Before the COVID-19 pandemic, living pay cheque to pay cheque, while not the option of choice for many, was nevertheless manageable. However, with the economy at a downturn, cash is tighter than ever for many households and individuals, and bills are proving to be harder to manage than ever.
As if the looming gloom of the virus isn’t enough for Canadians to be dealing with, many employees are working with the fear of being laid off or having their hours cut. Social distancing isn’t helping Canadians pay the bills either. At a time like this, if you just happened to be caught with a bit more debt than what you’re comfortable with, it can be hard to meet payment deadlines.
However, not all is bad, and there is a solution for most people’s financial worries at the time of COVID-19.
When to Consider a Home Equity Loan
We say ‘most people’s financial worries’ as there is just one requirement to applying for and qualifying for a home equity loan – you must be a homeowner. If you do not own a property, the alternative for you would be to apply for short-term loans or personal loans. However, if you do own a property, now is the perfect time to tap into some of the equity in your home and to convert that into cash.
With a home equity loan, you are extracting the value from the equity of your home into capital, which you can then use to pay off month-end bills, consolidate loans, or even make business ventures. The amount you qualify for is equal to the estimated value of your property minus any outstanding mortgage you have, up to a certain percentage.
The Best Time to Apply for a Home Equity Loan
Of all things that go up, some of them can come down. This is especially true with housing prices.
Although home values have been increasing steadily over the last few years, there is no guarantee that the trend will continue. Home values diminished significantly during the 2008 recession, when many people were already struggling to pay their mortgage. It’s also possible that the housing market could crash unexpectedly, or that your home caught off-guard with any natural causes such as earthquakes or fires.
As we are now a few months into the COVID-19 epidemic, property prices are starting to slide ever so slightly, but not to the point of crashing yet. Many economists are expecting a downward trend, while an equal number of economists are expecting the Vancouver market to be immune to COVID-19. However, if you are a homeowner, now could be the best time to take advantage of your property value and to sort yourself out with a home equity loan.