Wondering how you can make use of a home equity line of credit? We can help you understand what it’s all about!mortagearchitect
Wondering how you can make use of a home equity line of credit? We can help you understand what it’s all about!
Using your best asset, your home, you can borrow money from lenders and keep refreshing it. That trip to Europe, education in Ivy leagues and more such dreams can be easier to achieve and finance with a home equity line of credit! How? Read on.
A HELOC is simply a loan you take on the equity present in your home. It’s a secured form of credit and the home is your guarantee. Home equity lines of credit usually have a maximum credit limit up to which you can borrow money.
What are the kinds of home equity lines of credit?
In Canada, there are essentially two types of lines of credit:
2. HELOC + Mortgage
A stand-alone home equity line of credit can help you benefit from the equity present in your home. This is inclusive of the amount you have repaid on your home mortgage as well, allowing you to borrow more!
This type of credit is not associated with your main home mortgage and usually does not build towards higher equity in your home. A benefit for this type of stand-alone credit is that you’re not required to pay the principal and interest at fixed intervals. Most lenders require you to pay the interest and it has been used as a substitute for regular mortgages as well.
A combined mortgage and home equity line of credit, on the other hand, do have their own benefits as well. They can be used to pay for a home in equal or unequal divisions. For example, you can 40% of your home mortgage with a HELOC and 60% of it with a fixed rate mortgage.
A great benefit of combined HELOC’s is that as and when you pay your premium and interest on the fixed mortgage, the amount you can borrow against the equity present in your home for your home equity line of credit increases!
Learn more about home equity lines of credit and get expert advice on how to use them to your advantage with Toprate Mortgage!