A Home Equity Loan, often referred to as a second mortgage, allows you to borrow money for large expenses or to consolidate debt by leveraging the available equity in your home. Home equity is based on the difference between the market value of your home and the outstanding balance on your mortgage. Here’s a simple, straightforward example: If your home is valued at $1,000,000 and you still owe $750,000 on your mortgage, then your available equity is $250,000.

Your home equity can be an excellent source of funds, but you must be smart about how you use that money. Here are some good reasons:

• A wise use is to fund Home Improvements that will allow you to live more comfortably and ultimately will increase the value of your home.
• If you find yourself in a financial emergency, such as suddenly hospitalized due to illness or accident and are faced with high Major Medical Expenses, you could tap into the equity in your home.
• When you have to finance a major expense, such as funding Tertiary Education Expenses and you compare the rates to other sources of cash, such as credit cards and personal loans, you will realise that the interest rate is more favourable through equity financing. This then will be a good reason to utilize the equity in your home.
• You can also use the equity to Consolidate Debt from high interest loans, including credit cards and allow you to streamline your monthly payments.
• If an Investment opportunity presents itself, then equity financing can be used to help you take advantage of this venture, including purchasing another property.

You should not use your home’s equity to fund recreational expenses or pay routine monthly bills which will be, in effect, using debt to fund your lifestyle. Remember, the security for this loan is your home.

If you have determined that you are indeed in need of a Home Equity loan, here are the some of the key benefits:

• Long repayment terms
  The repayment terms on home equity loans can be similar to that of a first mortgage. At TTMB you can be financed for up to 30 years! This can translate into a very affordable monthly repayment installment.
• Lower interest rates
  Because home equity loans are secured by your property, they are typically offered at a lower rate than unsecured forms of borrowing such as personal loans or credit cards.

If you are interested in exploring this option you can set up an appointment to speak with a knowledgeable TTMB representative and find out more about how your home’s equity can help you.