It’s one of the many different types of “home equity loans” out there; here we’re going to talk about how they work and how you can use a Toronto mortgage broker to get the best rate. You shouldn’t have to just take whatever is offered to you, and that’s why you need to compare different lenders and loans to make sure you’re getting the right one for you! So let’s start talking about a secured line of credit and see what they can do for you.
What is a Secured Line of Credit?
A line of credit is just a type of financing; you probably already have these with a credit card. It’s the same concept, but the “secured” part means that the debt is secured by collateral. Here we’re going to be talking about a secured line of credit backed by the equity in your home as collateral. Equity works like this:
If your home is worth $100,000 and you owe only $10,000 in mortgages, you’ll be able to borrow up to about $80,000 worth of what you own in your home.
I’d recommend against borrowing this much all at once, so you’ll want to think about what you really want to do with the money. Talking with your mortgage broker can help you make the right decision and to avoid any issues with a bad lender who can’t help you. It’s important that you choose a good lender to give you the right loan.
Is a Secured Line of Credit Difficult to Get?
If you have equity in your home, you can almost get financing. You’ll want to make sure that your credit is as good as possible; every step towards bad credit your score takes is a step towards higher interest rates and less favourable terms. You’ll be able to get a much better offer with even a slight 10 to 50 point increase in your credit score.
It’s important to get the right lender as well, and this is where a mortgage broker comes in. They’ll be able to help you find different lenders who will be more agreeable in regards to lending you money. If you’re self employed, have bad credit or no credit, are retired or have a unique income situation, you may have to have help. A Toronto mortgage broker won’t get paid until the loan is finalized or originated, so it never hurts to get a consultation.
Is a Secured Line of Credit Right for You?
No situation is perfect for everyone, but it never hurts to see if it’s the right one for you. If you need to liquidate money quickly out of your home, and you need to borrow repeatedly, this can be a great option. You will want to be very careful and make sure you can take on this kind of debt before you think about this kind of financing. You could lose your home if you’re not careful, so you want the lowest interest rate and most favourable loan terms possible.