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There are two types of lines of credit (LOC) that banks offer, secured and unsecured. Both lines of credit offer variable rates or fixed interest rates.
Unlike secured, unsecured LOCs, do not require collateral and usually come with smaller limits and higher monthly payments. You can also usually expect a higher interest rate.
In contrast, a secured LOC uses your home as collateral. They are most often referred to as a HELOC or (home equity line of credit). Since HELOCs use your home as collateral, they usually come with a low-interest rate, higher credit limit and can be expected to have a lower monthly minimum payment.
While they may be harder to qualify for, secured LOCs provide much more flexible than a home equity loan and are the way to go if you need to borrow money for a debt consolidation.
Home Equity Lines have terms and conditions similar to a credit card. They come with an access card and can be linked to your chequing account for convenience. They are a form of revolving credit without a nosebleed interest rate.
Having the ability to borrow money is crucial in today’s economy. With job closures, layoffs and life’s unforeseen circumstances, access to a credit line can make a world of difference.
While secured credit lines are a terrific option, due to new government rules, it is harder to borrow against the equity in your home forcing big banks to scrutinize your income and credit.
A home equity line of credit is a great option for cash-strapped homeowners and secured credit lines can be used to reduce higher interest debt. Moreover, they can provide access to cash when needed, often at the lowest rate possible. They are a much cheaper alternative to personal lines of credit or unsecured loans.
The best part about a home equity line of credit is that you only pay what you owe as well as only paying the monthly interest that has built up. With a home equity line of credit you are able to pay as much as you want towards the principal owing at any time, whether it’s making minimal payments or paying a large lump sum.
Similar to a credit card, HELOCs can be monitored via online banking and reuse the amount you have paid down at any time. HELOCs can be used for just about anything. In fact, with a HELOC you can:
HELOCs are flexible and cost-effective, whereas, personal loans are rigid and expensive. They are perhaps one of the best products a homeowner can have. The challenge with HELOC is figuring out how to secure one, especially if you have bad credit.
Fortunately for homeowners, there are a number of lenders who work with poor credit and are often willing to overlook credit issues where a homeowner has equity. Having a skilled mortgage broker on your side can mean the difference between an approval or being turned away.
Turnedaway.ca has been helping clients arrange financing for over 30 years. We pride ourselves on arranging the best rates and flexible terms even if your credit history isn’t perfect.
Let Turnedaway.ca provide you with peace of mind. If your application for a HELOC has been turned away by your financial institution, contact us today 1-855-668-3074 or apply online and get no-obligation quote.
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We can’t thank you enough for all your help with our mortgage. We were skeptical about filling out an online application but we had tried several banks and due to our credit, couldn’t find anyone to help us. Getting a call within 15 minutes of submitting our application to go over the application put my mind at ease but my husband and I were both shocked to receive a call the same day with an approval. We are still amazed at everything you did considering how difficult the banks made our situation sound. Again, from the bottom of our hearts thank you so much!
Marilyn & Bob T, Whitby Ontario