By law home equity lines of credit, or HELOC loans, must have a cap on how much the interest rates can increase during the life of your loan. This doesn’t cap how much interest fees creep up on you over the life of your loan, but it does make sure that a 4% HELOC doesn’t convert to a 20% HELOC in a couple years too. You’re going to want to work with one of our Toronto mortgage brokers to make sure that you’re making the choice that’s right for you – after all, HELOCS are risky business!
What is a HELOC?
A home equity line of credit, or HELOC, allows you to turn all that equity you’ve built in your home into cold hard cash you can use. You don’t want to end up with a line of credit that’s not working for you, so it’s important to work hard to make sure you’re working with a lender that has your best interests at heart.
When you work with us as your Toronto mortgage broker you’ll get all the help you need to find the HELOC lender that will work with you. But it’s not just the lender you have to worry about – you’ll need to worry about interest too!
Why Does Interest Matter?
Interest matters when it comes to your HELOC – the higher the interest on your loan the more you’ll end up having to pay. You want to get this figure as low as possible, but how?
Credit plays a big part in getting an interest rate that works for you. You’ll want your credit to be in a great place before you start applying for home equity lines of credit.
Equity also plays a large part in getting an interest rate that’s equitable. The more equity you hold in your home when you get started the better off you’re going to be when it comes time to borrow.
You’ll also want to be careful about borrowing before you pay off other mortgages or as soon as you pay off another loan. It looks bad to lenders.
Can You Afford a Home Equity Line of Credit?
How much equity do you have available on your home? Are you still paying off a first or second mortgage? Did you just pay one off? Like mentioned above, these can look pretty bad to your lender when they’re reviewing your application.
“Why is this person borrowing again?” They might ask themselves – people addicted to credit can be a great source of income for a bank, but they can also cost them big when it comes to lending out home equity lines of credit.
Compare and Save
You’ll want to make sure you compare different lenders and loans, just so you can make sure you’re getting the best rate. Working with us as your Canada mortgage broker can help you understand your options and if a home equity line of credit is really the right way for you to go. Visit our home equity lines of credit page today to find out how we can help you today: http://www.homebasemortgages.ca/home-equity-loans/line-of-credit/