Mortgage refinancing offers many benefits, from lowering payment with lowered interest rates to consolidating of debt to access equity as collateral for a home equity loan or line of credit.
Home owners in the Ottawa Region and across Canada have purchased homes for a variety of reasons. Some want the stability of owning their own home, while others look at home ownership as an investment vehicle. No matter what the reason is, the truth is that home ownership has proven itself to be a good stable investment over time, and one which many home owners are profiting from.
Today, home owners have used home equity for making home improvements, furthering their investments portfolios, sending their children to university, boosting their RRSP contributions, and even high interest debt consolidation.
During a refinancing process, you will come across the term home equity and mortgage. While they are related to each other, but they are not exactly the same:
- Home Equity is the difference between your home’s fair market value and the outstanding balance of your mortgage.
- Mortgage is simply a loan secured by your home and are paid in installments in a predefined period.
Home Loans vs Line of Credit
- A home equity loan is secured loan provided in one lump sum based on the amount of equity you have in your home. Your home is used as collateral.
- A home equity line of credit provides you an ongoing access to funds. As you pay down your mortgage, you will build up the equity in your home and will automatically increase your line of credit available to you.
Mortgage refinancing has its benefits and risks, any home owners looking to utilizes their home equity should research fully and obtain information from the professionals. Contact The Laurin Team to discuss about refinancing and making your home's equity work for you.
Mortgage Tips: Using Home Equity To Your Advantage