What you should know about home equity lines of credit?
Home equity lines of credit (HELOCs) are a way that homeowners in Canada can use the equity in their home to borrow the cash they need. HELOCs are a popular type of loan because they are fairly easy to qualify for (as long as you have sufficient equity) and they are relatively inexpensive when you compare them to other types of loans such as credit cards.
Common uses for money borrowed through HELOCs are home renovations, down payments on other properties and consolidation of higher interest debt. But really, you may use the money for whatever you like.
How do home equity lines of credit work?
Home equity lines of credit are similar to regular lines of credit in that the borrower gets a set amount of credit that they can borrow against. Like a credit card, you may borrow and pay back any amount up to the limit as long as long as you don’t exceed the limit. There is a minimum monthly percentage that you will have to pay back once you decide to borrow the money but there is no maximum, so you may pay it back all at once if you wish without penalty.
Unlike a regular line of credit, HELOCs are tied to the equity in your home. This is advantageous because it means the interest rate is often lower and you don’t have to have perfect credit to qualify.
Is a home equity line of credit right for me?
As long as you have enough equity in your home, a HELOC can be a great way to get some extra credit and make use of your home equity. Compared to other types of loans HELOCs can be both cheaper and easier to qualify for.
Interested in learning more about home equity lines of credit? Contact 1ONEFUND Financial today!