There are many financial emergencies that can arise and take us completely by surprise. Emergency house and car repairs can cripple our bank accounts and cause unexpected debt. Large renovation projects, vacations, investments or other expenses are attainable through home equity that offers lower interest rates than traditional credit cards. Homeowners may be unaware of the financial options available to them. Vaughan homeowners can work with a mortgage specialist to see how they can make their home equity work for them by managing a variety of different financial situations.

 

Second mortgages allow access to home equity to help support financial needs, planned or otherwise. To qualify for a second mortgage, homeowners need to have built up at least twenty percent equity in their home. To calculate the equity, simply deduct the amount of debt owing on a first mortgage from the value of the home. It should also be mentioned that home value can change along with the market, so tracking the Vaughan housing market will also help you understand how much equity you have built in your home.

 

 

Debt consolidation is one way homeowners can use equity to their advantage. Outstanding bills and debt can be paid off with one loan! Restoring financial security is done through one simple monthly payment. The advantages include:

• Significantly lower monthly interest rates – lower rates mean you can pay off your debt in less time, years in fact. This allows borrowers to keep more of their own money, saving thousands in interest.
• Fewer monthly payments – helps borrowers budget accordingly and not "forget” to pay any outstanding bills while keeping their credit in good standing.
• One easy-to-pay bill each month – this decreases financial stress and streamlines the repayment process.
• Eliminate credit card debt – borrowers tend to turn to credit cards to "save the day” when it comes to emergencies or debt consolidation. Credit cards offer a much higher rate of interest, making it harder to pay debt back quickly.

Home Equity Line of Credit Top Choice

 

The top choice among home equity borrowers is a home equity line of credit (HELOC). Like a standard line of credit, a HELOC behaves similarly to a credit card. A total amount is made available to borrowers, but on an "as needed” basis.  Interest only accrues on the borrowed amount. Like a credit card, as long as the minimum monthly payments are made, the loan continues in good standing. Additional payments can be made without penalty, unlike many traditional mortgages.

 

Another way to manage debt consolidation is through private mortgages. Vaughan homeowners with unmanageable debt can use the equity they have accumulated in their home and borrow from a private lender. Traditionally, the top banks will not lend to accommodate such situations. Private mortgages use independent investors to finance loans and take individual circumstances into consideration.

 

Vaughan homeowners have different mortgage options available to them to help with debt consolidation. Helping to manage debt by using home equity will provide financial security through lower interest and fewer payments. Speak with a lending expert to help you understand what options are available!