A HELOC is essentially a secured line of credit that is secured by a first or second mortgage registered against your home. Depending on the lender, you can secure a home equity loan in the form of a line of credit for up to 80% of the property value.
The reason why this is such a valuable cash flow management tool is that once its put into place, you have ready access to the funds whenever you need it. For the average person, a small unsecured line of credit may be sufficient for their unexpected cash requirements, but for those of us that are more likely to be exposed to larger cash flow slings, a HELOC loan is arguably the best option available.
In addition to the fact that you basically have cash on demand as was previously mentioned, you are also going to pay the lowest available financing cost for short term borrowing with no fixed repayment schedule. The challenge with short term cash demands is that it can take time to get a loan or funding in place, and if you’ve had some tougher financial times at the time of a loan request, it can be hard to secure, at least not for rates at or near prime.
When a home equity line of credit mortgage is in place, as long as your payments are kept up to date on all your banking facilities, there should be no reason why it is not available to you when you need it.
To qualify for a Toronto home equity line of credit, you’re going to need to have good credit and the lender will perform a repayment assessment on the basis of their longer term rates assuming full utilization of the line to make sure you have the cash flow to cover off future utilization of the funds available to you.
For the self employed business person, real estate investors, growing families looking to take vacations or upgrade their homes, and many other scenarios where significant amounts of short term financing are required, a Toronto HELOC loan can be a great solution.
If you’re in need of a HELOC loan or would like to get more information on HELOC loans, give us a call and get a member of our team to go over your options with you.