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Refinancing & Home Equity Loans

By paying down your mortgage over time, you're building equity in your home.

By paying down your mortgage over time, you're building equity in your home. Accruing value on your property allows you to borrow against that built equity when you need to fund other large expenses, like starting a business, buying a cottage, debt consolidation, or investing in home renovations and repairs.

Home Equity Loan or HELOC?

Home Equity Loans vs. Home Equity Line of Credit

If you've decided to take out a home equity loan, you'll have two options: A lump sum, or a home equity line of credit (HELOC).

  • Lump sums are clear-cut: they're large sums of cash up front, paid back over time via monthly installments. This is an amortizing loan, meaning that each payment will reduce the loan balance, and covers some of the interest costs. Home equity loan interest rates can remain fixed throughout the span of the loan, creating consistency in your finances
  • A home equity line of credit, or HELOC, is an approval for an absolute maximum amount from which you can simply borrow what you need. So if the need arises, you can borrow multiple times up to the maximum amount you're approved for. Small payments are acceptable early in the agreement, though you'll eventually need to make full amortizing payments to get rid of the loan. This is the most flexible option, giving you complete control over the loan balance and interest costs.

Another alternative available through Sherwood that we recommend to some clients are equity loan Visas (ELVs). An equity loan Visa is another solution that uses your home equity to secure a line-of-credit in the form of a Visa. The card more or less acts like a mortgage on your home, and leveraged to take equity out of your home to use as you see fit. You can consolidate debts, or even use that equity for home improvement to reinvest in the value of your home.

Best of all, since ELVs are considered real credit cards, you'll be afforded the same benefits like the ability to build your credit score, or cash-back rewards programs and the like.

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