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Home Equity Line of Credit Oakville: What Property Owners Need to Know!

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Does 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?

It is 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.

Equity Line of Credit for Property Owners

A home 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.

Benefits of a Credit Line vs. Mortgage 

A home 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:
  1. A 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 such benefits.
  2. 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.
  3. A 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.
  4. A 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 necessary.

Current Mortgage Rates

Oakville 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. 

Professional Help and Advice

Many 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.


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