Home Equity Loan or Unsecured Line of Credit?

If it’s time to renovate your home, consolidate your debts into one monthly payment, start a new business, pay for your children’s tuition or borrow money because of a change in your work, it’s important to consider whether to take out a home equity loan or a line of unsecured credit.

Financial surprises come often and we need to be prepared.  It is far better to have a structure in place to borrow money when you need it, than to be unprepared and be forced to take whatever you can get in terms of loan rates, terms and more.

Unsecured Lines of Credit

An unsecured line of credit is a loan that you apply for, and the amount you qualify for is based on your income, cash flow and assets.  Interest rates are usually higher, since the loan is not based on any collateral and therefore is a greater risk to the lender.  Once a credit line is set up, the borrower can use it again as he or she pays it back.  Payments can vary, but minimum monthly payments are usually required.

A credit line can be used to deal with unpredictable financial times and may be useful for people with steady incomes that vary by the month.  So if your business slows down in the summer, for example, a credit line can help you get through the slow months.  For businesses, an unsecured credit line may be useful since it is not based on the company assets.

The disadvantages include higher interest rates, a higher credit rating requirement, and more limited funds.


Home Equity Line of Credit or Home Equity Loan

Home equity loans or a home equity line of credit allows a homeowner to withdrawal funds from your home based on its overall value.  If the value of your home has gone up, there will be funds you will be able to access.

There are many advantages to a using the credit in your home.  These include:

  • Lower interest rates based on your credit history, earnings, assets, investments with a particular institution
  • Access to cash when you need it
  • Flexible payment options
  • Easier application and acceptance
  • It’s based on the value of your home


Why use a Home Equity Line of Credit?

One of the biggest advantages is that a home equity loan can be used to consolidate debt into one lower monthly payment.  This is an excellent option that provides cash when you need it most!  If you use it wisely, it can help you re-establish your credit and get back your life.

Home equity loans can be used for renovations, vacations, a new car, tuition, and much more.  Since it is tied to your most valuable asset, you are able to get a longer amortization, and as the value of your home increases, so does the amount of money you have access to.


Use a Home Equity Loan Wisely

Like any loan, it is important to use credit wisely to ensure that you don’t overextend yourself.  Ensure that you only borrow what you are able to maintain and be careful of rising interest rates.  While interest rates are low today, they may increase tomorrow, and can you afford a 1% increase in your monthly payments?  It is important to find good advice before you take out too much credit.


Consolidate your Debt

One of the very best uses of a home equity loan is to consolidate your debt.  Sometimes you face a crisis a need to lower your monthly payments just to be able to cover your mortgage.  The mortgage professionals at One Stop Mortgage help people all the time to find the credit they need.  We have helped many clients access credit when they are self-employed, the bank turns them down or they are juggling several monthly payments.

It’s so important to be able to pay your bills and get treated with respect when you need credit.  If you are paying interest on multiple credit cards, have more than one mortgage out on your home, or need money fast to pay for repairs to your car, renovate your home, pay tuition for your children or need to pay your bills, the mortgage brokers at One Stop Mortgage can help you.

We’ve helped countless people in BC and Alberta get credit when they need it most and give them the advice they need to get credit-help, consolidate their debts or access money in their homes to start that new business or begin renovations.

Contact us today at 1-877-874-8988 and let’s find a financial solution to your needs so you can get back your life and improve your credit rating.


One Stop Mortgage can help

At One Stop Mortgage, our team of mortgage and credit specialists can help you consolidate your debt and begin to repair your credit.

As mortgage brokers, we have access to numerous financing sources and can provide help by working hard to get you the best financial package to suit your credit needs with debt consolidation help, home equity loans and more.

Visit CREDIT-HELP.ca for more information, or contact us at sergio@onestopmortgage.ca or call us at:

1 877 874 8988 (toll free)
604 874 8988
604 874 9109 (fax)