A Home Equity Line of Credit, or HELOC, is a loan that uses the equity in your home as collateral. In other words, it's a second mortgage on your home. But unlike a traditional mortgage, a HELOC gives you the flexibility to borrow only what you need when you need it. And since the equity in your home secures it, a HELOC usually comes with a lower interest rate than an unsecured line of credit or even a credit card. So if you're looking for a way to finance a significant renovation, consolidate high-interest debt, or cover unexpected expenses, a HELOC might be right for you. Here are six reasons why you should get HELOC rates Ontario.

1.    Access cash quickly and easily:

With a HELOC, you can borrow up to 65% of the value of your home. That means if your home is worth $500,000, you could qualify for a loan of up to $325,000. And since your home equity secures the loan, it's often easier to qualify for than an unsecured line of credit or personal loan. Plus, once approved for a HELOC, you can access your credit line at any time by writing a cheque or using your HELOC as an overdraft Protection on your regular bank account.

2.    Flexibility:

A HELOC allows you to borrow only what you need when you need it. So if you're planning a major renovation that will take several months to complete, you can draw on your credit line as needed and make interest-only payments during construction. Then, once the work is completed and your home is appraised at its new higher value, you can either pay off the remaining balance of your loan or convert it to a fixed-rate mortgage.

3.    Lower interest rates:

A HELOC is usually much less expensive than an unsecured line of credit because it's secured by the equity in your home—meaning the lender has less risk if you can't repay the loan. As a result, most banks offer lower interest rates on HELOCs than on unsecured lines of credit or personal loans.

4.    Tax-deductible interest:

The interest paid on your HELOC may be tax deductible when used for renovations or investments—unlike the interest paid on an unsecured line of credit or personal loan, which is not tax deductible.*

5.    No prepayment penalties:

If you come into some money and want to pay off your HELOC before the end of the term, most banks will allow you to do so without penalty.

6.    Use your HELOC as overdraft protection:

If you have a HELOC, you can typically use it as overdraft protection on your regular bank account—which means you'll never have to worry about bouncing a cheque or being charged an expensive NSF fee again.

Conclusion:

A Home Equity Line of Credit can offer many advantages over other forms of financing, such as unsecured lines of credit or personal loans—including lower interest rates and greater flexibility. So a HELOC might be right for you if you're looking for a way to finance major renovations, consolidate high-interest debt, or cover unexpected expenses. Speak with one of our Mortgage Specialists today about getting pre-approved for a HELOC and taking advantage of these six great reasons!