We are the best resource online when it comes to HELOCs and HELOC mortgage rates because of our partnerships in the HELOC industry. Our experience guarantees that you will get the right information on these lines of credit from us, and our contacts with lenders ensure that you will find the most affordable HELOC interest rates when you use the tools on our site. For the past several years, the home equity line of credit (HELOC) has been in the news quite often because of its popularity with Canadians who are looking for an affordable credit and financing product. A HELOC may be right for you if you are a homeowner and need access to credit. A HELOC will allow you to re-borrow a portion of the funds that you pay towards your mortgage. Read on to learn more about HELOCs and to access the best HELOC rates available in Canada.
What is a HELOC?
A HELOC is a line of credit that is backed by the equity in your home. You can borrow against this credit line up to the total amount of credit that has been granted to you; then, you can use the money for whatever you want. Many people use a HELOC to access money for home renovations or major expenses such as a new vehicle or college tuition. Some use a HELOC for consolidating debt and taking advantage of an interest rate that is lower than rates offered on other loan options. Others take out a HELOC and never access it, preferring instead to keep it available just in case a major financial need arises.
Canadian HELOC mortgage rates are set by lending institutions according to the prime interest rate currently established by the Bank of Canada. This is similar to how rates are set on variable-rate mortgages, however, HELOC interest rates are generally higher than the rates on variable mortgages. It is also hard to predict how lenders will set these rates. Standard rate formulas vary from bank to bank. Some lenders set their HELOC rates slightly higher than the prime rate. Other lenders set their HELOC rates slightly lower than the prime interest rate. Moreover, lenders are free to change their HELOC rates at their discretion than they are to change their variable mortgage rates.
As noted, HELOC mortgages are secured by the equity in your home, which is calculated by taking the home’s current value and subtracting the amount that you still owe on your residence. Most banks, it should be noted, will not allow you a credit limit as high as the total amount of equity you currently have in your home. Typically, the most a bank will grant you via a credit line is no more than 80 percent of your home’s current value minus the remaining amount you owe on your mortgage.
The Pros and Cons of a HELOC
Evaluating whether a HELOC is right for you requires that you weigh several pros and cons. Since current HELOC mortgage rates are almost always much lower than the rates on unsecured lines of credit, such as a credit card, a HELOC is a great idea if you want to consolidate debt and save money on the interest payments you are currently making to unsecured creditors. Also, if you are expecting a major expense in the future, having access to a HELOC is usually wise. After all, you will be well prepared for any eventuality if you know that you can borrow money to cover an upcoming expense.
On the other hand, getting a HELOC even at the best HELOC mortgage rates is not a good idea if you have had a lot of problems with debt over the years. A HELOC establishes a lien against your house that might lead to you losing your property if for some reason you find yourself unable to make regular payments on your credit line. So, if you have had trouble with debt in the past, you should make sure you have your budget and spending under control before you consider applying for a HELOC.
Some Interesting Facts about the HELOC in Canada
There is much more that could be said about the HELOC. Here are some interesting facts to help you understand the HELOC even better:
• You do not have to get a HELOC from the same bank that holds your mortgage. Sometimes, in fact, you can get better HELOC rates when you choose a lending institution that does not currently hold your mortgage loan.
• Sometimes, a HELOC is popularly known as a second mortgage.
• In most cases, the interest you pay on a HELOC is tax deductible, especially when it is secured by your primary residence.
• It is harder today to get a HELOC than it was in the past because the Canadian government is not backing home equity credit lines any longer.
Get the Best Home Equity Line of Credit Today!
We have only been able to scratch the surface when it comes to home equity lines of credit and HELOC mortgage rates. Canada homeowners who want more information on these loans and are looking for the best HELOC interest rates should select a rate on this page or fill out the online mortgage application form for more information on these popular credit lines.
[show-menu menu=32 menu_name=”Mortgage Rates By Type”]
