Looking for a loan to run or expand your small business? Do you own your own home? If so, a home equity loan is the best way to finance your investment. Read on to find out more….
Home equity loans offer flexible payments, simplicity, and the lowest interest rates. This makes home equity loans ideal for small business loans. This is especially true in Canada, thanks to rising home values and still low interest rates.
This is probably why investments are one of the main uses of home equity loans in Canada.
I’m sure that you have questions though, and we want you to be as informed as possible.
If the remainder of this article doesn’t answer your questions, or if you are wondering if a home equity loan is right for you, then just give us a shout
- home equity loans explained
- Characteristics of a home equity loan
- Advantages of a home equity loan for small business
- How do you qualify for a home equity loan?
- How do I get a home equity loan
A home equity loan is simply a loan backed by residential equity. Essentially, it’s a mortgage, typically in second place (second mortgage). According to this broad definition, your mortgage with your bank is considered a home equity loan. However, for our purposes, we will narrow it down to refer to second mortgages issued by private lenders, such as ourselves. Loans are typically interest-only and short-term (6-12 months). They are designed to be transitioned to a re-financed mortgage or similar product as soon as possible.
- Interest rates start at 5.95%
- Loan to values (LTV) up to 80% (this means that your total loan can go up to 80% of the value of your home)
- Loans start at $25,000 and go up to $2 million
- Available to applicants with poor credit
The cheapest financing you can get will always be secured – loans backed by an asset. The cheapest secured loans you can get will always be backed by residential equity (HELOCs and mortgages).
The cheapest mortgage financing you can get will be through a traditional bank. If this is possible, it should be pursued. This will always be our main goal for you and we will place you with a bank loan immediately if possible.
Failing that, however, a home equity loan is your best bet for a few reasons:
- Home equity loans offer short-term financing (6-12 months)
- Home equity loans interest only, allowing you to adjust your payments according to your needs and situation
- Home equity loans offer lower interest rates than unsecured debt
Our home equity loans are designed for homeowners. Our main criterion is your Loan-to-Value ratio (LTV). Essentially, your existing mortgage plus the loan you want from us can’t exceed 80% of the value of your home. In the image below, this homeowner could access a loan of $150,000, which would bring their LTV to 75%.
This differs from a typical mortgage, which requires income qualification. The problem with that is that, as a small business owner, you write-off as much as you can to lower the income on your tax return. This saves you money, but also makes it difficult to obtain a mortgage, even if you have good credit and income.
This is why home equity loans are perfect for self-employed and small business owners – we are able to lend based on your equity, rather than the income on your tax return.
The entire process of applying for a home equity loan is surprisingly quick and easy and can be done from the comfort of your home, in pants…or not (we don’t judge).
If you would like to apply for a home equity loan, just click here.
Book a Planning Process With One of Or Experts
Too soon? If you just want to know more, you can fill out some basic information by clicking this link and we can assess if a home equity loan is right for you.
And of course, you can always give us a call!