Home Equity Loan Broker in Ontario (2024)

FAQs

What disqualifies you from getting a home equity loan? ›

Most lenders require you to have at least 15% to 20% equity left in your home after factoring in the new loan amount. If your home's value has not appreciated enough or you haven't paid down a big enough chunk of your mortgage balance, you may not qualify for a loan due to inadequate equity levels.

Many home buyers simply assume that a broker can deliver a better deal than they could get on their own, but this is not always the case. Some lenders may offer home buyers the very same terms and rates that they offer mortgage brokers (sometimes, even better).

Mortgage Brokers and Home Equity Loans

In addition to traditional banks, you can reach out to savings and loans, credit unions, and mortgage companies. It's wise to get at least three quotes, and a mortgage broker can help you compare offers.

If your application is turned down, it's likely to be because you don't meet lenders' home equity loan requirements in one of these areas: Available equity: You typically need more than 20% equity built up to qualify for a home equity loan. Credit score: Few lenders will approve you if your score is below 620.

Home equity loans are relatively easy to get as long as you meet some basic lending requirements. Those requirements usually include: 80% or lower loan-to-value (LTV) ratio: Your LTV compares your loan amount to the value of your home. For example, if you have a $160,000 loan on a $200,000 home, your LTV is 80%.

Individuals who are less qualified buyers or are buying less traditional properties will have an easier time finding loans for which they can be approved by going through a mortgage broker than by going through individual direct lenders with generally stricter criteria for approval.

On average, agents take a 6% commission on the listing price when a property is sold. This is usually split between the seller's agent, the buyer's agent, and the respective brokers.

Negotiating with brokers can be a daunting task, especially if you are not familiar with the market, the jargon, or the tactics. However, with some preparation, research, and communication skills, you can negotiate like a pro and get the best deal possible.

Experts advise against using loan money to buy stocks—you can possibly lose the money and be stuck with a loan you can't afford to repay. You should also avoid using a HELOC to invest in luxuries like vacations, since the money will be gone quickly without an asset to sell if you end up needing the money down the road.

Who doesn't qualify for a HELOC? ›

Poor payment history. In addition to credit and income, lenders will also look at your payment history on rent, loans, or mortgages. They are looking for a history of on-time payments with no defaults as an indication of your ability to pay in the future.

Negotiating terms: Don't be afraid to negotiate with the lender. Sometimes, they may be willing to adjust the terms of your loan, including the interest rate, in order to win your business.

The current average rate nationwide for a 10-year home equity loan is 9.07%. If you take out a loan for $200,000 with those terms, your monthly payment would come to $2,541.10.

10-year fixed home equity loan: 10-year fixed rate home equity loans currently have an average interest rate of 8.79%. At that rate, the monthly payment on a 10-year $10,000 home equity loan would be $125.54. You would pay $5,065.05 in interest over the 10-year loan term, bringing your total payoff cost to $15,065.05.

If you took out a 10-year, $100,000 home equity loan at a rate of 8.75%, you could expect to pay just over $1,253 per month for the next decade. Most home equity loans come with fixed rates, so your rate and payment would remain steady for the entire term of your loan.

While every lender has its own requirements, to qualify for a home equity loan, you'll typically need: Sufficient equity in your home. A fair credit score — typically 680 or higher. Little other debt.

Generally, your maximum loan-to-value ratio — including your home equity loan and other mortgages — cannot exceed 85% of your home's value. Some lenders allow you to borrow up to 90% of your home's value, while others limit borrowing to 80%.

Your credit history, debt-to-income (DTI) ratio, and the amount of home equity you have play a role in determining if you will be approved for a home equity loan. With better credit, you can qualify for better interest rates.

Every loan requires some level of documentation, but some home equity loans will allow you to qualify without traditional income verification, such as pay stubs and tax returns. Instead, the lender relies more heavily on other aspects of your application, such as your credit score or bank statements.