After purchasing a home and making mortgage payments for several years, you may have unexpected expenses, plans for remodeling, or maybe you’re interested in making a financial investment in a new opportunity. Based on your homeownership and good standing with your mortgage lender, you may be eligible for a home equity loan.

Aman Duggal, a home loan expert, provides his clients with advice to help them carefully consider their options to pursue a home equity loan, the potential amount of the loan, as well as possible lenders, rates and terms among home equity mortgage companies.

Call Aman today to find out if a home equity loan is right for you.

What is a home equity loan?

A home equity loan allows a homeowner to borrow a lump sum of money that’s based on the owner’s equity in their residential property. Similarly, a home equity line of credit qualifies a borrower for a maximum amount, which can be withdrawn as needed, and the borrower only repays the withdrawn amount.

The homeowner’s equity, which is the value of the property minus any mortgages against it, informs the prospective home equity lender about the likelihood of the loan being repaid, especially if the homeowner is still making first mortgage payments. In general, you will need at least 20% equity in your home before you are eligible for a home equity loan.

What are the benefits of a home equity loan?

• Lower interest rates. Many home equity borrowers benefit from significantly lower interest rates than what they would have with a private loan or credit card. This is especially true if the loan is used for a large purchase.
• Extended repayment terms. Most home equity loans are repaid over a longer period than credit cards, resulting in lower monthly payments.
• Flexible spending. Although a home loan relies on your home as equity, the purchase(s) made with the loan amount can be unrelated to the home. Home equity borrowers can use the money for any expenses, including school tuition, vacations, vehicles, and anything else – big or small. In some cases, borrowers use the home equity line of credit to pay off a higher interest private loan or credit card. Of course, a homeowner may also use a home equity loan to pay for home remodeling and furnishings.
• Large loan amounts. Depending on the amount of equity a homeowner has in their home, the loan can be approved for a large amount of money, which often exceeds the amount of credit the borrower can access with a credit card or private loan.

Still not sure a home equity loan is the right solution for you?

Tell Aman more about your first mortgage and current financial needs. He’ll help you consider your options and weigh the benefits and pitfalls of a home loan. He’ll also research your best options for a loan among Canada’s home equity lenders. Based on your financial situation and long-term goals, Aman’s advice will be a tailored solution that’s meant just for you.