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Q & A
Home Equity Line of Credit My husband and I recently went to the bank to negotiate loan payments. We were given information on a Home Equity Line of Credit (TD Canada Trust). We were told that the interest rate was lower than the rate we were paying on our loan (5.25% versus 9.75%) but I'm not sure it's a good move. Can you tell me exactly what this is and how it works? Thanks! Libby
A home equity line of credit is an LOC that uses the equity in your home to secure the loan. Since the lender has security – if you don’t pay, they’ll take the house and sell it to get their money back – they’re not as worried about default, and so they offer a lower interest rate. Is it a good idea? Yes, provided you are doing it to lower your costs AND you are actively working to pay off the debt. Lots of people think that the equity in their homes is a great way to consolidate, and then they run right out and charge up a storm. That’s bad. Ultimately, the goal with any financing is to PAY IT OFF… not find more things to buy. If you have the right intentions, then the home equity LOC is a good
tool to use. |
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Books The contents of this website are of a general nature and should not be construed as financial advice. Individuals must seek professional counseling based on their specific needs before making a financial decision. ©Gail Vaz-Oxlade. Contents of this website may not be reproduced in any form without the written permission of the author. Site by cobourginternet.com Site map |
