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When should you set up a HELOC (Home Equity Line of Credit)?

Now, more than ever, this is an important question that every homeowner should  be asking themselves. Generally, the answer is – right now. Most homeowners wait until they have a financial need to set up a HELOC but setting up a HELOC in advance is a smart way to ensure that you are prepared and have immediate access to funds when unexpected life events or emergencies occur. 

Establishing a HELOC generally involves a legal fee and the cost of a home appraisal. Once this is done, you do not incur additional costs until you actually use the available funds. That means your HELOC can sit there waiting until you need it! 

HELOC is a revolving line of credit secured by your home. Homeowners can access up to 65 per cent of their home’s value. Homeowners can pay back
however much they want, whenever they want, as long as it covers the interest costs.  When getting a HELOC, you offer your home equity as security which allows you to get a better interest rate. The typical interest rate is Prime (currently 2.45%) plus 0.5%. It can be as low as Prime if you have a great client profile and employment history with your bank. It has been proven many times already that HELOCs are actually a smart way to borrow in an emergency – much better than credit cards or lines of credit, and definitely better than collapsing investments before giving it a chance to recover from the decline caused by COVID. 

According to industry watchers, Canadian banks are expected to tighten access to home equity lines of credit (HELOCs) when coronavirus-linked government assistance programs end in a few months, as lenders seek to limit credit to already-stretched borrowers. Setting up your HELOC now ensures you don’t run into restrictions that may be added in the near future. 

Please do not hesitate to contact us if you have further questions or would like us to walk you through the process individually.

OUR EXPERT: Tamara Tkachuk,

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Canadian Home Trends magazine gives you a personal tour of the most stunning homes and condos across Canada. You'll be inspired by a selection of accessible home décor products, trend reports, simple yet stylish DIY projects, and much more. In each issue, you are given the tools to recreate designer spaces you've always dreamt of having at home, in-depth renovation and design advice, colour palette and furniture pairings, and Canada's best places to shop.