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Line of Credit

 

What Is a HELOC?

 

HELOC stands for Home Equity Line of Credit. It is a line of credit or open loan that is secured by the equity in your home. The money from a HELOC can be spent any way you’d like. For example, you could make RESP or RRSP contributions with the money. Taking out a HELOC is often the first step in paying for repairs or renovations to a home, though you can use the money to buy land to build your dream home, buy an investment property, or putting a down payment on your future retirement home. Discuss all the ways you could leverage your home equity by taking out a HELOC with a Grande Prairie mortgage expert.

 

The interest rate you pay on a Home Equity Line of Credit is far lower than you’d pay for an unsecured line of credit because the debt is secured by your home. Lenders know that we’ll pay our mortgage before we pay any other debt. And if you can’t pay the loan, the rules regarding HELOCs ensure that they don’t lose their money, since you can’t take out a HELOC for more than 65% of the value of the property. This explains why HELOCs have the lowest overall interest rates of any mortgage product barring a mortgage itself. Yet there is significant variation in the interest rates different lenders charge on HELOCs, even if they’re assessing the same borrower and property. Talk to your trusted Grande Prairie mortgage broker to guarantee that you’re getting the best interest rate.  

Home equity lines of credit are particularly attractive to investors and the self-employed. First, the monthly payment is very low. You can pay only an interest payment. Second, the payments are flexible. A HELOC is an open mortgage, and you can pay it down at any time without penalty. If you pay it off, the HELOC remains open. The HELOC remains in effect as long as you own the home or refinance the mortgage and update the title. You can tap into the funds again at a later time without having to take out a new loan. You can withdraw as much money as you need up to the credit limit. It is similar to a credit card but with a much better interest rate. You’ll pay a lower interest rate, too, than if you were taking out a separate loan to buy investment real estate, a vacation home or buying land on which to build your future dream home.

Note that you’ll only pay interest on the amount of money you borrow, not the value of the line of credit. Talk to the Local Mortgage Experts in Grande Prairie to learn more about this mortgage product.

There are limits to what you can do with a HELOC. You can borrow up to 65% of the value of your home, though the amount also depends on the size of your mortgage.

You can convert a HELOC into a regular mortgage, whether it is a second mortgage or consolidated with your first mortgage. This process starts with a phone call. Note that you’ll have to pay legal fees to update the title along with loan origination fees. Talk to a Grande Prairie mortgage lender so you can understand your options regarding HELOCs.

Flex down mortgage for no down payment?

Do not have a HELOC or down payment? We have solutions. If you do not have a HELOC and want to borrow from an unsecured line of credit or get a loan for your down payment we can do these type of mortgages referred to as a flex down mortgage with a few lenders. Your Grande Prairie Mortgage Brokers at Whalen Mortgages Grande Prairie have solutions for many different situations and multiple lenders to get the mortgage financing you need in Grande Prairie.

 

Contact one of our highly qualified mortgage professionals today to see if a HELOC is right for you!

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