The concept behind a Home Equity Line of Credit (HELOC) is simple – leverage your home in return for a hefty line of credit to draw from. However, it’s the underlying challenges associated with HELOC variable interest rates that makes a HELOC a tool best reserved for the thrifty and financially astute.
Should you take out a HELOC on your home to fund your retirement plan? For some, it’s a good option – but understand the interest and pay back realities.
What is a home equity line of credit and how can it work for your borrowing needs? HELOCs can be a convenient way to access extra cash, but be aware of the pros and cons before tapping into your home’s equity to avoid dangerous levels of debt.
Homeowners looking to take out a home equity line of credit will find their borrowing power slashed as the National Bank enforced a 65 per cent LTV cap which takes effect today.
Bank of Canada Governor Mark Carney has repeatedly warned Canadians to simmer down on their borrowing costs – but that hasn’t stopped us from racking up a new 8-year record high debt level. According to credit bureau TransUnion, average Canadian debt levels (excluding mortgages) reached $26,221 in the second quarter – an increase of $192.
OSFI has released their final draft guidelines on mortgage underwriting principles. Expected to be in full compliance by the end of the 2012/13 fiscal year, the guidelines are targeting the borrowing capacity of mortgage seekers, establishing sound appraisal processes as well as effective credit and risk management measures.
Great news for homeowners! OSFI has revised proposed changes made in March to mortgage renewal and HELOC guidelines. The changes, which would have subjected home owners to a new credit risk check upon renewal, as well as imposed an amortization rate on home equity line of credit, were revised in light of criticism that they would cause more harm than good to the Canadian housing market.
Whether you’re saving for your kids’ education, or building up your retirement fund, a savings strategy is a must. But don’t just sit on your nest egg – explore diversification options like RESP’s, GIC’s and TFSA’s to make the most of your stashed-away funds.
The Bank of Canada is hinting a hike in the overnight lending rate is coming soon. This move will affect the payments on variable mortgages, lines of credit or any debt connected to the floating rate. If you’re worried about your ability to service debt in a higher interest rate environment, there are plenty of steps you can take right now to prepare.
As much as we all like seeing the balance in our savings accounts grow, aside from having enough cash on hand to pay your bills and daily expenses, it almost always makes more sense to pay off your debts first. Here’s why – and a couple exceptions to that rule.