When you find yourself dreaming and thinking about a new house, it is often because you’ve fallen out of love with your existing house. It could be the decor, the layout or simply that you’ve out-grown the space. If you’re ready to start the process of building your dream home and only thing is stopping you is a down payment, then perhaps we can help you find the solution.
All those years you’ve lived in your current home, making your mortgage payments on time every month, can pay off for you right now. You can use the equity you have in your existing home as a down payment on your dream build in a few different ways.
And it gets better. You don’t even need to wait until someone else falls in love with your current home to get the money for a down payment. You can actually use the equity from your existing home now to get the process going. The advantage of not having to sell immediately is that you may not need to live in a rental and you can afford to wait to sell your existing home at the best price. It’s also like hitting the fast-forward button on the entire process!
Your dream home can be a reality sooner rather than later, and it’s far easier than you imagined through options such as a Home Equity Line of Credit (HELOC) or a Bridge Loan. Even if decide to sell your home before beginning your new build, you may have the option of porting your current mortgage, which can save you thousands of dollars and go straight into customizing your brand new home!
Home Equity Line of Credit
A HELOC refers to a line of credit taken out on your existing home’s equity. The way that it works is very similar to taking out a second mortgage on a home.
Let’s assume you managed to wrangle the most fantastic deal on the house you currently own, and you’ve lived there long enough to make a sizeable dent in your mortgage. Now your home is worth far more than you actually owe. Your lender will use the equity you have in your current home to secure a loan for you for the amount you are approved for based on a few factors, such as how much you owe versus how much your home is worth.
While most people use their HELOCs for debt consolidation or to make improvements on their existing home, you can use it for virtually anything, such as investing it in another home. Why not use this HELOC as a down payment on your dream home? One of our preferred lenders will be happy to help you determine whether or not a HELOC is the right source of income for a down payment on your new home.
The definition of a bridge is an access point to take you over something that’s not easy to navigate, such as a rushing river, from point A to point B. A bridge loan can help you navigate financial challenges and reach the point of building your dream home when you already have a mortgage on a house.
This may be the solution to your current situation and allow you to begin building your new home before you have the chance to sell your current property. It’s a solution that allows you to get precisely what you want in the fastest manner possible and it’s an option many buyers use in Canada.
In essence, a bridge loan is a short term loan with specific terms and rates that bridges the gap between the sale of your existing home and the purchase of your new home, allowing you to have the funds necessary for the down payment.
Rising interest rates are always a possibility when acquiring a new mortgage, and so is the reality of paying a penalty to break your existing mortgage contract. Since we want you to have your dream home without spending a fortune on interest rates or penalties, our preferred lenders are available to discuss portable mortgages with you and what that means for saving you money.
It is likely that your current mortgage has a portability clause that allows you to roll your existing mortgage over into a new home without having to pay to break your contract and acquire a new mortgage. Even if today’s interest rates are lower than your current mortgage’s interest rate, you’re going to save significantly by avoiding penalties when you choose this option as a form of down payment for your new home.
Which Loan is Right for You?
While there may be many options available to you, the expertise of a builder’s lender is a great resource to have. They can help you decide what is best for your situation as they know the real estate market and how it works with the financial market.
No one family has the same situation, which often makes it difficult to determine which mortgage is the right one for you. Let one of our preferred lenders assess your personal situation and help you make the most educated decision.
Once you choose the best type of mortgage option for your down payment, your new home is no longer a dream – it’s a reality! Your life is about to change for the better in a new Broadview home.