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).
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.