Mortgage Brokers in Vancouver Can Get You Cash
If you’re a homeowner, chances are your home has increased in value since you bought it. If you subtract the amount that is remaining on your original mortgage from the amount of the value of your house today, you get the amount of equity you have in your home. Mortgage brokers in Vancouver can give you a loan, based on that amount.
Why Not Ask a Bank?
Banks are in the business of making money as are mortgage brokers, but banks have rules and regulations about lending. They will ask an applicant why they want the loan as well as about their credit history, age, income and other invasive questions. After getting the answers, they may decide to reject the loan application. When banks won’t help, mortgage brokers want to help applicants get the cash they need based on the equity of their homes.
How to Use the Money?
The money belongs to the homeowner and can be used for whatever he or she wants. The most common uses are:
- Pay down high-interest credit card debt
- Home upgrades or renovations to increase the value of the home
- Pay educational expenses
- Make large purchases such as a car
- Take a great vacation
When high-interest loans such as credit cards are paid-off, the homeowner can reduce their monthly payments by more than half. Home renovations are popular because the increase the value of the home and upgrade the living space. They can be used for a completely new kitchen or bathroom or to add a swimming pool or extra bedroom.
Why the Credit Rating Doesn’t Matter
Credit ratings show lenders the amount of risk involved with an applicant for a loan. If the rating is high, the applicant is considered low-risk and will most likely be granted a loan. However, there are many reasons why a credit rating may be low, and they don’t all apply to risk. Sometimes, there are mistakes on the credit report. If the applicant doesn’t use credit cards, they may have a low credit score. If they are self-employed they may also have a low credit score. This doesn’t mean they are high-risk borrowers.
Some Considerations about Refinancing
A home equity loan can be an effective financial-planning tool especially if it is used to manage debt.
- Consider the interest rates. The rates today may be lower than when the house was purchased. Lower interest rates are a great reason to refinance and could reduce monthly payments by thousands of dollars and provide much-needed cash.
- Consider cash-flow management. This means you get the cash you need for any reason.
- Consider tax strategies. The cash can be used to pay down non-tax deductible debt quicker and save tax-deductible debt to be paid off last.
It’s worth talking to a mortgage broker to determine if an equity loan is right for you. You’ll find out how much you’ll save making lower payments and how the lower payments will affect the principal.