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Home Equity Line of Credit

Thinking of doing bigger or better things?

If you have equity in your home, a HELOC can be a lower-interest way to access funds for those important things that come up, like home upgrades or consolidating debt.

Need extra funds? Who doesn't.

Roof sprung a leak? Kids going off to college? Debts need consolidating? When bigger expenses or plans sneak up, a Home Equity Line of Credit (HELOC) may offer you a financial helping-hand that won't break the bank.

What exactly is a HELOC?

A HELOC is a revolving line of credit that allows you to borrow against the equity in your home, typically at a much lower interest rate than a traditional line of credit (or other forms of credit, such as a credit card). The variable-rate interest is paid monthly on the amount withdrawn, and you usually have flexibility in repaying the amount borrowed, which is made in addition to your mortgage payments.

What can I use a HELOC for?

You can use your line of credit at your discretion for any extra funds you'll need. Typically, a HELOC is used towards bigger-ticket needs, such as ones that can increase or improve your investments, or help you get into a better debt position.

  • Home renovations, energy-efficient upgrades, furniture or appliances
  • Investment opportunities
  • Secondary or higher education
  • Debt consolidation
  • Unforeseen expenses

Depending on the size of your down payment, first-time home buyers might not be eligible right away for a HELOC (talk to an expert broker for more details).

How much home equity can I access with a HELOC?

You may be able to borrow up to:

  • A maximum of 80% of the market value or purchase price of your home when combined with a current mortgage
  • A maximum of 65% of the market value or purchase price of your home as a 'stand alone' HELOC
  • Refinance or re-qualification may be required

Of course, you'll still need to pay back your HELOC, either through payments, lump sums or by the sale of your home.

How does a HELOC work?

Once your HELOC is in place, you can use some or all of your available line of credit at your convenience:

  • Depending on the lender, amounts to be withdrawn can be requested with a turnaround of 1-2 days
  • Or, it may be attached to a chequing account and can be accessed to make purchases by debit card, by e-transfer, or through cash withdrawals
  • Typically, a minimum interest-only payment is required on the amount withdrawn
  • Repayment options are flexible with no penalties
  • Your line of credit is yours as long as you need it or until you sell your home

A HELOC uses a variable interest rate, so your interest payments will increase or decrease with movements in the prime rate. The rate you receive can vary by lender and level of convenience or access.

How do I pay back a HELOC?

When you withdraw any amounts, you begin paying monthly interest on what you owe. To pay back your balance, you have the flexibility to make payments at any time (such as monthly), to make lump sum payments, or to pay the entire balance at once, with no penalty.

If you still have a balance on your line of credit when you sell your home, it will be paid back to the lender out of the sale funds at that time.

What's the difference between a HELOC and a refinance?

A refinance is another possible way to access the equity in your home, but you'll get part of your new mortgage as cash upfront. A HELOC allows you to access the funds at any time, and pay back at any time. With a refinance, you'll have the cash right away, but also be paying interest right away as part of your new monthly mortgage payment.

However, mortgage rates for a refinance may be lower than for a HELOC. Our expert brokers can help you decide which product is best for your unique situation.

Get a HELOC at your best rate.

A lower rate for your HELOC could save you thousands while you make improvements.

Talk to your friendly, highly-trained True North Mortgage broker, who will outline your options and check with accredited lenders (even your bank) to find your best rate and product fit.

We simplify everything for you, including all the paperwork. Our help comes with no cost to you, and no obligation. It's literally a no-brainer to talk to us.

Have more questions? That's why we're here! Anywhere you are in Canada, drop by, give us a call or connect online.