Using a Home Equity Loan for Debt Consolidation

Have you considered this popular option?

The largest debt you will face as a homeowner is your mortgage.  With the right approvals, you can borrow against the equity of your home with a home equity loan.

What is a Home Equity Loan?

This type of loan is slightly different to a home equity line of credit (HELOC), which is a line of revolving credit with an adjustable interest rate. A home equity loan is a one-time lump-sum loan.  Lenders are generally comfortable adding to your current low mortgage rate because they are safeguarded by the fact that your loan is secured against your home.

A Tool for Debt Consolidation

The primary bonus of a home equity loan is in its debt consolidation capabilities.

How do I get a Home Equity Loan?

The best way of going about getting a home equity loan is through a Canadian mortgage rate professional.

Advantages of a Home Equity Loan

  • Cash in your hands to pay off outstanding high interest debts. 
  • By paying off outstanding debts you will improve your credit score. 
  • The home equity loan can be spread over the lifespan of your best mortgage rate, often up to 25 years. 
    • Tax deductions are available.

Disadvantages of Home Equity Loans

  • You risk your home if you can’t pay the loan back. 
  • When you borrow against your home you lose equity or ownership in the home.

Talk to a mortgage broker today to learn if this financial product is right for you.

 

Canadian Farm News