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Home Equity Line of Credit (HELOC) in Canada

What is a Home Equity Line of Credit?

Home equity line of credit is when a loan given to you is secured by the equity in your home. It is especially convenient if you don’t need to spend all the money at once. You will have an option to set it up as a second mortgage, if so you wish. Home equity line of credit can be issued against 65% of your home’s value, however if you combine it with amortized mortgage, you can stretch this limit to 80%. So in order to be approved for a HELOC, you will need to have at least 20% home equity ownership. If you get even more equity, you can request increase of your line of credit, but it will require you to apply anew and go through the qualification process again.

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In a great number of cases, homeowners will use their home equity for a wide range of reasons, from investing in some other property, to renovating and taking a vacation, to paying off debts. Assuming that you will use that money wisely, loan backed by home equity can be very useful. It is best if your monthly source of income is reliable and you are certain that you will be able to pay off the loan on time. Also, home equity loans have low interest rates and low tax deductibility, which makes it a very attractive option. In most cases home equity loans are used to finance larger expenses like medical bills, education, debt consolidation, etc.

When you apply for a home-equity loan or home equity line of credit via Loans Geeks, you might be tempted to ask for more funds than you actually need. However, it is recommended to approach the loan wisely, as it is given against your own property.

Choose from the Best Home Equity Loans Offers

With different home equity loans available in the Canadian market, it can get difficult to choose the best loan for your needs. If you are looking to set a monthly repayment schedule for a definite period to pay off the loan, home equity line of credit might be right for option you. It is also a good solution if you are looking to remodel your home and want to determine the exact cost of the whole process. Remember though that home equity loans can lower your credit score if you happen to be late on the repayments.  If you are considerably late, or if you default on the loan, it will result in a foreclosure. All things considering, it is best to carefully assess your financial situation and your needs to ensure that you can make payments on time.

With Loans Geeks you do not have to contact multiple lenders, bother with paperwork and waste precious time on physical visits. On our platform you can fill in an application for a home equity line of credit online, from the comfort of your home. You will get to choose among up to five most competitive loan offers from top-rated loan lenders in Canada that we have partnered with.  After you submit your application, you only need to wait from 1-2 business day to receive a reply whether your application has been approved or if a lender needs some additional information.

How does a home equity loan work?

Home equity loan or home equity line of credit works just like any other credit, only it is revolving. You will need to make payments on a monthly basis and you will receive monthly statements to pay off your fixed mortgage and as you do so, the limit of your available revolving credit will increase. As your home equity is a collateral that is securing the line of credit, you will get HELOC interest rates that are much lower than those of the unsecured lines of credit. However, home equity line of credit rates in Canada are often tied to the prime lending rates, which can result in rates increase if the variable rates increase as well. This is why most lenders will offer an option that you lock in portions of a home equity line of credit interest rate.

Home equity lines of credit are loans that are based on interest only, you can count on your minimum payment being equal to the monthly interest on the amount of money that you have borrowed. If you still haven’t repaid the loan after certain period of time (in most cases 10 years), your payments will also include the principal and will therefore be increased.

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Home equity line of credit (HELOC) is a loan where your home equity is placed as a collateral. And your home equity is the difference between the amount that you still owe to pay off your home and its market price (the amount that you would get by selling it)

Home equity line of credit enables you to convert your existing possession into a form that you can spend. It allows you to get an access the savings that you have invested in your home.

Home equity line of credit rates in Canada will mostly depend on your credit score and your lender’s criteria. To know exactly what you can qualify for, you should submit your application via Loans Geeks to get most competitive offers.

The main differences between a HELOC and a HEL are the repayment policies and interest rates. A home equity line of credit in most cases has a variable interest rate, while a home equity loan has fixed interest rate.

Most home equity line of credits are also second mortgages, but it is not always the case. Sometimes people have their first mortgage paid off, yet they desire a line of credit, so they secure it against their home.

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