Home Equity Line of Credit (HELOC) is a low-cost borrowing option, which uses the equity you have built up in your home. With the Home Equity Line of Credit, you can access to up to 65% of the value of your home (access an additional 15% in a mortgage if required). Unlike a mortgage, as your balance is paid down it is re-accessible via transfer, check, or bank withdrawal. At an affordable borrowing rate, it is an option for providing readily available access to your equity when you need it. It can be a fabulous source of funds to redo your kitchen, finish your basement, fund your dream vacation, buy that investment property, consolidate your debts, or can be a saving grace when times get tough.
A HELOC can be in first or second place on the title of your property. Your first mortgage lender must approve the HELOC in second place if you are not refinancing and placing your first mortgage and HELOC with the same lender. A HELOC may also be combined with your first mortgage (fixed or variable rate) in what is often called an All In One. This allows you to have a fixed/variable mortgage portion with a specified term, as well as a HELOC. As your pay down the balance of your mortgage, the credit limit of your HELOC increases, making more funds available to you.
HELOC has flexible payment options. Pay as little as interest only, pay a portion of, or all of your balance at your convenience, with no penalties. The interest on home equity loans are variable, meaning the interest rate fluctuates with the prime rate.
Overall, a Home Equity Line of Credit can be a powerful tool for you if you have the equity in your home if you are looking for flexibility and want to have immediate access to the equity in your home when you need it. If you would like to discuss whether a HELOC is right for your particular situation, please Contact Us and speak to one of our associates!