women looking at laptop
Picture of Ghummaz Bhatti

Ghummaz Bhatti

Getting a Home Equity Line of Credit: What You Should Know

There are many advantages of getting a home equity line of credit. However, before even considering it, it pays to know exactly what you are getting into first. There are two main types of home equity lines of credit. One is combined with a mortgage, and another one is a standalone product. This blog post will shed light on these two types of home equity lines of credit, or HELOC, and how they may come in handy for you. 

Getting a Home Equity Line of Credit: What You Should Know

Home equity lines of credit may be used in a variety of different ways. These two types of HELOC are designed to meet different needs and financial goals. This blog post will help you understand the specifics that go into each type of HELOC. This way, you will be able to make a more informed decision about which one may work more effectively for your specific needs.

Home Equity Line of Credit Combined with a Mortgage

This type of HELOC is also often referred to as a readvanceable mortgage. Most lenders offer this type of product combined with a mortgage under their own specific brand name. This type of HELOC combines a revolving home equity line of credit and a fixed-term mortgage.

With this type of HELOC, you will be able to use a portion of your home equity line of credit and your fixed-term mortgage to finance the purchase of your home. Depending on your lender, you may be able to gain access to other banking products such as personal loans, car loans, and credit cards that all fall under a single line of credit. 

Standalone Home Equity Line of Credit

On the other hand, a standalone HELOC is a line of credit that is backed by the equity of your home. Unlike a home equity line of credit combined with a mortgage, it has nothing to do with your mortgage. It is treated as a separate product altogether.

The total amount that can be loaned under a standalone HELOC can go up to 65% of your home’s market value or purchase price. This type of HELOC may be used in place of a mortgage to buy a home. However, certain terms may apply to buying a home using a home equity line of credit instead of a traditional mortgage. Higher down payments may be required for this type of home buying method. However, you may also achieve more flexibility in contrast to a traditional mortgage scheme. It is best to inquire with your lender as to these terms before agreeing to push through with the HELOC.

Conclusion

There are many ways by which you may be able to take full advantage of your HELOC. It pays to know the specifics of how to use these mortgage products, especially if you are thinking about using them to purchase a home. If you have additional inquiries, it is best to take them up with an experienced mortgage agent. These professionals will be able to accurately provide answers and tell you if taking out a HELOC will be a good idea for you or not. 

Should you need the assistance of a skilled mortgage professional or have questions on home equity line of credit, come to Ottawa Mortgage Services. We make it a point to provide mortgage agent services for first-time homebuyers in Ottawa, self-employed individuals, and commercial clients. We also help with refinancing, pre-approvals, and debt consolidation.

Contact Ottawa Mortgage Services to learn more

funding@ottawamortgageservices.ca

Like & Share on Instagram & Facebook

@ottawamortgageservices

Get Started, sign up and fill out the application: Click Here

Share this post

Related Articles

house

What Should You Buy: A Starter or a Permanent House?

There is no better way to define success and stability than having a house of your own. Besides the shelter it provides, it is also a hard-earned investment that owners can be truly proud of. The tricky part of buying a home, apart from all the processes and requirements, is

Read More
mortgage

Mortgage Pre-Approval for the Self-Employed: Insights and Strategies

Homebuying is an exciting and monumental milestone for many, but navigating the mortgage pre-approval process can be particularly challenging for self-employed individuals. As a self-employed homebuyer in Ottawa, understanding the mortgage pre-approval process and its unique considerations is essential for effectively preparing and optimizing your chances of success. By partnering

Read More
canadian dollar

What You Need to Know about Debt-to-Income Ratio and Mortgages

A lender will assess your financial situation before granting you a mortgage to ensure that you can afford the payments and that you are stable. This is the lender’s guarantee that you can manage the mortgage. That said, to assess your financial health, one of the things lenders look at

Read More
Shopping Basket