If you are a homeowner in Mississauga, one of the best and most convenient ways to borrow cash is with a home equity line of credit. Home equity lines of credit or HELOCs for short, let you borrow money from your home equity (up to 80%) at an interest rate that is usually much lower than a credit card.
What is a home equity line of credit and how does it work?
As mentioned, a HELOC is a mortgage tool that allows you to borrow up to 80% of your home equity. It is a revolving line of credit so you can borrow from it and pay it back on a regular basis as long as you never go over the maximum approved amount and you continue to make the minimum payments. You only pay interest on the amount of money that you have borrowed – not the amount that you have been approved for. Once you have been approved for a HELOC, you don’t have to keep reapplying when you want to borrow more – similar to a credit card or a personal line of credit.
Getting a home equity line of credit in Mississauga has several distinct advantages over other types of loans. Here are a few reasons you might want to consider getting a HELOC.
- Lower interest – HELOCs are secured by your home equity. That means investors will consider them less risky than unsecured loans such as credit cards. As a result, the interest rates tend to me much lower.
- Revolving line of credit – If you need to borrow money on a regular basis, HELOCs are much more convenient that one-time loans because you don’t have to reapply every time you wish to take money out. As long as you stay within the maximum limit and keep making your minimum payments, you may borrow from your HELOC whenever you like.
- Don’t need perfect credit – With unsecured loans, lenders generally require you to have good credit. But because HELOCs are a type of secured loan, you don’t need to have perfect credit in order to qualify for one.
Are there any drawbacks to getting a home equity line of credit in Mississauga?
Like all loans that are tied to your home equity, you need to be sure that you don’t borrow more than you will be able to pay back. Otherwise, you risk losing your home. That’s why it is always advisable to work with a professional mortgage broker who can help you determine which products are best for you.
If you would like to learn more about home equity lines of credit in Mississauga, contact Akal mortgages today to speak with one of our brokers.
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