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What is a home equity line of credit? Can it be associated with another credit product? How much can I borrow from a home equity line of credit?
Keep in mind that mortgage refinancing is another option for you.
In the case of a home equity line of credit, your house is used by a financial institution that provides you with funds to guarantee repayment. Of course, this is a separate line of credit.
It is also renewable. Following the repayment of a portion of the capital, a new loan (at a favorable rate) is still possible, obviously within the credit limit. For this purpose, there is no need to submit another application for credit.
The following details are worth mentioning regarding this type of credit:
Conditions for eligibility to a home equity line of credit:
=> Downpayment: 20%
=> Home equity line of credit: 65%
=> Conventional loan: 15%
Amount of credit granted by the financial institution
In the event of a capital gain since the acquisition of the property
Before talking about the benefits, it should be noted that this is not a credit solution that suits everyone. A home equity line of credit is suitable:
This is an advantageous credit solution because:
As you may have noticed, repayment flexibility is an important advantage obtained from a home equity line of credit. However, it is considered a risk at the same time especially if it is used to overcome financial difficulties in the long term.
As stated in the previous section, a home equity line of credit may not be right for you if you can follow an established payment schedule which is paradoxical considering the flexibility that this type of credit provides.
In case of failure to pay the loan, if you have only paid the interest, you will probably be obligated to repay the entire capital when you sell your house or after a few years.
On another note, the benefit of having a home equity line of credit is the fact that the rates are the lowest in the market. However, note that the rate is subject to market fluctuations. Thus, in the event of an increase in interest rates, repayment may take longer and become a little more difficult than you first thought.
In addition to the separate line of credit, there is also the possibility of a line of credit combined with a mortgage. This can be used to reduce the potential risks of a separate line of credit.
In the case of a credit line combined with a mortgage:
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