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Equity Take Out Mortgages; Could You Benefit from One?

Equity Take Out Mortgages; Could You Benefit from One?

posted in Mortgage News

If you’re not familiar with equity take-out mortgages, the following short guide should help you learn more about them and discover whether you could benefit from one. If you think you would like an even more detailed guide, reach out to a professional mortgage broker who can assist you in determining whether one would be suitable for you and your specific circumstances.

What is an equity take out mortgage?

Now often referred to as an equity loan, an equity take-out mortgage can be used to extract money for other purposes than buying a property, such as for property repairs or renovations, to make a down payment for a vacation property and many other similar purposes.

Because the loan is tied to a property’s equity, the owner of that property must therefore have equity in it after its fair market value and other mortgages are accounted for. Containing either a fixed rate and a fixed borrowed sum, or a variable rate arranged as a line of credit, where funds can be withdrawn at the borrower’s discretion, equity take out mortgages can be useful for certain individuals.

What are the advantages of an equity take-out mortgage?

In many instances, such as if a home owner has accumulated a lot of equity through owning a property for a long time and its value has appreciated, an equity take-out mortgage makes better financial sense than any other form of borrowing. Because loans secured by property are often offered at better rates of interest than those that have been secured by other means, or that haven’t been secured at all, if a home owner needs some extra money for any reason, they might be well advised to consider an equity take-out mortgage.

One other advantage of an equity take-out mortgage is that under certain circumstances, the borrower may not be required to use the entire credit line in one go, and may obtain extra draws against the line of credit if necessary. Interest is only charged against the amount of money taken by the borrower, and not on the entire line of credit.

Could you benefit from an equity take-out mortgage?

If you have substantial equity in a property and need to withdraw some funds for any reason, then borrowing against it can be an effective option. However, it’s important to discuss your financial situation in detail with an unbiased mortgage professional, who can help ensure that you select the right type of take-out mortgage for your specific needs, if that would even be the best option for you.

Talk to a trusted, qualified mortgage broker today if you’d like to know more about equity take-out loans.


Mortgage News

05 dOct, 2020

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