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HELOC Richmond 2020

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Flexiti Financial -
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There are times in life when there’s just not enough money in the pot to cover some of life’s biggest expenses. Maybe you want to cover the cost of a home improvement project or pay for a car repair. Or perhaps you need the extra money to pay for college tuition or another pressing expense. Whatever the case may be, having access to extra money in the form of a loan can prove to be a life-saver sometimes.

There are plenty of loan options available in these cases, including HELOCs. This unique type of funding may be available to homeowners who have a certain amount of equity. If you qualify, you can use the funds from your home equity in the form of a HELOC to cover whatever expenses you might have.

Keep reading to find out what HELOCs are and if they’re the right loan option for you.

HELOCs – Defined

Simply put, a HELOC – an acronym for a ‘home equity line of credit’ – is a type of loan that lets homeowners borrow against the equity built up in their homes. Home equity refers to the value of your property, less whatever is still owed on your mortgage. In order to qualify for a HELOC in Richmond, you’ll need at least 20% equity in your home.

Want to know how you can build home equity? Find out here.

How Does a HELOC Work?

A HELOC may be a type of loan, but it’s rather different than the sorts of loans you might be familiar with. The average loan often involves gaining access to a lump sum of money, then paying the loan back in installments with interest. But HELOCs work a little differently.

The best way to understand a HELOC is to compare it to a credit card. Borrowers are offered a specific limit of funds that they are allowed to borrow against with a HELOC, which is similar to what you would get with a credit card limit. You’re then free to borrow as much or as little of that limit as you need to.

Thinking of using your home equity to pay off your credit card debt? Read this first.  

The only time you pay interest is if you withdraw funds, at which point you’ll only owe interest on the exact amount that you’ve withdrawn rather than the full credit limit. Once you’ve paid back that loan amount that you withdrew, you no longer owe interest or payments until you withdraw again.

You’re free to make withdrawals as often as you please, as long as the full amount is repaid when the term of the HELOC expires.

Click here to learn how you can get the best rate for your line of credit.  

How Do HELOCs and Home Equity Loans Differ From Each Other?

HELOCs are often used interchangeably with home equity loans, but they differ slightly from each other. Their similarities lie with the fact that they both involve the use of equity in a home that homeowners use as the source of their loans. But that’s where their similarities end.

Also known as a ‘second mortgage‘, a home equity loan involves borrowing a lump sum of money against a home’s equity rather than involving a credit limit that can be withdrawn at different times and in varying amounts. The money borrowed with a home equity loan is then paid back in installments, similar to the average type of loan.

What Can You Use a HELOC For?

The funds from a HELOC can be applied to a variety of things, including the following:

  • Home improvement projects
  • Car repairs
  • College tuition
  • Investment opportunities
  • Starting or expanding a business
  • Debt consolidation

The True Cost of BorrowingDo you know what the true cost of borrowing is? Check out this infographic to learn more.

Should You Apply For a HELOC?

For starters, you will need to ensure that you are eligible for a HELOC before you consider taking one out. You’ll obviously need to be a homeowner in order to have equity accessible to you. Furthermore, you’ll need at least 20% equity in the home in order to qualify.

Want some information about retiring with a mortgage in Canada? Look at this.

If a HELOC is an option for you, you’ll want to think hard about why you want to apply for one. After all, it is money that you will owe, so you’ll want to make sure that you’re not just financially capable of paying it back, but that you’ll be putting the funds to good use.

A good reason to apply for a HELOC Richmond is to cover the cost of home renovations. That’s because you’ll be adding value to your home (if the right updates are made), making it money well spent. Also, if you need the money for emergency purposes, then perhaps taking out a HELOC might make sense.

But if you’re planning to use the money for frivolous purposes or you aren’t financially comfortable enough to repay the money, then you might want to think twice about applying for a HELOC, or any other type of loan for that matter.

If you’d like to apply for a HELOC or other home equity loan product, click here.

Are You Considering a HELOC Richmond?

After assessing your financial position and the reason why you want access to more money, determine whether or not applying for a HELOC makes sense. If it does, let Loans Canada help you find the right lender to help you access the equity you’ve worked hard to build up in your home to be put to good use.


What happens if I miss a mortgage payment?

  • Missing a mortgage payment will affect your finances in two ways. A missed payment will be reported to the credit bureaus and negatively impact your credit score. And your lender could potentially charge you a late fee. If you know you won’t be able to make a loan payment on time, make sure you speak with your lender.

What is home equity?

  • Home equity is the percentage of your home that you actually own. As you pay down your mortgage (or if the market value of your home increased), your home equity or the percentage of your home that you own goes up. Home equity is valuable because you can use it as collateral to borrow against.

What credit score do I need to qualify for a mortgage?

  • Generally speaking, in Canada most banks and traditional lenders will require a minimum credit score that falls somewhere between 620 and 680.

How do I find out how much equity is in my home?

  • In order to gain access to your home equity via a home equity loan, HELOC, second mortgage, etc. a professional appraisal must be performed, which will determine the value of your house. But, if you’re interested in having a general idea of the amount of home equity you’ve built up, subtract your remaining mortgage balance from the price you paid for your house.

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Posted by
Lisa has been working as a freelance writer for more than a decade, creating unique content that helps to educate Canadian consumers. She specializes in personal finance, mortgages, and real estate. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. She enjoys sharing her knowledge and experience in real estate and personal finance with others. In her spare time, Lisa enjoys trying funky new recipes, spendin...

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