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How much money can I take out of my Equity?
January 14, 2020 | Posted by: Gian Manalastas
How much money can I borrow out of my Equity? Explaining loan to value (LTV) and how it affects your ability to take equity out.
LTV also known as Loan to Value is simply the balance owing on your mortgage divided by the approximate value of your property (mortgage balance/property value=LTV ratio). For example if you owe $200,000 on your mortgage and your property value is $400,000 your LTV ratio is 50%. It’s important to know this because your LTV ratio will determine how much equity you are able to take out.
Most major banks will allow you to refinance up to 80% of the property value (within the Greater Toronto Area, outside the GTA will vary). If your property value is $400,000, you can refinance up to $320,000 with most major banks. That is the maximum amount you are able to refinance through the bank assuming that you qualify. If you cannot qualify through the bank for any reason, their are other lenders that will be able to lend you the funds regardless of your credit through a home equity loan, home equity line of credit or VISA or a second mortgage. There are some lenders that can even lend up to 95% LTV through a second mortgage. The rates and terms will vary based on your overall application.
There are lots of options when it comes to refinancing or taking equity out of your home. If you’d like to inquire how much money you can qualify for, you can contact us here and speak to one of our agents.