Unlock Equity with a Home Equity Line of Credit in Burlington

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Did you know that in Canada you can access up to 80 per cent of the value of your home through a home equity line of credit? Here’s how it works and why more homeowners are choosing a home equity line of credit in Burlington.

Homeowners can borrow money by leveraging the equity in their homes, by using their home as collateral. The homeowner can borrow up to a certain amount for the life of the loan – a time limit set by the lender. During that time money can be withdrawn as the homeowner sees fit.

While the interest rate on a home equity loan is typically higher than that of a first mortgage, it’s usually much lower than credit cards. In fact, paying off credit card balances and other outstanding debt is a common reason people turn to these types of loans.

Other reasons why Burlington homeowners consider a home equity line of credit if there are one-time expenses coming like college or an unexpected costly expense.

A home equity line of credit in Burlington can be used for anything from home renovations to big-ticket purchases.
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Explaining Home Equity Line of Credit

 
A home equity line of credit (HELOC) is a loan that uses the equity of your home as collateral, only the loan takes the form of a revolving line of credit instead of a lump sum. A credit line offers greater flexibility, in that you have access to a pool of funds, which you can use for things like:
  • Emergencies;
  • Debt consolidation;
  • A home improvement project;
  • Day-to-day spending.
Payments towards your line of credit are flexible as well, since you can pay as much off as you want, or as little as interest only, depending on your loan agreement. The line of credit also comes with a variable interest rate that is much lower than the interest rates on credit cards. And like a credit card, the payments you make each month towards what you owe free that credit up for you to use again.
 

Is a HELOC in Burlington Right for You?

 
Because a HELOC is backed by collateral (your home), the rates generally tend to be lower than credit cards or unsecured loans. It differs from a normal mortgage loan in that you are not charged interest for the money you do not use. In addition to low rates and repayment flexibility, HELOCs add to your credit history when used responsibly, and can raise your long-term score.
 
Be sure you stick to your budget when taking out a home equity line of credit and exercise discipline, as it can be tempting to overspend or continue to withdraw funds. It is also important to keep in mind that when you borrow against your home, you lose that same amount of equity. This can be a disadvantage if you have paid off your mortgage or want to sell your home down the road.
 
A home equity line of credit is very popular for Burlington homeowners due to its flexibility and competitive rates. As long as you are disciplined and have a plan on how you want to use the money—and how you will pay it back—it is an excellent loan option.

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