Line of Credit

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Line of Credit

Line of Credit People choose lines of credit for a lot of reasons. Some of our clients have chosen lines of credit to partially or totally finance a renovation project, to purchase equipment or a new computer, or even for that much needed vacation. Some even use them for investment purposes. Others may have a personal line of credit in place just in case of an emergency. Whatever your reason, our mortgage associates will provide information you need on this type of loan so that you have all the facts.

Apply for a Line of Credit

Frequently Asked Question: How does a mortgage line of credit work?

DID YOU KNOW: Lines of credit are often used to change high interest debts from credit cards to a much lower rate. With secured lines of credit, rates can be as low as the prime rate. Compared to the 16-19% interest rate of average credit cards, switching your debt over can lead to significant savings on interest charges.

If you have a lot of different payments to keep track of, you might also be interested in debt consolidation.

Here is how a line of credit works:

There are two types of credit. One is a secured line of credit, where you have collateral protecting it and the other is unsecured and is based entirely on the strength of your credit history and current income. The latter usually will not exceed $20,000 and may or may not need the help of a guarantor.

With a secured Line of Credit (LOC), you can usually receive a rate of close to prime, which today is 2.25%. An unsecured LOC can be as high as 3 or 4 per cent above prime. This is why a secure line of credit makes a lot of sense. The secured LOC can be a good option if the consumer plans on paying off the balance very quickly and wants to avoid long-term debt or payout penalties incurred when attempting pre-payments on a traditional mortgage loan. LOC's aren't for everyone though. Most consumers want to have a diminishing balance that they can keep track of through a fixed rate option.

Line of Credit payments are usually interest only, which is great for the lower payment but when it comes to the balance, you will have a larger balance for twice the amount of time if you only plan on paying the minimum interest only payment. Having a mortgage with a start to the term and an end to the term allows you to actually pay off the principal and interest in a pre-calculated, blended payment. By the end of the mortgage term chosen you will be sure of your outstanding balance.

Please ask your Alberta Equity representative if the Line of Credit option is right for you and your financing needs.

Lines of Credit at a glance

  • Lines of credit can provide funds for nearly anything you need, especially for emergencies.
  • Very low rates, oftentimes approaching the prime rate.
  • Offload higher interest debts onto secured line of credits to pay less in interest.

Alberta Equity has helped over 50,000 people find and qualify for the best mortgages in Canada for over ten years. We do all of the heavy lifting and ensure that you get the best mortgage rates and product features available. Apply online for a free, no obligation consultation.