Home Equity Line of Credit (H.E.L.O.C.)
A Home Equity Line of Credit (HELOC) is a secure form of credit. Banks, Private Lenders and Credit Union use your home as a guarantee that you will pay back on the loan at the set time.
How does Home Equity Line of Credit Work?
A HELOC is similar to a Low Interest Credit Card with a pre-set limit. As the balance is paid down, you have the freedom to use the funds all at once or over time.
The payments go directly back into your line of credit, allowing you to reborrow.
HELOC has the option for variable or fixed interest rates at the time of setting it up.
Pros and Cons of HELOC
Determine if a HELOC is right for you
- Large Amounts of Cash
- Easy Access
- Open Line of Credit
- Borrow for Any Reason
- Consolidate Debts
- Home Renovations
- Children’s Education
- Down Payment on Another Home
- Builder for a New Home
- Financial Discipline in Borrowing
At Private Mortgages, we are happy to answer any questions you may have, in relation to a HELOC or any other mortgage type.
You have the option of exploring offers from private mortgage lenders in Ontario. We are not required to conduct stress tests and are more laid back.
How should I qualify for a HELOC?
The application process and requirements for a HELOC is pretty much the same with any other loans. You must have an outstanding or at least a fair credit score, sufficient source of income, and an acceptable percentage of debt to income ratio.
When you apply for HELOCs in banks, you have to pass their stress tests. They also have a more rigid standards as they don’t want to lend money to high risk borrowers. There are also other documents that may be required from you depending on the lender. They may ask you to run through your mortgage payments, balance, and terms among others.