Home Equity Line of Credit in Surrey
One of the biggest advantages of being a homeowner is the ability to build equity over a period of time in your home. You can use your home’s equity as a strong financial borrowing tool to secure low-cost funds as a “second mortgage.” You can do this either as a one-time loan, or as a home equity line of credit (HELOC).
Benefits and Advantages
You can use the credit line to pull out cash anytime you need it. A line of credit will allow you to borrow up to 75% of your home’s value.
You can turn your home’s equity into cash, and as housing prices rise or you pay off your mortgage, you will have more home equity to borrow from.
You can repay at your own pace. There are low minimum monthly payments, which will keep your borrowing affordable.
The Basics of Home Equity Line of Credit
Since the loan or HELOC are secured against the equity of your home, lenders will offer extremely low interest rates. You’ll be paying less financing fees compared with other loans, like credit cards.
The main downside to using your home as collateral is that the lender will place a second charge on your home. This gives them rights to your home should you fail to make your monthly payments. The more you borrow, the more you risk.
Home Equity Mortgage Eligibility
All lenders follow guidelines that govern how much they can lend based on the value of your home as well as your own creditworthiness and income. Like any other type of loan or a mortgage, your eligibility for a mortgage and your interest rate depends on your employment history, income and credit score. The higher your credit score is, the lower your risk and the lower your rate will be.
Home Equity or Second Mortgage
Your home equity mortgage, commonly known as a second mortgage, will come as a one-time lump sum of cash. If you need money for a one- time expense like a wedding or renovation, then it is a great option. You will usually be offered a fixed rate, so you’ll be informed of what your monthly payments are precisely.
Home equity or second mortgages are usually a minimum of $25,000. Some lender’s minimum second mortgage amount is $50,000.
Home equity lines of credit are a little different. They are a revolving source of funds much, like a credit card. You can access your funds as you choose. They usually have variable interest rates. It can be a great emergency reserve fund because the banks do not charge any interest on the unused portion of the credit line.
If you would like to learn more about home equity loans and HELOCs, contact Benevolent Bancorp today.