If you are worrying about debt or how to pay large expenses,
a home equity line of credit in Markham might be the right solution for you.
Life can lead you in various directions, and surprise you with unexpected
bills. Worrying about how you will be able to pay off those bills can be
stressful and cause you to worry. Using your pre-existing equity that as built up
in your home can be an answer to your problems.
What Is a Home Equity
Line of Credit?
A home equity line of credit or HELOC is a type of loan that
uses the buyer’s built up equity in their home as the source of lending.
Described more as an on-going loan than a lump-sum payout, a HELOC allows the
consumer to determine a fixed repayment term and interest rate suitable to
their needs. It works by a maximum amount that is agreed upon to be lent. The
buyer has the ability to withdraw funds as they are needed and only pays
interest on the amount that is currently being used. This is beneficial for
times when smaller sums of money are needed at differing times, and you do not
want to take out a high-interest loan with a large lump-sum payment. Working
alongside a mortgage broker, the buyer will also determine the appropriate
length of time the HELOC will remain open. The term is flexible and completely
open . The interest rate will also vary depending on their institution . The
rate is often based on the Canadian prime
rate plus the lender’s own extra rate. This can mean that the interest rate
may change over time and should be discussed with your lender.
Home equity lines of credit are used for various reasons,
but some of the more common reasons are:
- Tuition and Educational Purposes
- Home Renovations
- Medical Expenses
Where to Get a Home Equity
Line of Credit
You have determined that a HELOC would best fit your needs,
but you are unsure where to turn to obtain one. There are many options and
resources available to you. First, you can certainly talk to your existing
banking institution, but they may not be able to give you competitive rates. Online sites can help you do a wide search
into what different companies are offering at this time; as well they often
have helpful calculators to give you a general idea about the amount you
require, interest rate, and term length. Also, you can speak to friends and
family to see if they have ever utilized the equity in their home and if they
have any recommendations.
A great way to summarize a home equity line of credit is
that it is similar to how a credit card works. You have a set maximum limit you
can withdraw from at any given time. You make payments based on the amount you
have borrowed plus the interest that has accrued over time. You may just make
the minimum payments required or if you have additional funds, you can make
large lump-sum payments to lower the debt. A large advantage to a HELOC is that
the interest rates are significantly lower than credit cards.
Managing your debt and expenses does not have to be a
stressful and exhausting task if you live in Markham. A home equity line of
credit is a great option available to suit your financial needs.