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Home Equity Loans in Ontario

One of the easiest loans to access for homeowners is a home equity loan in Ontario. There are different types of home equity loans and hundreds of lenders in Ontario to meet the needs of every homeowner. The type of loan you choose is dependent on your employment status, your credit score, and your home equity and home’s appraisal value.

The main advantage of a home equity loan in Ontario, Canada, is that it is easy to access and you can use it in any way you want. Read on to learn how to pick the best home equity loan rates in Ontario. 

What Is A Home Equity Loan In Ontario?

Home equity refers to your home’s market value minus the amount you owe lenders. For instance, if your home’s appraisal value is $500,000, and you owe lenders $200,000, then your home equity is $300,000. Your home equity is the amount that a mortgage broker and money lenders consider before approving your loan application. 

Lenders will approve you for up to 80 percent of your home equity. There are different types of loans including primary mortgage, second mortgage, home equity line of credit (HELOC), and reverse mortgage. 

A primary mortgage is what you take when you have 100 percent equity in your home. A second mortgage is taken when you are still paying your primary mortgage – this option comes at a relatively high-interest rate. HELOCs are ideal when you need lower interest rates, you have a good credit score, and reliable and provable income. In HELOCs, you can access your money through a credit card whenever you need it and only pay interest for the money you spend. A reverse mortgage is available for retirees above the age of 55. With a reverse mortgage, you never have to make monthly payments or clear your loan unless you are selling your house or moving. 

What Can You Use A Home Equity Loan In Ontario, Canada, For?

You can use your home equity loans in Ontario, Canada, in any way you want. Some of the ways to use a home equity loan include:

  • Debt consolidation
  • House renovation
  • Make an investment
  • Send children to college
  • Take a vacation
  • Boost your business
  • Boost your retirement income with a reverse mortgage
  • Help a family member financially
  • Pay medical bills

There are so many more ways to spend your home equity loan. 

Home Equity Loan In Ontario vs. Second Mortgage

Any loan taken against the market value of your home is a home equity loan. If you take a home equity loan when you are still paying your first or primary mortgage, this loan is considered a second mortgage. The primary mortgage is given first priority in the event of a foreclosure sale and the second mortgage second priority. Due to the risky nature of these second mortgages, they come at high-interest rates (more than 10 percent at times).

A mortgage refinance is also worth considering. It allows you to receive a new mortgage at more favourable rates. Older homeowners who own their home outright also often consider reverse mortgages, which do not require repayment until you ultimately sell your home.

Pros and Cons of Home Equity Loans In Ontario, Canada

Pros

Easy Access

These loans are easy to access as long as you have home equity. Again, you can borrow large sums of money if your home equity allows. 

Can Be Used for Anything

There are no restrictions on how you use your loan. You can choose to have the loan in a lump sum or to withdraw whenever you need it.

Lower Interest Rates

Unlike unsecured loans, home equity loans are relatively affordable. The reverse mortgage and HELOC are the cheapest types of home equity loans. 

Cons

Variable Rates for HELOCs

HELOCs have the strictest approval requirements compared with other loan options. Again, they have variable rates which means your monthly payment rates might increase any time.

High-Interest Rates

Second mortgages come at high-interest rates, although still relatively affordable compared to credit cards and other types of personal debt.

Trust Loans Geeks for Finding Home Equity Loan Rates in Ontario

When you need the best home equity loan rates in Ontario, you can compare rates from hundreds of lenders on Loans Geeks. The platform compares lenders based on their rates, reputation, and customer service. 

Frequently Asked Questions

What is a home equity loan in Ontario?

A home equity loan is a loan taken against the equity on your home. Home equity refers to the appraisal value of your home minus what you owe lenders. If you default on your home equity loan, you might lose your home. 

How does a home equity loan work in Ontario?

An appraiser might be sent to your home to estimate the market value of your home before your loan is approved. These are long term loans that can be paid in 10 or more years.

How do you get a home equity loan in Ontario?

Home equity loan requirements include home equity and your home’s market value (as the main requirement), a reliable source of income (especially for a first mortgage and HELOC), and a good credit score. An appraiser might be sent to your home before your loan is approved.

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

Depending on the lender you choose and the type of home equity loan you apply for, approval might take between a day and a week. 

What is needed for a home equity loan in Ontario?

You need home equity; which is the percentage of your home that you own. 

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

You can borrow up to 80 percent of your home’s equity. Even if you have a first and second mortgage, the amount you borrow can never go above 80 percent. Some lenders, however, offer home equity loans benefits up to 85 percent of your home equity. 

5 Things To Do In Ontario

  1. Explore the Thousand Islands National Park
  2. Take a tour to the Agawa Canyon Park and Enjoy Breathtaking Views
  3. Visit Algonquin Provincial Park
  4. Dive into the Fathom Five National Marine Park
  5. Canoe the Wabakimi

Map of Ontario

Things To Do In Ontario

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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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