What is HELOC and How to Find the Best HELOC Rates?

 

HELOC stands for Home Equity Line of Credit, which is a revolving credit line that lets you borrow the equity in your home at remarkably low-interest rates, especially when compared to the traditional credit line. HELOC is an economical alternative to other credit lines such as personal loans, credit cards, etc.  You can find the best HELOC rates online with the help of trusted and reliable brokers. But before you go ahead with HELOC, it is important to learn more about it.

 

A quick guide to HELOC and best HELOC mortgage rates in Canada

When you take out a mortgage with HELOC, you can get pre-approved cash within your mortgage. When using money from HELOC, you are liable to pay the interest on HELOC money aside from the regular mortgage loan payments. Here, it is prudent to understand what home equity refers to? Home equity is your home’s current value minus the mortgage loan balance you still owe. Fundamentally, it is the amount of property ownership you’ve built up via mortgage rate appreciation & reduction by repaying the loan amount. Hence, when you pay back your mortgage and build equity in your home, you are eligible to borrow the funds again with the help of HELOC.  

 

Some of the benefits of HELOC include:

 

Flexibility due to the facility of revolving credit, no fixed payments, and the ability to repay and borrow money as you need. You just need to pay your monthly interest.

Lower interest rates as HELOC comes with amazingly lower interest rates compared to personal or other loans.

Emergency funds as HELOC can be useful when you need cash urgently without having to save pennies for years.  

An easier option as HELOCs are mostly cheaper compared to open mortgage rates, these are better short-term solutions for financing when you are able to repay the loan within a few months, one year or so.

HELOC is used for debt consolidation, higher education, home renovations, and other purposes. An important note here is you can apply for HELOC up to 65% of the value of your home.

 

How to get the best HELOC rates?

While you cannot get above 65% of your home’s value as HELOC, another fact is your mortgage loan balance and HELOC shouldn’t reach or exceed 80% of the value of your home. To get the best HELOC mortgage rates, you may consult the experts at RateGuru.