Home Equity Line of Credit (HELOC)

Make the most of your home’s equity with a home equity line of credit, better known as a HELOC! You can use it to get the funds you need to start a home renovation, consolidate debt, or cover any other expenses that could benefit from extra cash.

What Is A Home Equity Line of Credit (HELOC)?

 A secured HELOC uses your property as collateral. It is a home equity line of credit. In other words, it uses the equity in your home and makes it available to you. It is a revolving line of credit. The name might mislead you, but a home equity line of credit is, in fact, a mortgage.

How Does HELOC Work?

A registered HELOC is a collateral mortgage, a different type of mortgage. It can fluctuate up and down as you draw money off of it and pay it back, unlike a purchase or conventional mortgage where you simply make payments and the principal amount goes down. A home equity line of credit mortgage is available when you have more than 20% equity in your property.

How Is More Than 20% Equity Determined?

The value of your property less the amount of money you owe is considered home equity. For example Your property value is $500,000, and you owe $300,000. You may qualify for a HELOC since you have more than 20% equity in your property.

But keep in mind you cannot exceed 65% of your home’s value with a home equity line of credit.

What Is The Interest Rate Of A Home Equity Line of Credit?

Most home equity line of credits are interest-only payments, but there are a wide variety of HELOC products outs there. This means you are only obligated to pay interest on the money you borrow or withdraw. Typically are prime +0.5% and prime +1.00%. You only pay when you use it.

Why Is A Home Equity Line of Credit HELOC A Good Option?

• Low-interest rates
• Enjoy lower interest rates than most other loans and low to no closing costs.
• Enjoy interest-only variable rate payments, or lock in your balance at a fixed rate and term for fixed payments.
• Borrow several times
• When you pay down your credit line, the funds become available for borrowing again during the 10-year draw period.
• The remaining balance can be repaid over 20 years.

Benefits of A Home Equity Line of Credit

Here are a few ideas for what you can do with your HELOC.

• Renovations to the home
• Debt consolidation
• Fund for Emergencies
• Investing Education Costs
• Any major purchase
• Take the next step toward making your dream a reality.