A Home Equity Loan allows you to convert your home’s equity into a low and competitive fixed rate loan that can be used big life expenses such as rennovations and wedding. Since a HE loan is a not tied to your originial mortgage, you can keep the great low rate you already have on your mortgage loan!
Having a Home equity loan is great for emergencies because you have a safety net for unexpected expenses. A HELOC can even save you money since the rate is lower than most credit cards.
- Cheaper than signature or personal loans
- Offers low and competitive fixed rates as low as 5.49%1
- fixed payment for life of loan
- Flexible payment terms
- Borrow up to 80% of your home’s appraised value
How does a HE Loan work?
A Home Equity allows you to borrow up to a certain Combined Loan To Value such as 80%. The exact amount will be determined by the credit union once the application is submitted and a value on the property is obtained.
For example, say you have a home worth $300,000 with a balance of $150,000 on your first mortgage and you want to access up to 80% of your home’s value (based on Combined Loan To Value – CLTV) stats. You may qualify for a HE Loan up to a $90,000:
- Home Value at $300,000 x 80% = $240,000.
- 80% minus what you owe is $240,000 – $150,000 = $90,000.
- $90,000 would be the maximum amount of the loan, for this 80% CLTV example.
What can I use a HE Loan for?
Once you qualify for a certain limit and your loan is closed, you can use the funds for things such as: home improvement, debt consolidation, medical bills, education and even a vacation.
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