A home equity line of credit, or HELOC , is a great way to use up the equity that’s just sitting around, not working hard for you, and use it for the extra cash that you need. But what are the requirements for obtaining a HELOC?
The biggest requirement that will be asked of you is that you have equity in your home. This is the amount of home that you actually own, and the absolute minimum requirement you’ll need to hold is 20 per cent. And, because restrictions on HELOCs and home refinancing have become so strict, many lenders might even require that you have more than that. Once you hold the required amount of equity in your home, you’ll then be able to borrow yp to 80 per cent of that required amount.
Depending on the lender that you choose, there may be other things required of you when apply for a HELOC. One of those requirements might be that you’ll need to have a good credit history; most of the major lenders, especially the Big Six banks in Canada, will almost always run a credit check when you apply for a loan of any kind. While these lenders might still be willing to give you a HELOC, if you have a bad credit score they’re going to charge you a much higher rate of interest – and that could make a HELOC not so profitable, or worthwhile, for you.
Some lenders will even require that you have a reasonable length of employment, as well as a high enough income. These requirements are the same as are required for your first mortgage, and they can be tough. But with more lenders becoming much more wary, it’s something you might face if you don’t know where to go for help with your HELOC.
On the other hand, you might be able to find a private lender that will give you more than 80 per cent of the equity in your home, and that doesn’t require any credit or employment verification. Because these are private lenders, they’re not bound by the same regulations as the major lenders and so, they can provide you with more through your HELOC than others.
Whether you’re looking for a major lender or a private lender, come see us at CMI. The only way to get the right HELOC for you is to go to the right lender for you; and we know about all of them.
