HELOC-toronto

Getting a Home Equity Line of Credit in Toronto

If you’re trying to use your home equity to get better financial flexibility, then a home equity line of credit could be a good option for you. A HELOC allows a borrower to get a loan at extremely low interest rates and allows the borrower to use the loan as a revolving line of credit, giving the borrower plenty of flexibility as well as friendly payment terms.

Benefits of A HELOC

Most people get a HELOC because they find that it as a good loan option for purchasing an extra property, supplementing their cash flow, making investments, or as a source of fund for a budding business. The interest is much lower than a business loan, a credit card, a car loan, or a personal loan. Other benefits include the following:

  • A HELOC is partly tax deductible. You can deduct the interest paid if you are using a HELOC to make investments.
  • A HELOC is friendlier to your monthly cash flow as there is nothing to pay if you haven’t used it and in case you used it, oftentimes you only have to make monthly payments for the interest while the principal is to be paid much later.
  • A HELOC gives you a revolving source of funds. As you make payments for your HELOC, you can keep reusing the credit until the end of the term or until the limit is reached. You can reborrow as needed within the validity period without having to apply for a new loan. This means plenty of flexibility while saving money on fees and interest as compared to other loans.

Things to Watch Out for with A HELOC

Some lenders may charge a higher interest and in some cases, a variable mortgage rate may be better than a HELOC’s because of lower interest and other benefits.

HELOCs are not created equal. Some lenders may reduce the amount of your available credit and some may need extra permissions that take time to allow you to access your credit. This means that a HELOC from such lenders is not a good source of funds for emergencies.

You may have challenges with collateral mortgage charge. This is because when a lender gives you a HELOC, a mortgage charge is registered on your property that is equivalent to the value of your home or more. This allows the lender to readvance more credit if needed or required. Having collateral mortgage charge means that your ability to borrow anything against your home will be limited and might incur additional fees. You must make sure that you are aware of things like this before signing up for a HELOC so that you can protect yourself better.

Do you have questions about getting a HELOC in Toronto? We are happy to help at Homebase Mortgages! Contact us if you need an assessment and expert opinion before you make a final decision with getting a home equity line of credit. An informed decision is a smart decision, after all. Once you are ready, you can apply for a HELOC with us.