Your home is a valuable investment. It offers a place for you and your family to live, grow and prosper. It also offers flexibility in terms of building equity. Here’s how to take advantage of the financial benefits.
Whether you’re looking for extra cash to cover renovations or repairs, or looking to consolidate high-interest unsecured debt, it makes sense to take advantage of your biggest and most valuable asset. A home equity line of credit (HELOC) is a popular option for obtaining extra funds. Compared to traditional loans or refinance options, it has many benefits.
With a traditional loan, you receive a fixed amount of money in one lump sum, to be paid back over an agreed term. Interest rates tend to be higher because your home is not being used as collateral.
A HELOC allows you to take out cash against the equity in your property. Because the loan is secured by the home itself, it is considered low-risk in the eyes of lenders. The interest rate tends to be lower than other types of loans, resulting in reduced cost of borrowing and payments over time.
Another defining feature of a home equity line of credit is the flexibility it provides. If you refinance your mortgage or take out a more traditional loan, you’ll be charged interest on the entire amount.
With a HELOC, the money is there when you actually need or in case of an unexpected event. You’re not required to have any set plans for the funds and can use them as you see fit. By accessing the funds when you need them, in the amount that you require at the time, you only pay interest on the money you withdraw.
A HELOC can provide access to a large sum of money, particularly if you have a lot of equity in your home, without affecting your existing mortgage. You can simply take out a loan using the home’s equity as collateral, without refinancing.
With a mortgage refinance, you’re essentially applying for a new mortgage. As such, you’re required to pay the associated fees, which can add up. You may also be faced with higher interest rates and additional changes to the term of your original mortgage agreement.
Have questions about the best way to take advantage of your home’s equity, or your mortgage options in general? Answers are just a call or email away! Contact us today to find out more.
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