‘Letting your home work for you’. How can your home work for you? The answer? By using the ‘equity’ you have acquired over the years, to finance other expenses such as education, debt consolidation, investment, medical expenses and even vacations. Let us explain ‘equity’.
Let’s say our homeowner, John, purchased a property valued $500,000. John is required to inject a minimum of 10% as a deposit/down payment ($50,000) while TTMF would have given him a mortgage loan for the difference ($450,000). John’s equity ($50,000) in the property would therefore be the difference between the value of the property and the loan amount ($500,000 – $450,000).
Fast forward a few years and the balance owing on John’s mortgage loan is now $300,000. John has faithfully serviced his mortgage by making his payments on time every time. He has effected repairs and maintenance to the property as needed and the value of his property has appreciated over the years.
John’s son has been awarded a partial scholarship to pursue a Masters Degree offered by a University in England and John must raise TT$250,000 to cover his son’s living expenses and the cost of books. John does not have ready access to $250,000.00. What should he do? Should he deny his son this opportunity for lack of funds? We say no.
John can obtain a home equity mortgage from TTMF to fund his son’s education. By maintaining his property and servicing his loan John has ensured his initial investment of $50,000 has increased. The value of John’s property is now $800,000 as advised by his recent valuation of the property, and by using the formula (value – current mortgage balance) John now has $500,000 represented by the equity in his property. He can use this equity to fund his son’s education. John can also consolidate his smaller consumer loans thereby ensuring his only monthly commitment, his mortgage payment, is manageable.
Equity financing makes it possible for homeowners to finance the ventures that are important to them and their families. In order to ensure you build equity however, you must remember the following:-
Our commitment is to always work with our customer through their life’s stages/changes, to ensure that their financial needs are met by ‘letting your home work for you.’
Find the financing you need to defray significant expenses.