A mortgage line of credit – commonly called “HELOC” in English – is a loan in the form of a revolving line of credit that is secured by the equity in your home. Because the loan is directly secured by a tangible asset, it is possible to obtain the latter at a lower interest rate than most other types of unsecured loans.
Unlike loans like car loans, where the borrowed money must be used to purchase the item specified in the loan agreement, a line of credit allows you to withdraw any amount you desire from the amount that has been granted to you, and the money can be used for any purpose. Also, when you pay off the money you borrowed on the line of credit, you can “borrow” the money anytime up to the limit of your line of credit. This is what is meant by revolving line of credit.
Companies often use a line of credit to finance large capital expenditures required to grow their business. For homeowners, a home equity line of credit can offer similar benefits.
Take advantage of a mortgage line of credit
Because they offer a lower interest rate as well as higher limits than most other types of personal loans, they are a preferred choice by homeowners, which allows them to finance major renovations. from their family home. Mortgage lines of credit can also be an economical solution for consolidating high interest rate debts into a single monthly payment at an attractive repayment rate. They can also be used to help you cover the costs of a child’s post-secondary education or incur significant expenses, such as those related to a marriage or other family event.
The self-employed and small business owners often use the home equity line of credit to maintain adequate cash flow during off-peak periods and to manage operating expenses. These can also provide the starting capital needed for people who want to start a new business.
In Canada, a mortgage line of credit cannot exceed 65% of the total value of your home. Also, please note that the total amount of this line of credit, when added to any outstanding balance on your mortgage, must not exceed 80% of the market value of your home.
GoTrust Visa Credit Card as an Alternative to a Mortgage Line of Credit
GoTrust offers a different solution with the GoTrust Visa credit card. This specialized product is not a conventional mortgage line of credit, but a credit card whose limit is guaranteed by a mortgage. The GoTrust Visa card allows you to access your home equity just like a mortgage line, but with the convenience of a credit card. Also, since the GoTrust Visa card is secured by the equity in your home, the interest rate is much lower than the interest rates on standard credit cards.
In addition, the GoTrust Visa card offers additional benefits, including a 1% cash back on all purchases made with the card. So whether you use your GoTrust Visa card to pay for services and materials to finance a new renovation project, to buy supplies for your business, or even as your everyday credit card, you can take advantage of advantages combined with a low interest rate and a guaranteed 1% cash back on all new purchases.
For more information, please visit the GoTrust Visa website or contact your mortgage broker.