While a refinance or second mortgage can be extremely effective tools to help homeowners tap into home equity to achieve other financial goals, it’s important to get the right advice before borrowing against the roof over their head. That’s where you come in.
As summer approaches, there are many luxuries your clients may be interested in purchasing. Whether it’s a set of patio furniture, a boat or a lavish vacation, it’s important for them to consider these splurges in the context of their overall financial picture. Particularly for those with significant equity, it could be tempting to use their home as an ATM to access cash quickly. There are both good and not-so-good reasons to tap into this resource. By guiding clients to be strategic about leveraging their home equity, you can help them reach their financial goals sooner.
Tapping into home equity can be extremely valuable, because it’s a convenient and cost-effective way to borrow funds at a more favourable rate compared to credit cards and other short-term borrowing options. But it depends on what they’re planning to use the money for. It’s best to avoid using home equity for splurging on vacations or purchasing depreciating assets like furniture, cars or boats.
On the other hand, a second mortgage is an excellent option for clients who want or need r to improve their current financial situation. Instead of using home equity to fund luxury purchases, it’s better to use that equity to consolidate high-interest debt, purchase an investment property, fund home renovations or to cover tuition costs.
Add value to your clients financial outlook by helping them better understand the pros and cons of using their home equity, and using it effectively. Here’s a few tips to set your clients up for success by getting their financial house in order in the short term so they can confidently indulge in that vacation or brand new car later on.
Help your clients leverage their home equity to get their finances in order, begin creating positive cash flow and eventually get them to a place where they can afford the little (or big) luxuries in life. Remember to look at both sides of the balance sheet when discussing options to fund financial goals. Where tapping into home equity makes sense, private lenders like CMI can help your clients and offer flexible financing, even when the bank says no.
Partner with CMI today and see why we’re preferred by brokers across Canada. With access to more than $1 billion in capital, we lend everywhere from cities to towns and everything in between.