Hoping to renovate or make some repairs to your home in the
GTA? Looking for that perfect winter getaway but worried about maxing out your
credit card? A home equity line of credit may be the ideal solution to your
financial conundrum. Many homeowners in the GTA do not realize that preferred
interest rates are available for a line of credit when using the equity in
their homes as security.
Terms such as home equity should not send you into a
tailspin. Simply put, it is the difference between what your home is worth and
how much you owe on it. As you pay off your mortgage loan balance, you build
equity. You own a little more and your home turns into a valuable asset, which
may be leveraged in various beneficial ways.
In the GTA, it is possible to access up to 80% of your
home’s value, less your current mortgage value; the most common way being
through a home equity line of credit or a home equity fixed-rate loan. A home
equity line of credit differs from a home equity fixed-rate loan in a few
important structural ways. Fixed-rate loan borrowers generally receive a lump
sum amount, which must be repaid within a defined period of time, making it a
good option for a one-time payment or occasion. On the other hand, a home
equity line of credit is ideal if you require money periodically and not all at
once. The entire available credit is not advanced upfront. Instead, you have
access to as much as you need, whenever you need it. Homeowners appreciate this
style of loan, which ensures that as the fixed-term mortgage is paid down, the
available revolving limit increases.
Some of the other advantages of a home equity line of credit
are detailed below:
- One-time application – With the help of an
independent trusted mortgage broker such as Canadalend, it couldn’t be easier
to apply for a home equity line of credit, and once you do, you never have to
- Convenience – Once you qualify for a
predetermined spending limit, you can access it at any time.
- Preferable interest rates – The interest rates
available to HELOC borrowers are lower than those using a credit card to
intermittently access funds.
- Flexible repayment schedule – A HELOC gives you
the flexibility to borrow and repay as frequently as required.
Homeowners generally use the equity in their homes to make
major purchases that, till now, may have seemed out of reach, such as the
- Extensive home renovations/repairs
- College tuition fees
- Medical bills
- Business establishment/expansion
- A wedding
- Vehicle upgrade
Others may choose to tap into their home equity in order to
consolidate high-interest debt, such as credit card repayments into one monthly
payment, while some homeowners may never access their available credit. The
knowledge that it is there in the case of emergency (and does not cost if it is
not touched) can be very comforting.
Whatever your objectives are, a home equity line of credit
is an excellent option for homeowners in the GTA who have a significant amount
of equity built into their home and wish to unlock extra cash by leveraging
their home’s equity at affordable interest rates. A specialist’s advice from
independent mortgage brokers such as Canadalend is an excellent way to ensure
that the chosen financial product is the best fit for your budget and lifestyle.