Home Equity Borrowing Sees Spike in Popularity Among Canadians
TORONTO, ON / ACCESSWIRE / March 18, 2021 / Amid the ongoing COVID-19 pandemic, Canadians are increasingly turning to home equity loans for relief. Bolstering this rush is the fact that home equity loans are relatively easy to qualify for even as many other lenders (including credit card companies) strive to limit risk during this period of economic hardship.
What is home equity borrowing?
Home equity borrowing comes in many forms, all of which help Canadians temporarily withdraw money from their residences without selling. Structures include:
- Home equity loans, which grant borrowers a lump sum they repay in installments
- Reverse mortgages, which grant borrowers a lump sum they don’t need to repay until a certain date or event (i.e. the sale of their home)
- Home equity lines of credit, which grant borrowers a revolving amount they can tap into as needed
Inside the Numbers
According to industry data, home equity lenders saw originations increase between 14% and 200% (numbers vary by company) between November 2019 and November 2020.
Additionally, industry insiders expect demand will remain strong for much of 2021 as consumers continue capitalizing on low interest rates and the accessibility of these loans.
Insiders also note borrowers are no longer simply desperate seniors looking for cash, which has long been the stereotype associated with home equity borrowing. On the contrary, borrowers today are often in good financial shape and looking to grow their wealth further via investments or reap the rewards of good financial planning.
Why Home Equity Borrowing Is Seeing Such Tremendous Growth
Home equity borrowing is nothing new. Companies like Alpine Credits have existed in Canada for over 50 years. However, consumers have sought out home equity loans in droves lately for two primary reasons.
First, as reported by Global News, much of Canada has experienced a real estate boom amid the pandemic, leaving homeowners with an enormous amount of new equity.
This equity has become an obvious choice for homeowners looking to fund major expenses like renovations during the pandemic, especially as lenders are enforcing much stricter criteria, which is the second major reason for such a drastic spike.
How Canadians Can Maintain Financial Stability While Borrowing from Home Equity
As with any substantial loan, borrowers need to be careful when tapping into home equity. Alpine Credits provides the following recommendations for Canadians looking to make the most of their home equity.
Carefully Consider the Type of Loan
Canadians have many options for tapping into home equity. While these options bear some similarities, they’re not interchangeable. In fact, they come with different risks borrowers should carefully consider.
Home equity lines of credit, for example, may be problematic for those with a history of mismanaging debt. Their revolving nature can facilitate reckless spending. Such individuals may find themselves better served by home equity installment loans.
Borrow a Manageable Amount
Home equity lenders typically don’t consider factors such as income when evaluating applications. Rather, they calculate a potential borrower’s home equity and make the allowable portion (equivalent to no greater than 80% of the property’s value, although it varies by loan type) available.
Prospective borrowers must then ensure the loan amount is feasible based on their future plans.
Consult an Advisor
Borrowers should always speak with licensed advisors about their situation before settling on any particular loan type.
Lenders typically have advisors on staff to carefully consider prospective borrowers’ needs. By working with reputable lenders, Canadians can rest assured these advisors will not mislead them into an unsuitable product.
About Alpine Credits
Alpine Credits is a leading provider of home equity loans in British Columbia, Alberta, and Ontario. They’ve been providing home equity installment loans for more than 50 years. To learn more about their services, click here.
Media Contacts:
Company: Alpine Credits
Contact Person: Ashok Gupta, Vice President of Marketing
Email: info@alpinecredits.ca
Telephone: 1-888-830-6560
Address: 310-10524
Website: alpinecredits.ca
SOURCE: Alpine Credits
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