Home Equity Line of Credit in Toronto: Homeowner Basics

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Thinking and talking about opening a line of credit can be rather bland, a subject one regularly avoids. With the amount of options available as well as the constantly changing public opinion on borrowing money, navigating the financial world can be tough. But don’t worry, Toronto property owners. Keep reading to learn about the benefits of opening a home equity line of credit (HELOC) and how such an action differs from applying for a mortgage.
 

Does Your Home Have Equity?

 
First of all, it is wise to determine if your home actually has equity or not. The process of seeking a financial professional and discussing opening a HELOC before doing such a thing would be rather pointless. If you have made significant advances in your repayment of a first mortgage, your home probably has equity. Equity is the amount that has been paid off, the portion of the property that the owner has rights to, without question. When opening a home equity line of credit in Toronto, the equity that has been incurred on the real estate is used as collateral.
 
Refinancing and opening a HELOC is opportune during low interest rates and fluctuating real-estate markets. An easy-to-use online mortgage calculator can help you get started with understanding how much equity you have and the amount that would be open to you with the successful application of a HELOC.
 

Benefits of a HELOC

 
Once you have determined you have equity and are therefore eligible for a HELOC, a financial professional can help you to better understand the benefits of opening this kind of line of credit. Here are a couple basic reasons a home equity line of credit is an extremely attractive type of loan:
  1. Independence. Borrowers can choose when and how much they would like to contribute to the loan repayment. There are no fixed term rates with a HELOC and a homeowner can opt out of a payment if times or tough. On the other hand, a large sum of money can be paid off if the owner is able to. Repayment decisions are left entirely up to you, giving you more financial freedom and less pressure to meet deadlines and due dates.
  2. Tax benefits. The amount of interest paid onto a HELOC can be filed as a tax deductible. If portions of the credit line go toward home repairs and upgrades, an even higher amount can be deduced at tax time, so long as the owner files correctly and with proof of purchase.

2015 Mortgage Rates

 
The first step in receiving a home equity line of credit is establishing a solid interest in a mortgage. For first-time buyers who are looking toward opening a HELOC in the future, remaining consistent and continual on mortgage repayments is key to successful application. Financial institutions hesitate to do business with you if you have a history of bad credit or late payments. Staying on top of finances now means more freedom in the future.
 
Mortgage rates continue to be lower than average going in the year 2015. The five-year fixed rate in Canada sits around 2.79%, whereas variable is 2.35%. This means that one could potentially enjoy even lower interest on a HELOC in the future, as this type of credit usually carries a lower interest when compared to a mortgage. Clearly, the time to buy property is now.
 
So, what are you waiting for? Contact a Toronto financial specialist today to get started. Reaping the benefits of low interest rates and more monetary freedom is in sight! 

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