Mortgage Blog

Are you a Vancouver homeowner grappling with financial challenges or in pursuit of additional funds? Navigating the nuances between private mortgages and private Home Equity Lines of Credit (HELOC) is pivotal for making informed decisions.

1. Private HELOC: The Hidden Gem

Surprisingly, many borrowers are unaware of the Private HELOC option available to them. Both private mortgages and HELOCs based solely on the equity in the property, don't require any  income verification or a pristine credit history. Furthermore, both avenues facilitate fast funding.

2. Unveiling the Distinctions

While both private mortgages and HELOCs share similarities, a pivotal distinction lies in the nature of the credit line. Unlike private mortgages, a HELOC provides a revolving credit line. Borrowers have the flexibility to withdraw any amount, up to the registered balance, at any time and make repayments as they see fit. They only pay interest on money they withdraw, not a limit of HELOC. 

3. The Private Mortgage Landscape

In contrast, a private mortgage disburses the entire loan amount at the onset. Monthly payments are structured based on the mortgage advanced, with the typical scenario involving full repayment at the term's conclusion or renewal for another term. While some lenders permit partial lump sum prepayments, they do not re-advance funds.

4. Pricing Considerations

Private HELOCs generally come at a slightly higher set up cost, ranging from 1%-2% more expensive than a regular private mortgage. This cost differential is a trade-off for the flexibility and convenience offered by the revolving credit nature of HELOCs.

Conclusion: Making the Right Choice

As a Vancouver homeowner, choosing between a private mortgage and a private HELOC depends on your specific financial needs and preferences. If you seek a lump sum for a particular purpose, a private mortgage may be the suitable choice. On the other hand, if you desire ongoing flexibility in accessing funds, a private HELOC may align more closely with your goals.

For personalized guidance and to explore the best financing solution for your situation, connect with Invis Inc. and Alex Vinarski, your Vancouver-based mortgage expert in private mortgage.