Transform your house into a home
You’re likely here because you’ve decided that it’s much more beneficial to make your house suit your needs rather than selling and buying new. Why deal with the stress, costly fees and adjustments of moving to a new neighborhood?
Maybe some new landscaping, an extra wing for your growing family, an expanded kitchen, or a swimming pool in the backyard is just the thing to make your home better suit your needs. Or, perhaps you’re ready to move-up and want to upgrade your home’s features to make it more appealing to potential homebuyers.
In any case, a record number of Canadians have tapped into their home equity for improvement projects. There’s never been a better time to access the extra funds that can help bring your home to that next level of comfort. Consider accessing the cash you need to complete the home renovations and improvements you’ve been dreaming of.
Frequently asked questions
HELOC stands for Home Equity Line of Credit. It is a revolving amount of credit that is secured against your home. During the HELOC process, the lender will decide on the amount of your HELOC.
Lenders allow total loans (mortgage plus HELOC) of up to 80% of your home’s value. So, if your home is worth $500,000 and your mortgage is $200,000, your HELOC could be as much as $200,000. You can draw from that money at any time, for any reason.
What is the difference between a Home Equity Line of Credit and a Home Equity Loan?
While both a home loan and a home equity line gives you access to the equity in your home, a home equity loan gives you a one-time lump sum of money. Whereas, a home equity line of credit (HELOC) provides convenient, ongoing access to funds when and as you need it.
The more equity available in your home the more funds you have available to borrow. A HELOC gives you the freedom and flexibility to use the funds as you need and allows you to repay the line of credit with interest only payments on the funds you actually use.
What can I use a HELOC for?
A HELOC has a unique advantage in that it can be used, repaid, and used again, while only paying interest on the portion of the funds that have been used. A HELOC is a good solution for many funding needs, such as launching or supporting a small business, covering medical and health care expenses, accessing funds for purchasing a second property, financing home renovations, repairs, construction, and all kinds of other household projects.
Is a HELOC or a second mortgage better?
A HELOC is actually a type of second mortgage. The main difference between the two is how you will receive your loan payment. A second mortgage is a lump sum, whereas the HELOC is a line of credit. The HELOC functions like a credit card with a credit limit and minimum monthly payments. You will be required to make fixed-rate payments however, this is typically added to your mortgage principal.
For individuals with an existing mortgage, who have good credit and more than 20% equity in their homes, the most affordable second mortgages will be in the form of a home equity line of credit. However, if the homeowner has weaker credit and/or little equity in their property, a second mortgage through a trust company or private lender would be required.
Can I have more than one line of credit?
Yes, you can have multiple home equity lines of credit outstanding, even on the same property, as long as you hold enough equity in your home to meet the lender’s guidelines.
If you own multiple properties and have the equity available, you can have as many mortgages and equity lines or loans as you can qualify for. As long as you’re not overleveraged or owe more than your properties are worth, there’s no limit to the number of home equity loans or HELOCs you can have at one time.
How do I qualify for a HELOC?
Lender requirements will vary, but here's what you'll generally need to get a HELOC:
A debt-to-income ratio that's 40% or less.
A credit score of 620 or higher.
A home value that’s at least 15% more than you owe.
The process of getting a home equity line is similar to any purchase of a refinance mortgage.
Here the are the steps we’ll follow:
1. First, we’ll determine whether you have sufficient equity and how much is available for you to borrow.
2. Then, we’ll gather the necessary documentation before you apply to ensure the process goes smoothly. We will present your file to lenders on your behalf and once selected, apply for the HELOC.
3. We will then review the lender’s disclosure statements and begin the underwriting process which can take anywhere from a few hours to a few weeks.
4. The final step is loan closing, when you sign paperwork and the line of credit becomes available.
Our team of licensed experts are ready to help transform your house into a home.
Click "Get started" to begin your mortgage refinance.