A home equity line of credit (HELOC) is a revolving line of credit in which the lender uses your home as a guarantee that you’ll pay the money back that you borrow.
Home equity lines of credit can be combined with a mortgage from a financial institution, also known as a readvanceable mortgage. It combines a revolving home equity line of credit and a fixed term mortgage.
You usually have no fixed repayment amounts for a home equity line of credit. Your lender will generally only require you to pay interest on the money you use. The fixed term mortgage will have an amortization period.
You have to make regular payments on the mortgage principal and interest based on a schedule. The credit limit on a home equity line of credit combined with a mortgage can be a maximum of up to 80% of your home’s purchase price or market value. The amount of credit available in the home equity line of credit will go up to that credit limit as you pay down the principal on your mortgage.
As you make regular payments on your mortgage, the home equity increases, thereby increasing your credit limit. Juno Mortgage can help work with lenders to help you figure out which financing options will best fit your needs. Sub-accounts can also be created to help pay off other personal loans and consolidate debt with a home equity line of credit.
