Home Equity Loans: How to Access Your Home's Equity
There are many reasons why a homeowner might want to access some of the equity in their home. Whether it's to pay down consumer debt, cover school tuition costs, or complete home renovations, using the equity available in the property is a great way to avoid taking out high-interest loans. Here's how home equity loans can help homeowners tap into the cash they've built up in their Edmonton home.
How They Work
Many people assume that home equity loans work exactly like traditional loans, but there are a few important distinctions between the two types of lending. Unlike a traditional home loan, a home equity loans uses the equity that you've built up in your property to secure the financing. Another important difference between home equity loans and conventional loans is that a home equity loan typically has a variable interest rate as opposed to a fixed one. A third difference between the two types of loans is that home equity loans offer revolving credit, so you can access as much cash as you need, when you need it.
Accessing Your Home's Equity
How much you can borrow depends on your home's current market value, how much equity you've built up in your property, and the balance of your mortgage. Generally, lenders will allow you to access up to 80 percent of the appraised value of your home, minus the unpaid balance of your existing home loan. If your home is worth $350,000, for example, and you currently owe $125,000 on your mortgage, you can borrow up to $155,000 ($350,000 x 80% - $125,000).
How to Qualify
Our lending specialists can help you quickly and easily access the cash you need, using your home's equity as collateral. Contact us today for more information about home equity loans and to discuss whether this type of financing is the right choice for you.