3 things Ontario homeowners should know about home equity loans

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As Ontario slowly emerges from the coronavirus pandemic, many homeowners are starting to take stock of their financial situation and planning for a future that will hopefully be more stable than the turmoil of the past year.

As homeowners start to revive projects that were put on pause during the pandemic, many are exploring they can fund these long-term plans, and in some cases, this means considering a home equity loan.

If you are considering getting a home equity loan in Ontario or simply want to know more about your borrowing options as a homeowner, here are three things you should know about home equity loans.

1. They Can Be Used to Consolidate Debt

Most Canadians are carrying a considerable amount of unconsolidated debt, much of it from high interest loans like credit cards. It has been estimated that the average Canadian has non-mortgage debts totaling almost $24,000.

While some of this debt is “good” debt from student loans or other necessary investments, a lot of it is consumer debt that simply serves as a drain on personal finances. Financial experts have long argued that one of the best ways to deal with large amounts of unsecured debt is to consolidate it into a single lower-interest debt that can be more easily paid off in installments.

Home equity loans are one of the most affordable ways for homeowners to consolidate debt, so if you want to start working toward a debt-free future, get in touch with a local mortgage broker today.

2. They are a Low-Interest Way to Fund Repairs

Owning a home means you’re responsible for maintaining it, and for Canadians, summer is the perfect season to book property repairs. But if you need to have a new roof installed or your foundation patched, the price tag can be pretty daunting, and finding low-interest ways to borrow is important if you don’t want to be saddled with significant medium-term debt.

One of the most common reasons people take out a home equity loan is to finance repairs, and mortgage brokers are the best way to find borrowing options tailored to the needs of homeowners trying to invest back into their properties through maintenance and renovations.

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3. Home Equity Loans are Available to Borrowers with Bad Credit Scores

Home equity loans are a form of secured debt, which means that you are borrowing against an asset — in this case, the equity you have in your home. This means that even people who might struggle to secure a regular loan due to a low credit score can often get a home equity loan.

For those with poor credit, the best way to explore the options for a home equity loan is to contact a mortgage broker specializing in residential loans for homeowners with credit scores below 650.

Home equity loans can be one of the smartest options for homeowners to borrow large sums of money in sustainable and responsible ways. If you think a home equity loan may be the best way to pay for debt consolidation or home renovations, get in touch with an Ontario mortgage broker today.