstances:
- Debt consolidation
- Second home
There are essentially two main ways to access your home equity, without selling your home. One method is to place a mortgage on your home in exchange for the funds that you require that fit within the guidelines of the financial institution or lender. These funds are lump sum amounts and the interest accrues on the total funds acquired from the date of closing.
Another way to access your home equity is with what’s known as a HELOC. But what is a HELOC? A HELOC is a Home Equity Line Of Credit that is similar to a line of credit you would typically receive from the banks, however this type of loan is secured to your home. In other words, it’s a type of mortgage placed on your home. Unlike other types of mortgages, the HELOC is not a lump sum loan but rather allows you to access the funds you needed when you need them. Interest is paid on the outstanding balance of the loan and not the entire limit. In addition, you have the flexibility to be able to pay back all or some of the loan at any time without any penalties or limitations.
If you are interested in learning more about equity take outs, or If you’re looking for HELOC services in Brampton, or HELOC services in Mississauga, you’ve come to the right place, so give us a call!