Does discussing a home equity line of credit usually send you running for the hills? The idea of borrowing a substantial amount of money from a powerful financial institution is intimidating. However, knowledge is power when it comes to such financial decisions. Keep reading to learn about the benefits of opening a home equity line of credit for your Vaughan property and how such a line compares to a traditional mortgage.

What Is Home Equity?

Understanding the basics of home equity is key to figuring out if you are a suitable candidate for application. Home equity is the amount of rightful interest an individual has in their property. The more a mortgage has been paid off, the more equity the owner has at stake. This type of line is basically a second loan. A mortgage is used to buy the property, and a home equity line is then used for ease of management. In terms of a home equity line of credit, property owners agree to use their interest as collateral during the period in which a loan is granted. In order to apply for a home equity line of credit (HELOC), the owner must be in good credit standing with a large portion of the initial mortgage already paid off.

Home Equity Credit Line Benefits

Here are some expert-approved reasons to consider opening a home equity line of credit in Vaughan:

1. Rainy day credit: Homeowners can use a home equity line of credit as they please. If a dire situation arises and funds are needed quickly and immediately, the individual can dip into this account without being taxed. Financial institutions are fair and will let you access the money you are entitled to without hesitation.
2. Easy payment options: Homeowners can opt to make payments to the interest only if necessary. Life often gets in the way of managing debt properly; if a sudden expense has you scrambling, skipping a large payment is acceptable. 
3. Lower interest rates. This is perhaps the most convincing benefit of opening a HELOC. Credit card interest is extremely high lately, so charging high amounts to a card or taking advantage of cash advance options will end up costing a fortune. A home equity line is much lower, sitting at a variable rate of approximately 2.1% in Canada right now.
4. Consolidate debts. Having all owing debt pooled into one place makes life easier--it is as simple as that. Having to keep track of multiple payments and managing differing interest rates is complicated and, quite frankly, something to avoid. A home equity line of credit is a much more organized and efficient way of borrowing money from a financial institution.

Seeking Professional Advice

If this all seems too overwhelming, you have the option of easily hiring a financial professional to help aid in the process. A great company will have solid experience and references, and referrals should be readily available upon request. Book a consultation and get started today.