There can be many disadvantages to a secured line of credit, but most of these can be sidestepped with the right Toronto mortgage broker (like us!) Most people get into a bad situation with any type of credit lines because they don’t understand the terms of the agreement that they’ve entered into. Here we’re going to talk about things you need to look out for before signing up for a secured line of credit and how they work. Let’s get started!
What is a Secured Line of Credit?
The “secured” comes from collateral. If you don’t pay your credit card bill, you’ll wind up with negative marks on your credit. Everyone has had this happen to them, don’t feel bad! But when you don’t pay a secured line of credit off, you can wind up losing whatever you put up to secure the debt. In this case (at least when we’re talking about it here) the collateral will be your home. You don’t want to lose your home because you got a bad secured line of credit! Talk with one of our Toronto mortgage brokers before you sign on for one of these.
What are the Advantages of a Secured Line of Credit?
While these can be risky if you try to get one on your own without understanding them, they can be fantastic when done right! A secured line of credit is something known as “revolving credit” which means it works a lot like a credit card. You’ll borrow up to 70% of the equity in your home at any given time, but you can pay back and borrow back as often as you want. Depending on what kind of credit line you get, you’re going to want to think about what you’re going to be using it for before you get one.
What can a Secured Line of Credit be Used For?
They can be used for virtually everything, but it’s good to stick to a one time big purchase at the beginning or using it to plan for your retirement (like in the case of a Canadian reverse mortgage for example). Just because you’ve been granted x amount of money doesn’t mean you have to borrow it all at once, and you should always be careful about what you’re spending your money on! A mortgage broker can really help you decide whether a Canadian secured line of credit is right for you or if you should think of a more conventional type of financing like a second mortgage instead.
Secured lines of credit can help get you the money you need out of your house when you need them… but not all mortgage lenders are created equal. We’ll help you find that magic fit that will help you get the money you need and make sure you can pay it back in a reasonable amount of time. The best thing about mortgage brokers is that we work for you and not for the bank! Put us to work for you today.