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A home equity line of credit – often referred to as an “HELOC” – taps into the existing equity of your home and offers to you a revolving line of credit. Lenders will offer you a HELOC at rates much lower than secured loans or credit cards because the loan is backed by the value of your home – much like a mortgage.
A home equity line of credit can be used for any purpose and can be accessed (and paid back) at any time at any time you’d like. As you pay down the line of credit, you can then borrow back the available credit at any time, as long as you don’t exceed your credit limit. While the loan that Toyota might offer you has to go towards the purchase of a vehicle, the HELOC can be used for any purpose; making it popular among small-business owners and other self-employed Canadians. If you have the right business idea, you might even be able to fund it through an HELOC!
A home equity line of credit offers you a low interest rate and a higher limit than most other personal loans. Due to their accessibility, flexibility and affordability, home equity lines of credit are very popular solutions for homeowners looking to finance an improvement or renovation to their home. A home equity line of credit can also be used to get rid of your higher interest rate debt. Credit cards, personal loans and other types of debts will all typically have higher interest rates compared to a home equity line of credit. Consolidating your higher interest rate debts will allow you to pay less interest over time and can also help to manage your typical monthly cash flows. HELOC’s have even known to come into play for large expenditures such as tuition for education or a wedding!
In Canada, there are limits to how much you can access through a home equity line of credit secured by your property. An HELOC cannot surpass 65% of the total value of your home and in combination with your mortgage, the two debts cannot exceed 80% of the market value of your home as determined by your lender.
To put more money in your pocket, and not your bank’s, a home equity line of credit might work for you! Fill out the form above and speak to MonsterMortgage.ca to get started on your approval today!