Getting a Home Equity Loan in Toronto - or Alternatively, a HELOC.

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Anyone living in Toronto knows that it can be difficult, financially, to get along, and owning a home changes the nature of those difficulties, but does not erase them. Whether it is a barrage of small day-to-day costs, a sudden major expense, or the ever-present issue of credit card interest rates, there are a number of ways to make things easier; among them is the possibility of a home equity loan in Toronto - and of a home equity line of credit (HELOC).

Closed-End Loans

The classic "second mortgage” home equity loan format, of course, has a place. Heavy costs can come from nowhere, or loom overhead for a long time unaddressed, creating desperation and stress. For example, damage caused by storms or by the extreme winters Toronto tends to see can leave homeowners without an immediate solution, allowing the damages, costs, and risks associated with them to grow. On the other side of the coin, parents in Toronto or the GTA, especially those who do not qualify for OSAP, may not always be able to put out the money for tuition and other costs associated with post-secondary education, and student loans are not always enough on their own. In situations like this, the closed-end home equity loan can shine.
A second mortgage may also be used to consolidate debts through some mortgage brokers and banks. By knocking off a huge amount of interest in this way, you may lose the alluring minimum payments of credit card debt, but you will also be out of debt much faster, allowing your money to go into more constructive things than just your creditors’ wallets.

Open-Ended Loans (HELOCs)

On the subject of credit, there is also an alternative to a second mortgage for home equity - available in a Home Equity Line of Credit, or HELOC for short. These are revolving credit loans similar to credit cards in nature, but balanced against your home equity, and as such they have a much lower interest rate. For those with a number of small but regular costs and inconvenient rhythm to their income - or income that isn’t always predictable, but remains reliable - this can be a good way to balance things out without racking up credit card debt that ends up in a nasty debt spiral. Where closed-end loans can be used to consolidate debts, a HELOC can help you avoid those debts in the first place, keeping your credit score high and your head above the proverbial water.
This kind of home equity loan in Toronto could potentially make your life easier. While home equity loans typically require an excellent credit score through major banks, some private mortgage brokers specializing in home equity may offer them to people with poorer credit. As is the case with any loan, research should be done beforehand and caution should be exercised by consumers. While home equity loans in Toronto can be helpful, one should also keep in mind other alternatives, and should speak with professionals to find out what will work best on an individual-to-individual basis. It serves neither you nor the broker if your loan ends up being something you do not need, so do not be afraid to ask questions, or even walk away to carefully consider the situation if need be.


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