Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit is a mortgage in the form of a personal line of credit that is secured against the borrower’s property. Typically, this type of mortgage is used when a home owner repeatedly needs access to significant amounts of cash for large projects or purchases, such as renovations, vehicles, tuition, etc.

With this type of mortgage, a homeowner may simply write a cheque or make a withdrawal from the line of credit to make purchases as desired, and up to the available limit of the mortgage. Then, they make payments as required, or on an accelerated schedule, which ever is most convenient for the homeowner, and much like a credit card, as payments are made towards the balance, this credit becomes available again for other projects or purchases.

The interest rates charged on a HELOC are much lower than that charged on credit cards and other loans, but is slightly higher than a traditional mortgage.

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