the term home equity line of credit send you running for the hills? For most
homeowners, the thought of collateral becoming the equity incurred by property
ownership is concerning. Equity line of credits are rather complicated and therefore
generally misunderstood. Keep reading to learn about the benefits of opening a
home equity line of credit.
Does Your Home Have Equity?
a good idea to have a solid understanding of what home equity is exactly. Home
equity is defined as the portion or share of home value dedicated to the owner.
Financial institutions own the portion of the home paid with credit until said
loan has been paid off in full. The more often one makes contributions to a
mortgage, the more home equity they incur.
Line of Credit for Property Owners
equity line of credit involves the owner agreeing to borrow the maximum amount
of credit where the property itself becomes assurance in terms of consistent
and continual loan repayment. If the owner fails to make consistent and expected
payments toward the loan, the financial institution responsible for the credit
has the right to foreclose the home if necessary.
of a Credit Line vs. Mortgage
equity line of credit is very different than a mortgage. Here is what you need to
know about each type of credit as a potential or current property owner:
home equity line of credit will off potential tax deductions and the
opportunity for consolidated debt. A mortgage on the other hand, will not carry
- An owner
must have established a substantial amount of home equity in terms of
consistent mortgage repayment, in order to be eligible for a home equity line
of credit. A new or potential buyer cannot open a line of credit immediately; a
mortgage with down payment must be the starting point.
home equity line will offer more flexible payment options when compared to a
mortgage. Also, when money is needed for larger purchases or investments, a
line of credit is available for use immediately and without bank appointments
and paper work.
home equity line of credit offers the flexibility of payment options. One can
opt to only pay interest if times are tough or an emergency purchase was
recently made. There is no penalty for skipping a monthly contribution if
residents are continuing to enjoy record-breaking low mortgage rates going into the year of 2015,
although experts say the trend will not last forever. Individuals in the market
for a new home should seriously consider committing to a property deal within
the next months in order to enjoy the low rates. The average variable mortgage
rate in 2014 in Canada sat at 3.0 per cent. The fixed rate was slightly higher,
approximately 5 per cent. Owners should note, however, that rates do fluctuate
between lending institutions and one could potentially find an even lower rate
upon careful local research and consideration.
Help and Advice
homeowners opt to seek professional advice when it comes to understanding a
home equity line of credit. Companies in Oakville that provide mortgage and
refinancing services will be able to offer solid and substantial advice as well
as customized mortgage plans to better fit your needs. If opening an equity
line of credit is what you need, contact the experts and get started today.