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There are two types of home equity financing options available – home equity mortgages and home equity lines of credit (HELOC for short). It is the purpose of the rest of this page to explain the pros and cons of each financing option, and to help you make a better decision.

What is Equity?

Home equity is the portion of the home that you rightfully own. For example, if the value of your house is $200,000 and the outstanding mortgage balance is $80,000, then your equity is $120,000. You can take out up to 95% of the $120,000 as a home equity loan mortgage or a home equity credit line, and use it for whatever purposes you see fit.

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Home Equity Loans in Canada

Home equity loans offer a way of taking out equity from your property and using it on needed expenses such as: renovations, education, medical costs, vacations, new cars and more, without breaking your existing mortgage. Equity home loans can be as big as the equity in your home, but cannot exceed 95% of property value. You must own at least 5% of the property at all times.

Payments on equity loans are similar to a regular mortgage. It is a regular loan secured through the equity built in your home. You receive a statement every month detailing the balance, how much you need to pay, and the interest / principal paid to date. To find a home equity loan company and to get the best home equity loan quote, put your postal code on top of this page, and let Kanetix do the rest!

A home equity loan is not to be confused with other products we can quote offline, such as the following:

Home Equity Line of Credit or HELOC for Short

A Home Equity Line of Credit is another great option for taking advantage of saved equity in your home. It works like a regular line of credit, but with one advantage – low interest rates.

Home equity lines of credit can be a great way to consolidate all your debt into one convenient loan at a relatively low interest rate. Student loans, auto loans and especially credit cards have high interest rates, which when combined together, can make for large payments every month. To reduce those payments, you can take out a home equity loan, pay off all other debt, and make considerably smaller payments every month, as opposed to covering several accounts at a higher rate of interest.

Please call us right now at 1-888-922-8422 x 216 to obtain your personalized HELOC rate quote.

Equity Line Visa

An equity line Visa is an actual Visa card that you can use to purchase goods and services or for cash advances. The rate of interest on an Equity Line Visa is determined by your credit worthiness. It can be a great tool for the self employed, to help carry the costs of their business, or to pay for something like home renovations.

The advantage of the Equity Line Visa over other products is that as your balance is paid down and more equity is built in your home, the available balance on your Equity Line Visa goes up accordingly. The rates offered on an Equity Line Visa are well below the rates offered by the average visa card issuer.

Please call us right now at 1-888-922-8422 x 216 to obtain your personalized Equity Line Visa quote.

What is Required to Obtain a Home Equity Loan, Home Equity Line of Credit (HELOC), or an Equity Line Visa ?

To get a home equity loan, equity line VISA or a Home Equity Line Of Credit, you need the following:

• Own at least 5% of the equity in your house / condo. (HELOC's can only go as high as 80% of the appraised value of your property - for up to 95% you will need to refinance your mortgage)
• Have a good credit rating (the higher your credit, the lower the rate of interest
• Employment information such as: yearly income (employer verification / bank statements or Canada Revenue Agency tax returns), length of time at the current job

Lenders also look at your debt to income ratio, which is a measurement that tells how much of your income goes toward paying debt (credit cads, student loans, car loans, mortgages, etc) and how much is spend on monthly bills (phone, electricity, gas, water, etc).

The ratio, properly called Total Debt Service (TDS), must ideally be 40%, however lenders are willing to work with higher brackets up to (44%) for clients with strong credit ratings.

Home Equity Loan, Equity line VISA and Home Equity Lines of Credit Interest Rates

Interest rates for home equity loans and home equity lines of credit can be both fixed and variable. Rates for equity line visa cards are fixed based on your credit worthiness.

• Fixed interest rates stay static for the duration of the loan term and do not change, meaning your payment always stays fixed and never fluctuates
• Variable rates (also called adjustable) could possibly change up to 8 times a year. Variable rate is tied to the “prime rate” set forth by the Bank of Canada. If the prime interest rate either goes up and down your rate will be effected. i.e. If your rate is Prime + 0.1% and prime is at 2.25% then your rate of interest is (2.25 + 0.10) 2.35%. So when the prime changes to 3% then your rate of interest would still be Prime + 0.1% or (3.0 + 0.1) 3.1%

If you are thinking of getting a home equity loan, and prefer your monthly payments to remain stable, then a fixed rate is the correct choice. Home equity line of credit rates can be variable or fixed, and regardless of your choice, are highly convenient when you need quick access to cash.

Find your lowest rate home equity loan with the help of Kanetix. Compare lenders and select your best option!