Home equity line of credit: what you need to know

The mortgage line of credit is this extremely practical mortgage product for all kinds of reasons, starting with its favorable interest rate. The mortgage line of credit is also the best friend of renovators. Here are the highlights of this financing product that every good homeowner should know.


The mortgage line of credit: a very useful financing product

The mortgage line of credit: a very useful financing product

Your mortgage broker and your financial institution will certainly suggest that you get a mortgage line of credit, because it can become very practical, especially if an urgent situation requiring funds occurs or if you decide to renovate your home. It allows you to access credit simply and quickly, because it is only a case of withdrawing money or issuing a check to use it.

If the line of credit option was already granted when signing your loan, it is not worth going back to the notary to activate the line of credit. You just have to make an appointment with the financial institution and you will then have quick access to funds for the reason of your choice. The mortgage line of credit does not require proof of project or purchase. Do you want to borrow to renovate the bathroom or even to take a trip? The home equity line of credit is an open loan that lets you do it. And you can repay it as you wish, in whole or in full, at a time that suits you, as long as you pay the monthly interest.

Note that the maximum amount allowed for a mortgage line of credit is 65% of the current value of your property. To qualify, you must have sufficient income and your credit report must be in order.




The major advantage of the mortgage line of credit is simple: the interest rate is very advantageous compared to credit cards and most personal loans. Compare it with the rate appearing on your monthly credit card statement and you will quickly notice the difference!

Interest is calculated only on the amount borrowed and only for the duration of the loan. This may seem obvious, but, compared to a personal loan that you will repay in monthly installments, it can make a big difference in the interest paid for the total repayment of the margin.

For example, you decide to have a pool digged and you need $ 20,000. With a personal loan, you will have to borrow $ 20,000, no matter how much you actually need in the end. If it turns out that the amount spent is ultimately $ 18,000, you will still pay interest on the difference of $ 2,000. With the margin, you can borrow gradually and repay when you want!


The inconvenients

The inconvenients

Nothing is perfect, so here are some things to consider if you want to use a mortgage line of credit. First, be aware that the interest rate that applies to a line of credit fluctuates according to market conditions. If the rates suddenly increase, it could cause you difficulty in repayment.

Access to this type of credit can quickly give ideas of greatness, so we have to keep our consumption habits at the same level and ensure that our repayment capacity is real.

To remember

  • The mortgage line of credit provides quick and easy access to credit.
  • The interest rates on the mortgage line of credit are advantageous compared to credit cards.
  • The interest rate granted fluctuates according to market conditions.

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