A Home Equity Line of Credit (HELOC) essentially refers to a kind of secured financing where the lender utilizes your house as collateral to make sure that you will repay the loan. Since revolving credit is the essence of HELOC, you are allowed to borrow, repay, and borrow again within a pre-defined credit limit after being approved for any such loan. HELOC is offered in two variants, namely, stand-alone and mortgage-linked.

Also known as a re-advanceable loan since it provides a fixed-term mortgage along with the added provision of having a revolving credit facility against the home equity of the borrower, the latter kind is offered by most of the traditional financial institutions in Canada. In general, a mortgage-backed HELOC does not come with a specified requirement for monthly repayment, and you will usually have to pay for the interest incurred solely on the utilized amount of the quantum of loan that you are approved by the lender.

On the contrary, your house is obligated when you opt for the former type of HELOC, and the lender provides you with a revolving loan against your property. However, the loan is not backed by a mortgage this time, and you may obtain as much as about two-thirds (65% to be just precise) of the market worth or purchase price of your home with a stand-alone HELOC. You should also understand that your credit line would not increase when you repay the loan.

Call us now for any queries or further information on how you may benefit by obtaining a HELOC from Royal King Mortgages!