Home Equity Line of Credit
Mississauga

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Using the Equity on Your Mississauga Home

Home Equity Lines of Credit or HELOCs are popular among the Canadian public as they offer easy and relatively inexpensive access to funds. Once the amount is agreed, the money can be withdrawn whenever it is needed.

A HELOC is ideal for those who don’t need a large sum of money all at once but who want to use their home equity for easily accessible funds in the future.

Home equity is the portion of your home that you own. It is calculated by subtracting the amount owed on the property from its market value. In many instances, home equity represents a significant portion of the home owner’s wealth.

The amount of home equity that you have accumulated will depend on the appreciation of property values over time, the size of the initial down payment and how much of the principal amount has been paid. Every time you make a payment on your Mississauga home, a portion of that payment is allocated to the principal amount.

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Featured Rates

FIXED

LenderRateTerm
Mortgage Lendwise RateLendwise

2.59%

5-Year
Mortgage First National Bank RateFirst National Financial

2.95%

4-Year
Mortgage RMG RateRMG Mortgages

2.69%

3-Year
Mortgage Street Capital RateStreet Capital Bank

2.99%

2-Year
Mortgage TD Bank RateTD Bank

2.79%

1-Year

VARIABLE

TermRate
5-Year variable

2.9%

(prime - 1.05%)
3-Year variable

2.9%

(prime - 1.05%)

HELOC

TypeRate
HELOC

4.2%

(prime +0.25%)

OTHER

TypeRate
Line of CreditStarting at

3.00%

Equity LoansStarting at

5.99%

Private MortgagesStarting at

5.99%

HELOCs – The Facts

HELOCs are restricted by law to 65% of the appraised value of the property, but this can be supplemented by a mortgage of up to 80% of the value. You can increase the HELOC as the equity in your home increases but you will have to make a new application and pay additional costs when you do this.

HELOCS operate like a revolving line of credit and you can use the funds up to the agreed amount as and when you need them. Because it is a secured loan it is a lot cheaper to service than most other lines of credit.

The interest rate is usually governed by the prime interest rate. HELOCs operate on adjustable interest rates, so you run the risk of interest rates rising. Because of this risk, you should be careful to keep the repayments well within your ability to pay.

A default in payment could result in you losing your home. Some lenders will allow you to lock in a portion of the HELOC to reduce the risk.

HELOCs are interest-only loans for an agreed period. After the period has lapsed the instalments will be increased to include the principal. The HELOC is technically the second mortgage and so in the case of payment default, the lender will receive payment only after the primary mortgage has been settled. Because of this additional risk, the interest rate on the HELOC will be higher than the interest on the primary mortgage.

Know the Costs and Conditions

Most Mississauga lenders will allow you to take a HELOC at any time during the mortgage period. The amount that they lend you will depend on the appraised value of your home at the time of the application. The cost of the appraisal and the closing fees are the only costs that you will pay over the term of the HELOC.

HELOC’s are subject to review and can be revoked or reduced by the lender at any time during the term of the loan.

Whilst HELOC’s are great financial tools for those wanting flexible and accessible finance, at relatively low cost, as with all such matters, you should discuss costs and the terms and conditions of the contract with your mortgage broker before signing a contract.

OUR CUSTOMERS LOVE US

I've worked with mortgage brokers before and have had some issues, so wasn’t sure if i wanted to go to a bank or a broker again. I ended up finding Leon and his team and the reviews seemed really positive, so i decided to just give them a call and see what they offer. Leon explained everything over the phone and was able to adjust to my schedule for a meeting. We ended up going over everything from start to finish, I explained my situation and he recommended a mortgage for me. He explained how it would save me money and how he would guide me step by step. At any point during the process he was literally just a phone call away and was very responsive. The best experience I’ve ever had with my mortgage. Gonna stick with Leon and his team from now on.
Randa Conyers
Randa Conyers
04:49 24 Feb 18
I found Leon a few months ago when we were looking to secure a mortgage for our new home. I read the reviews and they all seemed positive, so I gave him a call. Leon and his team honestly live up to their reputation, they answer all their calls, respond to emails within the hour and have the best rates I’ve seen. They know everything about the market and answer every question I have. Got a great rate and the customer service was outstanding. Would recommend to anyone, 5 stars
Yolanda Sizelove
Yolanda Sizelove
11:41 17 Feb 18
Most of my income is in dividends so my mortgage approval turned out to be a lot more complicated than normal. Leon guided me step by step through the whole process. He explained everything, was very patient and answered any questions i had. A week before the closing the lender asked for some additional documents and Leon was just a phone call away and was able to get everything together right away. Great service and great team.
Christin Franco
Christin Franco
03:34 01 Feb 18
Working with Leon has honestly been amazing. He managed to find a bunch of properties at a great price. We told him what we were looking for and our budget, he was able to find properties that we were able to renovate and re market. It has honestly been a pleasure working with him.
Tener Fellers
Tener Fellers
03:02 19 Jan 18
The entire team at certified mortgage broker were very kind and professional. Never worked with a mortgage broker before, but was tired of the terrible service at my bank. After a bit of research I found these guys and its been great. They are easy to reach, my rate is lower and they are VERY professional. Awesome service.
Myron Wiggins
Myron Wiggins
02:11 15 Feb 18

Our Barrie Based Mortgage Brokers Offer the Following Services

Private mortgage

Conventional mortgages are not for everyone. Sometimes a private mortgage is the best or only way to finance the property of your dreams. Private mortgages are tailored to the needs of the individual. They come all shapes and sizes. Most importantly, private lenders are more concerned with the value of the property that will secure the loan than in the credit rating of the lender.

Private mortgages are short term loans. Typically, they run for terms of between six months and three years. They are also interest only loans. The interest rate on a private mortgage will be higher than you’ll pay on a conventional mortgage. The higher interest rate reflects the higher risk to the lender.

You will also have to pay closing fees for the loan. You should budget for between 1% and 3% for these fees, but most lenders will include the fees in the mortgage. You will also need a down payment of at least 15%.

A private mortgage is the best fit for you under the following circumstances

  • You have a low credit rating and have been turned down by a conventional bank
  • You are self-employed or working off commission and have difficulty proving your income
  • You plan to buy an unconventional property that the banks won’t finance
  • You need the money quickly to take advantage of an investment opportunity.

Applying for a private mortgage is quick and easy. Private lenders do not have to wade through the bureaucracy common amongst the bigger institutions.
Your private lender will help you with an exit strategy because at the end of the term you should be in a position to pay back the capital amount and refinance through a cheaper conventional loan.

Second mortgage

A second mortgage is a loan secured by a property against which you already have a mortgage. It is a convenient way to convert the equity in your home into cash, since you can use up to 85% of your home equity for this purpose.

Equity is that portion of your home which you own. It is the difference between the market value of the property and the amount that you owe on it. Every time you make a payment, a portion of that payment goes to interest and the rest comes off the principal, growing your equity. When the value of property increases over time, so too, does your home equity.

If you’re thinking of renovating or extending your home, need money to send your children to college or simply wish to consolidate your debts through a cheaper secured loan, a second mortgage could provide you with the cash to do just that.

A second mortgage is subservient to the first, meaning that if you default on payments and the house is sold as a result, the holder of the first mortgage will receive payment before the second mortgage holder. For this reason, the interest on a second mortgage will be higher than on your primary mortgage. It is, nonetheless, still a lot lower that the interest on unsecured debts.

Depending on your needs you can take the money in a lump sum, or you may opt for a Home Equity Line of Credit or HELOC. A HELOC offers revolving credit, where you can take the money that you need when you need it. You pay interest only on the amount that you have withdrawn.

Commercial property

If you’re planning to buy commercial rather than residential property, unless it’s for investment purposes, you’ll need a commercial mortgage.

Applying for a commercial mortgage can be complex because when it comes to suitability, it is not the individual that is assessed but the business. Because of this complexity it can take up to a year to obtain approval on the mortgage. You’ll have to provide financial statements and income forecasts. As the owner of the business your own creditworthiness is also paramount.

Commercial mortgage interest rates are also considerably higher than the residential mortgage, reflecting the higher risk inherent in the commercial mortgage. The risk is higher because the payment ability depends on the business’ success.

It is difficult to gauge what a market related interest rate is because rates differ between industries and businesses. A certified mortgage broker that specialises in commercial mortgages is invaluable when it comes to estimating what a fair interest rate is for the property that you want to buy.

The term of a commercial mortgage is typically anywhere between three and ten years.

Lenders financing a commercial mortgage generally require a fairly large down payment to reduce their risk. A loan to value ratio of between 80% and 65% is what they’ll look for.

Before the lender approves the mortgage, he’ll want an appraisal and a survey of the property.

Reverse mortgage

If you’re older than 55 and your home is fully paid-up you may be eligible for a reverse mortgage. A reverse mortgage is a financial tool that many home owners use to make a secured loan against their property. It is designed for older people who may find it difficult to cope with the cost of living. By accessing your home equity, you can fund your way of life without having to sell your home.

If you opt for a reverse mortgage you can access up to 55% of the value of your home. How much it is worth will depend on your age, the appraised value of your property and the mortgage provider. You can take a lump sum or smaller amounts as you need them. You could even use the lump sum to buy an annuity, ensuring yourself a regular income.

With a reverse mortgage you are not required to make regular payments. You only have to pay back the loan if you sell the house or move out. At which time you will have to pay back the value of the loan and any accumulated interest.

On your death the bank will sell your home and use the proceeds to pay back the amounts owing on the reverse mortgage. Your beneficiaries will receive what remains of the money.

A reverse mortgage offers home owners a handy way to improve their standard of living, giving you control of your finances. On the downside, they are more expensive than conventional mortgages as they have higher interest rates. There are also other costs involved including appraisal and closing costs.

Private mortgage

Conventional mortgages are not for everyone. Sometimes a private mortgage is the best or only way to finance the property of your dreams. Private mortgages are tailored to the needs of the individual. They come all shapes and sizes. Most importantly, private lenders are more concerned with the value of the property that will secure the loan than in the credit rating of the lender.

Private mortgages are short term loans. Typically, they run for terms of between six months and three years. They are also interest only loans. The interest rate on a private mortgage will be higher than you’ll pay on a conventional mortgage. The higher interest rate reflects the higher risk to the lender.

You will also have to pay closing fees for the loan. You should budget for between 1% and 3% for these fees, but most lenders will include the fees in the mortgage. You will also need a down payment of at least 15%.

A private mortgage is the best fit for you under the following circumstances

  • You have a low credit rating and have been turned down by a conventional bank
  • You are self-employed or working off commission and have difficulty proving your income
  • You plan to buy an unconventional property that the banks won’t finance
  • You need the money quickly to take advantage of an investment opportunity.

Applying for a private mortgage is quick and easy. Private lenders do not have to wade through the bureaucracy common amongst the bigger institutions.
Your private lender will help you with an exit strategy because at the end of the term you should be in a position to pay back the capital amount and refinance through a cheaper conventional loan.

Refinance

When you refinance your mortgage, you replace one with another. The new mortgage with have different terms and conditions and a different interest rate. There are many reasons that home owners choose to refinance their mortgage. These include

  • Taking advantage of lower interest rates – when interest rates drop it may pay you to refinance, even at the expense of the penalties on your existing mortgage. Savings on interest can mount up when calculated over the term of the mortgage.
  • To cash in on home equity – You can borrow up to 80% of the equity in your home. Cashing in on your home equity can help you to realise your dreams like furthering your education or extending or renovating your home.
  • Consolidate debt – You can use the equity in your home to save money. Secured debt attracts substantially lower interest rates than unsecured personal loans and credit card debt. Using your home equity to consolidate debt can therefore save you loads of money.

When you choose to refinance there are several choices you can make

  • A new mortgage – A cash-out mortgage with new terms and conditions
  • A Home Equity Line of Credit or HELOC – A revolving credit agreement where you withdraw money when you need it and you only pay interest on the amounts that you have withdrawn.
  • Blend and extend – A mortgage agreement whereby you add to your current mortgage amount and combine the interest rates. Blend and extend mortgages attract higher interest rates, so you should get expert advice before opting for this type of mortgage.

Certified Mortgage Brokers Barrie can help you to make the choices that will suit your long-term financial strategy

Construction mortgage

A construction mortgage is designed to finance a property planned for or under construction. There are two basic types of construction mortgage:
A completion mortgage
A completion mortgage is one where a single payment is made on completion or on occupation. To qualify for a completion mortgage, you would have to make a down payment, but your lender may allow you pay it in instalments.

An advantage of the completion mortgage is that you can make changes to the mortgage up to 30 days before completion. This means that if there are any upgrades required or errors in costing you can adjust the mortgage to take account of these.

Also beneficial is the fact that the lender generally insists on completion of the project within 120 days of starting. On the downside, if your personal circumstances take an unfortunate change you may no longer qualify for the amount of money that you need.
A draw or progress draw mortgage
Many owner/ builders choose a draw or progress draw mortgage. As the name suggests the loan is paid out at various points of progress in the construction process. This ensures that the builder has a regular cash flow.

On the downside you can’t change the mortgage once it has been approved. You will pay interest from the first payment and it could be a long time before you take occupation. Finally, you are liable for the appraisal costs necessary to ensure that progress payments are made.

Home Equity Line of Credit

A HELOC is a secured loan under which the home serves as security. A Line of Credit is a form of revolving credit whereby you can borrow incrementally up to a pre-determined maximum. You only have to repay the interest and you only pay interest on the amounts that you have borrowed.

You can access up to 65% of your home equity through a HELOC. In addition, the HELOC and fixed mortgage may not exceed 80% of your home equity. Interest on a HELOC is variable and is attached to Prime. This means that the interest rate moves up and down with movements in the prime interest rate. The rate you pay is typically higher than the rate that you would pay on a fixed mortgage, but the flexibility is well worth the cost.

Advantages of HELOC’s

  • These are easily accessible loans at relatively low interest rates
  • Because they are secured loans the interest rates are lower than the interest rates on unsecured personal loans or credit cards
  • Access to cash is flexible – you can access the money as you need it.

Disadvantages of HELOC’s

  • Concluding a HELOC attracts fees including appraisal, legal and application fees
  • Interest rates could increase
  • The bank could reconsider your loan and reduce the loan amount
  • If you are undisciplined and choose not to pay anything off the principal amount you could run up your debt.

Mortgage porting

Mortgage porting is the act of taking your mortgage with all its current terms and conditions from one home to another when you buy and sell.

If, as is quite often the case, the new property is more expensive than the old, you can still port it and get the lender to arrange a blend and extend mortgage. If you choose this option and you qualify for the additional amount, your lender will add the additional principal onto the loan amount and then combine the interest rates. More often than not the lender will also increase the fixed term of the contract.

It makes sense to port your mortgage if the interest rate on your current mortgage is lower than the interest rates currently on offer for new mortgages. If it isn’t you may want to consider breaking the current mortgage, paying the penalties and getting a new mortgage at better interest rates.

Not all mortgages are portable and even if they are, they have a window period of 30 to 120 days in which to sell and the buy a new property. Typically, only fixed rate mortgages are portable. Most lenders will allow you to change your variable rate mortgage to a fixed rate and then port it.

Before you decide on whether to port your mortgage or to refinance you should consider all of the benefits and shortfalls. Porting can save you having to pay penalties and it can preserve the low interest rates that you enjoy. Porting a mortgage is only possible if you buy and sell the old and new properties at the same time.

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