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Home Equity Loans in Alberta

Albertans earn the highest salaries in Canada but they also have the highest levels of consumer debt. If you need an easy way to consolidate high-interest loans, you can consider a home equity loan in Alberta. Home equity loans offer that flexibility that other loans lack. As long as you have equity in your home, you can access these different types of home equity loans and use them as you please.  

Home equity loans are short term loans, most need to be paid within two years. However, your first/primary mortgage and sometimes the second mortgage might be long term, payable in 5 years or more. Read on to learn more. 

What Is A Home Equity Loan In Alberta?

Home equity refers to your home’s market value less what you owe lenders as a mortgage. For instance, if your Alberta home is valued at $600,000, and you have an unpaid mortgage of $250,000, your home equity amounts to $350,000.

Lenders are willing to offer you up to 80 percent (some up to 90 percent if you have a good credit history and reliable income) of the appraisal value of your home. There are different types of loans offered as home equity including:

  • Primary mortgage
  • Mortgage refinance
  • Second mortgage 
  • Third mortgage
  • Home equity line of credit, HELOC
  • A reverse mortgage for retirees
  • Borrow back what you pay

With so many options there is a loan for everyone. One of the main home equity loan requirements is home equity. As long as you have more than 20 percent home equity in your home, you can access a home equity loan. You can get approval within a day. Some loan options, such as HELOCs, require that you have a good credit score and a reliable income to enjoy the benefits of home equity loans. 

What Can You Use A Home Equity Loan In Alberta For?

The lender will not ask what you intend to spend your money on. Granted, you can borrow a loan even if all you want is to have a large sum of money in your bank account. That said, most people take a home equity loan in Alberta to:

  • Invest 
  • Educate children
  • Take a vacation
  • Consolidate high-interest credit card debt
  • Pay medical bills
  • Renovate their home
  • Boost business
  • Pay tax debt

Home Equity Loan In Alberta vs. Second Mortgage

When you take a loan against the equity in your home, it is said to be a home equity loan. These loans come in different forms as listed above. A second mortgage is a home equity loan that you take when you are still paying your primary mortgage. Because the second mortgage takes second priority in case of a foreclosure sale, you will be a higher interest for it. 

Pros and Cons of Home Equity Loans In Alberta

Pros

Lower Interest Rates

A home equity loan in Alberta is a secured loan. These loans are, therefore, offered at lower interest rates. If you have a good credit score and reliable income, the interest rates will be even lower. 

No Regular Payment for Reverse Mortgage

For retirees 55 years and above, you do not have to pay regularly so you can increase your retirement income. 

Easy Funding Process

As long as you have home equity, you will get approval for a home equity loan within 24 hours after application. Except for HELOCs, most other options do not consider your credit score and income. 

Cons

High-Interest Rate on Second and Third Mortgages

If you take a second or third mortgage, the lender takes a higher risk lending you the money. As such, the interest rates are high. In most cases, you will pay more than 10 percent interest per year. 

Cheaper HELOCs have Strict Lending Requirements

While HELOCs have low-interest rates, you need a good credit score and a reliable source of income to qualify for it.

Trust Loans Geeks for Finding Home Equity Loan Rates in Alberta

With so many loan options and lenders in Alberta, you might be confused with the loan option or lender is best for you. You can rely on Loans Geeks to connect you with the best home equity loan lender. All you need to do is enter your details and the mortgage broker will do the rest. All lenders listed on Loans Geeks are licensed.

Other Types of Home Financing Available in Alberta

Not sure a home equity loan is right for you? Check out these other methods of financing available in Alberta:

Conclusion

A home equity loan in Alberta is ideal when you need instant cash and when you need long-term loans. To ensure you do not lose your home in a foreclosure sale, budget your money and ensure you pay the loan on time. 

Frequently Asked Questions

What is a home equity loan in Alberta?

Any loan you take against your home’s equity is a home equity loan. Home equity is your home’s market value minus the amount you owe lenders. 

How does a home equity loan work in Alberta?

An appraiser estimates the value of your home and from that existing mortgages are subtracted to see what you qualify for. 

How do you get a home equity loan in Alberta?

Send an application through which you give your personal details, your home and its location, existing mortgage details, your income, and your social insurance number among others. The lender will get back to you within 24 hours.

How long does it take to get a home equity loan in Alberta?

Approval usually comes within 24 hours after which the funding process starts. 

What is needed for a home equity loan in Alberta?

You need home equity. Some loan options, such as HELOC, need a good credit score and a reliable income. 

How much can I borrow with a home equity loan in Alberta?

You can borrow up to 90 percent of your home’s market value with a good credit score and a reliable source of income. Otherwise, most lenders offer up to 80 percent.

5 Biggest Banks in Alberta

  1. Tangerine
  2. Scotiabank
  3. CIBC
  4. Royal Bank of Canada
  5. Bank of Montreal

5 Things To Do In Alberta

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Things to do in Alberta

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Check Your Rate

A home equity loan allows you to access funds (also known as “equity”) tied up in your home. Interest rates tend to be much lower for home equity loans compared to other types of financing because your property is listed as collateral on the debt.

The amount of money you’re eligible to receive through a home equity loan all depends on the value of your property and how much equity you have built up in it. As part of the process, the lender will appraise your home and determine your equity.

While individual lenders may have their own stipulations, you can generally use a home equity loan for just about anything. People regularly use them for paying off high-interest debt, covering financial emergencies, and even taking vacations.

Lenders set their own home equity loan rates. They generally range from 2.35% to 4.45%. A major factor to consider, however, is the prime rate, which is set by the Bank of Canada. Lenders set rates as an additional percentage above prime.

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