The less mortgage you have the more home equity line of credit you can get.
A popular product amongst Canadian real estate owners is the Home Equity Line of Credit. This is similar to a personal line of credit. However, it is secured against your home. In most cases the interest rate is lower. You have the advantage of making interest only payments. With personal line of credits you have to make interest and principal payments.
There are many use case scenarios for it such as taking out money from the home equity line of credit to pay off high interest loans, buying things such as home appliances, furniture and related at lower rates or even using it towards a down payment for purchasing another property for investment purposes or vacation getaway such as a cottage.
The more down payment you provide at time of purchase, the more equity you have to start with. If your mortgage balance is higher than 65% of the home value there would not be enough room to get a home equity line of credit. In todays regulatory framework the maximum line of credit is 65% of the appraise value of the property.
Interest rates for home equity line of credit’s typically range from Prime rate +.50% to Prime rate +1%.
Trusterra Mortgage has access to lenders that offer home equity line of credits. Contact us to learn more about how you could get approved for one and for any general questions about lines of credits or mortgages that you have. We would be happy to answer your questions and to help you with your real estate financing needs.