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Home equity loans in Toronto offer homeowners a loan option with lower interest rates than other credit options such as credit cards. The loan is paid to the borrower in a lump sum and their home is used as collateral. Here we explain everything you need to know about home equity loans Toronto homeowners might be considering to help you decide if it is a good choice for you.

HOME EQUITY 101 UNDERSTANDING BANKS, MORTGAGE BROKERS, LINES OF CREDIT, AND SECOND MORTGAGES/HOME EQUITY LOANS

Understanding how to use the equity in your home can be difficult depending on your situation. Download this eBook now to make the process easier and to have a better understanding of the options available to you today.

Home Equity Loans Toronto: Get Yours Approved Today

If you are looking for an accessible loan to provide cash to pay off debt, make home improvements, or for other emergencies, home equity loans in Toronto could be the answer. Because you are applying for an asset-based loan, it can often be easier to qualify than it was when getting your mortgage. Because it is a simpler application process, you can receive approval today by applying through Citadel Mortgages here.  

What is a Home Equity Loan?

Home equity loans are actually second mortgages. If you have a primary mortgage, the lender uses your home as collateral, which means if you default on your home equity loan, the lender can take your home to cover their losses. The loan is provided in a lump sum based on 80% of the market value of your home, less what you still owe on your mortgage. You’ll need to qualify for the loan the same way you would with a primary mortgage. You then pay your first and second mortgages at the time.

What Can I Use a Home Equity Loan for?

You can use home equity loans for anything. However, homeowners usually access the money for the following:

  • Home renovations
  • Debt consolidation or to pay off higher interest loans like credit card balances
  • Children’s education funds
  • Retirement and other investments
  • Purchasing a second home, such as a cottage

How Much Can You Borrow on a Home Equity Loan?

You can borrow up to 80% of your home’s current market value, less what you still owe on your primary mortgage. If your home is worth $800,000, the calculation would be $800,000 x 0.80 = $640,000. However, you then have to deduct the amount owed. So, if you still owe $200,000, you would have to remove that from the $640,000, leaving you up to $440,000 the lender might be willing to loan you.

What are the Advantages and Disadvantages of a Home Equity Loan?

There are many advantages of a home equity loan, including:

  • A lump sum loan of up to 80% of your home’s equity
  • Lower interest rates than other types of credit
  • Fixed-rate home equity loans provide a consistent monthly payment and repayment schedule for simplified budgeting

You also have to consider the disadvantages of a home equity loan, such as:

  • Your preferred bank might not offer the option
  • Although interest rates are lower than other forms of credit, it is higher than primary mortgages rates
  • Your home is at risk if you can’t repay your loan
  • You are charged fees for the appraisal and legal fees

How to Get a Home Equity Loan?

You can apply for a home equity loan in Toronto if you own a house with at least 20% equity available. To qualify for the loan, you can follow these steps:

  • Apply with your lender
  • They will confirm that you have 20% equity available
  • Your home will be appraised, usually for a fee
  • Your lender will conduct a credit check to ensure you have a high enough credit score of about 620
  • You will have to prove you have the income and an acceptable debt-to-income ratio to make payments along with all your financial obligations

OUR TRUSTED LENDER PARTNERS

Our Featured HOME EQUITY LOAN Rates

HELOC

( HELOC UP TO 65% LTV OF HOME)

HOME EQUITY LOAN

( STARTS AT 8.99% UP TO 80% LTV OF HOME)

We'll help you find a rate and term that fits your needs.

How to Calculate My Home Equity?

Your home equity is calculated based on the current market value of your home less your mortgage balance.

Use Our Home Equity Line Of Credit Calculator Today!

Calculate Your Home Equity, Interest Rate, and Monthly Payments Below FREE, with No Obligations with our Home Equity Line Of Credit Calculator Now!

Secure | No Obligation | Get Approved Today

Home Equity Loan vs. HELOC

Here is an overview of each:

Home equity loans

  • This loan is considered a second mortgage
  • The loan is provided in a lump sum which means you pay interest on the total amount
  • You can access up to 80% of the market value of your home, less your current mortgage balance
  • Usually has a fixed interest rate above current mortgage rates

HELOC

  • This loan allows you to borrow money now and more if you need it
  • It works like a credit line with a credit limit based on up to 65% of your home’s market value
  • You pay interest only on the money you’re using
  • Your payments are based on the outstanding balance drawn from your HELOC
  • The HELOC has a draw period when you access the loan and a repayment period during which you can’t access more money and focus on repayment
  • HELOCs usually have variable interest rates making them riskier

Whether you have good or bad credit, a Home Equity Loan can help get you money for whatever you need, and the process is usually as little as 2-3 business days. Due to the increased risk for the lenders, because the home equity loan is in the second position, the interest rates for home equity loans are typically more than those for first mortgages and will have fees as part of the mortgage.

The term “home equity loan” is used because the loan is second in priority in case of default. This means that if a borrower defaults, the first mortgage will be paid off before the home equity loan.

We have many private mortgage lenders who have helped our clients receive home equity loans regardless of income or credit, based on the equity in their property. See the difference for yourself and get approved today with our home equity loan mortgage solution!

See The Difference For Yourself. Get Approved Today!

Home Equity Loan vs. HELOC

Here is an overview of each:

Home equity loans

  • This loan is considered a second mortgage
  • The loan is provided in a lump sum which means you pay interest on the total amount
  • You can access up to 80% of the market value of your home, less your current mortgage balance
  • Usually has a fixed interest rate above current mortgage rates

HELOC

  • This loan allows you to borrow money now and more if you need it
  • It works like a credit line with a credit limit based on up to 65% of your home’s market value
  • You pay interest only on the money you’re using
  • Your payments are based on the outstanding balance drawn from your HELOC
  • The HELOC has a draw period when you access the loan and a repayment period during which you can’t access more money and focus on repayment
  • HELOCs usually have variable interest rates making them riskier

These Documents will be required to close your home equity loan needs:

  • Current Mortgage Information Statement – Must be dated the same month as your application form, if you do not have one you can contact your mortgage lender and request one to be sent to you by email.
  • Most recent property tax statement – If you do not have this, then you can get the most updated statement from your local city hall.
  • Most recent NOA may be requested to show no income tax owing –  If income tax owing it will need to be paid out from the new home equity loan upon closing.
  • Other documents may be required, our mortgage agents here at Citadel Mortgages will help you if any additional documents are needed for your home equity loan needs.

Increase Your Cash Flow With A Home Equity Loan For Any Of The Following Needs

  • Consolidate Debt
  • Renovate Your Home
  • Invest In Your Business
  • Pay Off A Consumer Proposal
  • Pay Mortgage Arrears
  • Purchase Investments including Real Estate
  • Pay for wedding expenses
  • Pay for education
  • Cover medical expenses
  • Pay CRA tax arrears
  • Pay property tax arrears
  • Take a family vacation
  • Purchase a car
  • Get out of high-interest loans
  • Invest In RRSP or RESP
  • Pay off payday loans
  • Pay Off Judgments, Garnishments
  • Finance whatever your specific needs may be

FREQUENTLY ASKED QUESTIONS ON HOME EQUITY LOANS

Lenders prefer to see a credit score of at least 620 to qualify for a home equity loan.

In Ontario, you can qualify for up to 80% of the appraised value of your home, less your first mortgage balance.

You require at least 20% equity in your home to qualify for a home equity loan.  Here is how you can calculate your home equity:

  • Find out your current home value
  • Find out your current mortgage balance
  • Divide your current mortgage balance by your home’s market value

For example, if your market value is $400,000 and your mortgage balance is $100,000 you divide $100,000 by $400,000 to find your equity is 25%.

Yes, you can pay off a home equity loan in Toronto without any penalties in most cases.

It depends. Basically, the loan is repaid in monthly installments, which means your loan would be paid at the end of your loan term.

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Citadel 4-Year Fixed Mortgage Rates

6.99%

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4-Year-Fixed

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Yes

Pre-approval

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15%

Pre-Payments

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15%

Lump sum pre-payment

Citadel 4-Year Fixed Mortgage Rates

6.99%

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4-Year-Fixed

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Yes

Pre-approval

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15%

Pre-Payments

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15%

Lump sum pre-payment