Toward the end of a 15-year or 30-year loan term, clients begin to see the finish line. It’s a satisfying feeling knowing that a home is about to be owned clear and free of debt. A major monthly repayment is going to come off their personal budget and opens up new financial doors. However, there are benefits of not discharging a home loan completely at the end of the term.
Brokers who develop a solid relationship with their clients become their financial partners. Once you help them procure a mortgage or other financial product, it’s not the end of the line. If anything, it’s the beginning. A client who receives a lender’s approval for a loan is a financially viable individual.
The following are three benefits of clients not discharging a home loan.
Leverage Home Equity
Home equity is the difference between the property’s value and the outstanding mortgage amount. As the mortgage approaches zero, the home equity amount approaches 100%. Home equity loans offer homeowners favorable rates and the funds can be used to consolidate other outstanding debts, fund a child’s education, or pay for a much-needed vacation.
Increase Property Value
A home equity loan or line of credit can be used to increase the property’s value. Homeowners can fund a renovation, upgrade or remodel. This is an opportunity to improve the interior decoration, install a new heating and cooling system, or make moves toward turning the house into a smart home.
Studies continue to show that for every dollar a homeowner invests into their property, the value increases by at least 60%.
Favorable Rates
Individuals who make it to the other side of a home loan application with a purchase, establish their financial viability. Thereafter, if there are no negative changes to the client’s payment history, they set themselves up to receive favorable rates.
Not Discharging A Home Loan Conclusion
Not discharging a home loan offers a broker’s client several benefits. It also offers the broker an opportunity to extend the financial relationship. For more information, contact our Mortgage Street loan specialists.