.There are lots of ways to use a home equity line of credit so let’s explore a few of them.
If you’ve lived in your home long enough to build equity, you might be able to put that equity to work for you.
A home equity line of credit (HELOC) is a revolving credit line drawn against the equity you have in your home. Some mortgage lenders will allow you to access up to 65% of your home’s value to pay down other debt, cover educational expenses, or make improvements to your home.
There are many benefits to using the equity in your home as a line of credit. Firstly, the interest rate is typically much lower than other credit sources. And you can access as little or as much of your credit as you need, and you only pay interest on what you use.
Read on and learn five ways Canadians can use a HELOC mortgage to pay for the things you need.
1. Use a Home Equity Line of Credit to Improve Your Home
One of the interesting things Canadian homeowners do with their HELOC is remodeling or renovating their house. Not only is using your HELOC mortgage a more affordable credit option, but it also could increase the value of your home too!
You can use your line of credit to install a pool for your family to enjoy. Renovating your kitchen with the latest decor and appliances can make a world of difference in the appearance and value of your house. Instead of putting off that new deck or patio, you can make it a reality with low-interest credit from a HELOC.
Some of the home improvements that help increase the value of your home include bathroom renovations, a new roof, or energy-efficient windows. Update your home to enjoy it more now, and to increase the resale value later.
2. Pay for College
If you have a child preparing for college, you might be looking for ways to cover the cost of tuition. Canadian students pay an average of $6,000 to $10,000 per year for college. You can use the money from your HELOC to pay for some or all of that expense.
If you’ve been considering returning to university for an advanced degree or additional training in your field, you can finance your education with a HELOC, too. Many adults avoid returning to college because of the expense. With a HELOC, you have financial flexibility and options to continue your education.
In some cases, the credit terms on your home equity line of credit might be better than a student loan. They are almost always better than the terms associated with a credit card.
3. Consolidate Unsecured Debt
The average Canadian owes more than $20,00 in unsecured debt. This is usually in the form of credit card debt. Credit cards usually have an interest rate of 10%-20% and cost the cardholder thousands of dollars in interest charges each year.
On the other hand, a HELOC mortgage, by comparison, usually carries an average interest rate of less than 5%. You can use your line of credit to pay off high-interest rate credit cards and pay a much lower payment each month. The money you save on interest payments and finance charges puts more money in your pocket every month.
Talk with a HELOC mortgage specialist about the best ways to reduce your monthly debt payments. Mortgage rates are at an all-time low. Don’t let credit card debt weigh you down and cause extra stress in your life.
4. Make a Big Purchase
If you’ve been dreaming of a once-in-a-lifetime vacation with your family, your HELOC could be the right way to pay for a trip to an exotic location. Certainly, it’s more cost-effective than using a credit card. Even if you are only supplementing the expense of a trip, your home equity line of credit can help you make that dream trip a reality.
Some Canadian homeowners use the low-interest rate of a HELOC mortgage to pay for a down payment on a second home or a vacation home. But, in some cases, your HELOC may cover the full cost of a second home and at a lower interest rate than a traditional mortgage.
Weddings are another expense many people don’t plan for. And, the average wedding costs Canadians more than $40,000. If you haven’t saved for years to pay for that dream wedding, a home equity line of credit can help pay for some or all of the expenses at a low-interest rate.
5. Be Prepared For An Emergency
Finally, experts agree it’s essential to have enough savings to cover up to six months of expenses in case of financial hardship, such as losing a job or experiencing a medical emergency. However, the average Canadian family saves less than $1,000 per year. That’s not enough to cover the cost of some emergency expenses, and that means people turn to high-interest credit cards.
A better plan is to secure a home equity line of credit in case of emergencies. You only make payments on the amount you actually borrow. Having a HELOC in place to protect against unexpected expenses can help preserve your financial interests if an emergency arises.
Your Home Is Worth More Than You Thought
With a home equity line of credit, you can turn the equity in your home into low-interest cash. Use your line of credit to make improvements and renovations to your home. Pay for college tuition, a wedding, or a dream vacation.
You can lower your monthly debt payments by consolidating high-interest credit cards. With a HELOC mortgage you keep more money in your own pocket every month. If your savings are dwindling and you aren’t prepared for an unforeseen financial crisis, this could be the safety net you need to protect against a fiscal emergency.
If you’re ready to put the equity in your home to work for you, apply today for a home equity line of credit. Our quick and easy online form will get you started toward paying for home improvements or consolidating debt right away. Alternatively, if you have questions don’t hesitate to give us a call toll-free at 1-877-383-1577