How much do you know about your HELOC?Do you know the terms of your Home Equity Line of Credit? A new Leger Marketing survey says many Canadians don’t.
The survey, summarized here in the Globe and Mail, reveals that while 79% of Canadians who held a Home Equity Line of Credit felt confident in their knowledge of how it worked, most scored poorly on a quiz testing this knowledge.
As the title of the financial product indicates, a Home Equity Line of Credit uses your home’s equity to secure it. So, in return for a lower interest rate, you’re surrendering a portion of your home’s equity to the bank – similar to a mortgage. And, like other forms of credit, it affects your credit score – a score that is influenced, not only by your ability to make payments on time, but also by the total amount of credit that’s available to you.
If you’re thinking about obtaining a HELOC, make sure you do your homework – talk to a financial professional to find out if the product makes sense for you, ask about the pros and cons, and read the fine print before signing. If there’s something you don’t understand, ask! And above all else, once you have the necessary information in hand, evaluate whether it’s something you can handle. When you’re playing with your home’s equity, you can never be too careful.    |
