A home equity mortgage typically refers to the act of getting additional financing out of your home. This would imply that there is a current mortgage in place, but that the equity in the home is sufficient to support additional residential mortgage financing against the property.
This can be done in one of three ways.
The first way to get a Toronto home equity mortgage is to get a new first mortgage at a higher loan amount, repay the old mortgage and then have access to the additional funds for whatever purpose was intended. With a new mortgage, the additional funds will be advanced in a lump sum, so you should have a ready application for the additional financing as you will be paying interest upon disbursement.
The second way to get a Toronto home equity loan is by securing a second mortgage against the property. From a qualifying point of view, you may be eligible for either a new first mortgage or a new second mortgage. The choice of taking a new second mortgage can relate to benefits from interest rate, prepayment penalty avoidance, amortization, and so on. There is likely to be very little rate difference between a new first mortgage or a second mortgage as well, so the choice is more about how the incremental home equity mortgage financing will minimize your costs and fit into your cash flow and long term repayment plans.
The third approach to securing a Toronto home equity mortgage is through a home equity line of credit, or HELOC. This type of residential home loan is very similar to new second mortgage in terms of mortgage registration and loan amount qualifying. The big difference comes in the flexibility that is provided to you when accessing funds and also paying them back.
A Toronto home equity line of credit will also tend to come with a variable interest rate which may provide a significant saving in interest costs over time.
The approach you take to securing a Toronto home equity mortgage should be based on the greatest value and least cost to you.
In order to determine which option is the best fit overall for your home and financial requirements, we invite you to give us a call to set up a time with a member of our team so we can go through all the different scenarios with you.