Toronto Homeowners Can Financially Leverage Their Home

Living in Toronto is expensive. Housing in Canada’s largest and most populous city is among its most expensive. Inflation is rising, and so are grocery costs. True, homes cost less now than they did a year ago, but they’re still far more expensive than they were before the pandemic began, and they were expensive then too.

Luckily, homeowners have a few ways they can squeeze the value of the equity they’ve already built in their homes by paying their mortgage each month.

Home Equity Lines of Credits

A home equity line of credit, or HELOC, is a secured and revolving line of credit using your home as collateral. Homeowners can tap into their home’s equity sooner to access money when they need it, rather than years later, when they eventually sell their home.

HELOCs tend to be approved quickly because lenders are reassured to see property as collateral. The borrower can begin using the funds when they want and repay as they borrow. There are multiple types of HELOCs, and there’s considerable wiggle room for homeowners to adjust and customize the terms to suit their budgets and lifestyles.

Home Equity Loan

A home equity loan is like a HELOC, except instead of an open and revolving loan, the borrower gets a lump sum of money at one time they’ll need to repay according to an agreed-upon schedule. As with HELOCs, there are different types of home equity loans, and leading mortgage brokers can work with people who have been denied a bank loan due to their levels of debt, income, or credit.

Also, like HELOCs, most advisers recommend carefully spending the money you borrow because the costs of failing to repay could be high, including potentially losing your home. While most advisers will correctly insist, you’re free to use the funds as you please, they usually recommend things like reinvesting them in the home.

Such an approach raises the value of the asset you’re borrowing against, which can offset the borrowing costs or even result in a net profit. Others may tap into their home’s equity to raise quick cash for investment opportunities.

If you splurge on a vacation or new car using money from a home equity loan, you’ll have to pay for both the luxury goods and the borrowing costs in full.

Second Mortgages

Some people wrongly think that second mortgages are a last resort for financially desperate people. They’re actually very popular, and you can get a second mortgage in Toronto to help afford a world of rising costs.

Secure the right mortgage, and you can help bad credit and save over $1,000 each month, which is serious money and adds up quickly.

No two people have the same financial or lifestyle goals, so it’s crucial to get personalized advice from experts accredited by the Better Business Bureau. They can go deeper into the weeds about each of these options after listening closely to your needs. Many Toronto homeowners are struggling to make ends meet, and you should know all the ways your home can help you out.