Home Equity Line Of Credit
A Home Equity Line Of Credit (A.K.A. HELOC) is a revolving line of credit that is secured/backed by the equity you've built up in your home.
Since a HELOC is secured by the property, interest rates are generally much lower than other forms of credit such as credit cards or unsecured loans. This makes a Home Equity Line of Credit a very useful financial tool.
A HELOC is registered on the title of a property just like a mortgage. This means, when the property is sold, the balance owing on the HELOC must be paid out at the exact same time as your remaining mortgage balance.
If you have a balance owing on your HELOC during the middle of your term, you must make at least the minimum payment each month just like you would for an unsecured line of credit. In most cases, the minimum payment is equal to the interest accrued during the previous month. However, not every lender uses the same repayment structure.
As mentioned above, interest rates are generally much lower on a HELOC than any other form of credit. The interest rate on a HELOC is based on the Prime Lending Rate which means that it is subject to change. If the Prime Lending Rate increases or decreases, you will see the same fluctuation take place with your HELOC interest rate.
Since a HELOC is secured by the property, interest rates are generally much lower than other forms of credit such as credit cards or unsecured loans. This makes a Home Equity Line of Credit a very useful financial tool.
A HELOC is registered on the title of a property just like a mortgage. This means, when the property is sold, the balance owing on the HELOC must be paid out at the exact same time as your remaining mortgage balance.
If you have a balance owing on your HELOC during the middle of your term, you must make at least the minimum payment each month just like you would for an unsecured line of credit. In most cases, the minimum payment is equal to the interest accrued during the previous month. However, not every lender uses the same repayment structure.
As mentioned above, interest rates are generally much lower on a HELOC than any other form of credit. The interest rate on a HELOC is based on the Prime Lending Rate which means that it is subject to change. If the Prime Lending Rate increases or decreases, you will see the same fluctuation take place with your HELOC interest rate.
Qualifying for a HELOC
Just like a mortgage, the lender will have to make sure you qualify financially for the HELOC in order for you to open one. Since a Home Equity Line Of Credit is secured by the equity in your home, you must also have a certain amount of equity built up before a lender will give you access to a HELOC.
If you don't have a mortgage on your home, as long as you qualify, you can add a HELOC with a limit of up to 65% of your home's appraised value.
This works a little bit differently if you do have an existing mortgage balance on your home. The limit on the HELOC cannot be more than 65% of your home's appraised value and combined with the remaining mortgage balance cannot exceed 80% of your home’s value.
For example, if your home is worth $400,000 and you still owe $200,000 on your mortgage, you would only be able to register a HELOC for a maximum of $120,000 because the sum of both your remaining mortgage balance and the HELOC limit cannot exceed 80% of the home's value.
Contact me today to find out if a Home Equity Line of Credit is the right choice for you!
If you don't have a mortgage on your home, as long as you qualify, you can add a HELOC with a limit of up to 65% of your home's appraised value.
This works a little bit differently if you do have an existing mortgage balance on your home. The limit on the HELOC cannot be more than 65% of your home's appraised value and combined with the remaining mortgage balance cannot exceed 80% of your home’s value.
For example, if your home is worth $400,000 and you still owe $200,000 on your mortgage, you would only be able to register a HELOC for a maximum of $120,000 because the sum of both your remaining mortgage balance and the HELOC limit cannot exceed 80% of the home's value.
Contact me today to find out if a Home Equity Line of Credit is the right choice for you!
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Castle Mortgage Group
100-1345 Waverley Street
Winnipeg, MB, Canada
R3T 5Y7
100-1345 Waverley Street
Winnipeg, MB, Canada
R3T 5Y7