WHAT IS HOME EQUITY?
The amount of ownership built in a home that signifies the current market value of the house subtracted by the remaining
mortgage payments. The value of the home is constructed over time as the owner pays off the mortgage as the market value of the property only
increases! To calculate the amount of equity one has in their home all you do is take the value of your home minus the total of your mortgage
and that gives you your home equity! From there you are able to refinance your home to pay off any bills, do some renovations on your home or
even go on that vacation you’ve always wanted to go on.
TYPES OF HOME EQUITY LOANS
There are two types of home equity loans, a fixed-term loan and a line of credit often referred to as a HELOC. A home equity loan is a one-time
lump sum of money that slowly gets paid back monthly with a fixed interest rate, while a HELOC provides you with access to funds as you need
them and you would pay it back as you would a credit card. When getting approved for a home equity loan, financial institutions will approve
your request up to a specific amount based on the remaining equity of your home as your equity in your home will act as collateral. Although
interest rates on a home equity loan are higher than on a first mortgage, they are typically much lower than on a credit card and at Canadalend.com
we are committed to finding you the best rate.