Choosing Between A Home Equity Loan And Home Equity Line Of Credit
Alberta home equity loans and Home Equity lines of Credit (HELOCs) are convenient ways to access the equity you've built up in your home to pay for anything from home repairs to school tuition fees. But which type of loan is best for you? Below, we'll look at the main differences between the two types of lending products.
Home Equity Lines of Credit (HELOCs) vs. Alberta Home Equity Loans: What's the Difference?
A Home Equity Line of Credit (HELOC) uses the available equity in your home as a line of credit, using your property as collateral to secure the financing. Homeowners can generally borrow up to 80% of the appraised value of their home, minus what is owing on the mortgage. Because this is secured against your home, interest rates are low and you can pay the money back and reuse it as often as you wish without needing to reapply for financing.
Alberta home equity loans are mortgage loans in first or second place, often obtained for a specific purpose such as purchasing a car or financing a renovation. The loan is a one-time lump sum amount that is paid off monthly. Once you've received the money, you cannot borrow again without reapplying for a mortgage. Alberta home equity loans have fixed monthly payments, whereas HELOCs typically have interest-only payments.
Which One is Right for You?
Both Alberta home equity loans and Home Equity Lines of Credit have advantages and disadvantages. If you need the money for a one-time occasion, such as to pay for a house repair, an Alberta home equity loan may be best suited to your needs. But if you'll need the money several times over a period of time, a HELOC offers greater flexibility — you can borrow just the amount you need, when you need it. A mortgage broker can help you determine which one is best for you. Contact us today for a free, no obligation consultation.Request Mortgage Info
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