The Questions You Need To Ask Yourself When It Comes To Home Equity Loans

You may have a large purchase in mind: a renovation, a new vehicle, or even that trip to Italy that you’ve been dying to cross off your bucket list. You may realize that your home’s equity may be enough to cover your costs, so why not access it? This may be a good idea, but there are three things you need to ask yourself before considering Alberta home equity loans.

How Home Equity Loans Affect Your Cash Flow

Because interest rates continue to be historically low, one would think taking out a home equity loan is an affordable alternative to other types of financing. While this may be true, it is important to anticipate your new monthly payments and budget accordingly. Indeed, It's best to discuss your unique financial situation with a trusted mortgage broker before taking the plunge. Your mortgage brokers at Dominion will ensure that your new payment accommodates your existing fixed and variable living costs.

Is My Purchase Worth the Interest I'll Pay?

Alberta home equity loans may have low interest currently, but you need to determine whether your purchase  is worth the years of interest you incur in the future. Although a dream vacation may seem nice, paying for that trip for the duration of your mortgage may mean you may not be able to afford another. While a savings account may be a better way to finance a trip, there are some instances where you need funding immediately – such as an emergency repair or unforeseen expenditure. In these cases, a home equity loan might be the right solution. Another instance where a home equity loan may be well worth the interest is if you are increasing your home's equity greater than the amount you are borrowing.

Are Other Financing Options Cheaper?

Explore all your options before taking out a home equity loan. Life changes quickly and if you use your equity now, what will you do if you face an emergency situation where you need a large cash influx? Are there cheaper ways to fund what you are trying to accomplish? Your mortgage broker from Dominion Lending Centre in Edmonton can help give you some advice. Before you consider Alberta home equity loans, make sure to answer these questions for yourself. If you'd like help with your decision or want to see if this type of financing is right for you, contact us today and let's figure it out together!