A HELOC can be useful even if you don’t need to borrow money today. For some Edmonton homeowners, having a ‘home equity line of credit’ available provides financial flexibility and may also add a layer of protection against certain types of property fraud.
Here are the two main reasons you might consider setting a HELOC up.
Watch my video or read on for more details:
What Is A HELOC?
A HELOC, or ‘home equity line of credit’, is a revolving line of credit secured against your home.
Unlike a traditional mortgage, you don’t necessarily borrow the full amount upfront. You can have credit available and only pay interest on the money you actually use, subject to the terms of your particular product.
Reason 1: Quick Access To Money When You Need It
One of the biggest advantages of a HELOC is flexibility.
For example, you might have a relatively small mortgage that you expect to pay off within a few years. Setting up a HELOC at the same time could give you access to funds later without having to apply for new financing.
That money could be used for:
- Home renovations
- An emergency expense
- A vehicle purchase
- A future real estate purchase
The important point is that the credit is already available if you need it.
Having access to credit before you need it can also be easier than trying to qualify after your financial circumstances change. Approval is still subject to lender requirements, your home equity, income, credit, and other factors.
Reason 2: An Additional Layer Of Protection
A less obvious reason some homeowners maintain secured financing against their property is title fraud.
Title fraud can involve criminals using stolen identities or fraudulent documents to attempt to mortgage or sell a property without the legitimate owner’s knowledge.
Having a mortgage or HELOC registered against a property can mean an existing lender has an interest registered on title. A fraudulent transaction may therefore involve additional steps before that interest can be discharged.
However, a HELOC should not be considered a guarantee against title fraud or a replacement for title insurance and other fraud protections.
Is A HELOC Right For You?
A HELOC isn’t necessary for every homeowner. Access to easy credit can also create problems if it encourages unnecessary borrowing.
But for homeowners who want financial flexibility, setting one up while they qualify is worth considering, even if they don’t plan to draw from it immediately.
Whether you are preparing to buy your first home or your fifth, if you’re looking to get pre-approved for a mortgage in Edmonton, fill out my online application. I’m here to help you every step of the way.
About Jason Scott, Edmonton Mortgage Broker
Looking for a personalized mortgage solution? As an Edmonton Mortgage Associate, I’m trusted partner who will help you get the right mortgage for your home or investment property. I’m Jason Scott, and I’ll be your Mortgage Broker in Edmonton.
