Option
What it Means
Pros
Cons
Blend and Extend /
Blend to Term
Raising and extending your existing mortgage with your same mortgage lender by blending your existing rate with a new lower interest rate.
You can access additional funds without paying a prepayment penalty
Not always an option with every lender. Some lenders blend to the end of the term and some offer new 5 year terms.
Home Equity Line of Credit
A revolving line of credit secured by your home that allows you to borrow up to 65% of your home's equity based on its appraised value (you require at least 20% equity)
No need to break your existing mortgage. If your current lender offers this, you can apply in house.
You must pass a stress test. HELOC rates are generally higher as they are based on PRIME +
Second Mortgage
A mortgage in second position behind your current mortgage
No need to break your first mortgage and incur fees. Preserves first mortgage rate and terms.
Rates are higher with a second mortgage and there may be additional fees. Some lenders will only go to 70-75% of appraised value instead of 80%
Short Term Loan
A loan secured against the property
Easier access to funds short term and when a temporary situation is occuring.
Rates and fees can be very expensive. Renewals are not guaranteed as this is considered a temporary financial solution.
Reverse Mortgage
A mortgage secured in first place on the property but does not have payment terms or amortization in place for repayment.
No monthly payment is required. Income qualification is minimal.
Must be 55+. Interest accumulates and is paid at the end when the home is sold. More expensive interest rates.
