The Line of Credit Mortgage feature allows the borrower to access additional funds by drawing on the acquired equity accrued within one's home. A LOC involves fixing a limit on how much you can borrow (generally a fixed percentage of the loan amount).
The borrower directs income from various streams into a personalised LOC account, providing the ability to draw down funds as & when needed.
Positives of the LOC:
The Line of Credit enables you greater flexibility in regards to the size and timing of your repayments, allowing access to additional funds and even taking your mortgage with you to a new house. The way it works is that your entire income remains in your account until one needs it, therefore the major portion of your income stays within your loan account longer, hence saving you interest. The interest is reduced, reducing the amount owed each pay day until the funds are used.
- A great structure for home renovation, made possible by the ability to have access to ones (LOC) funds in stages over a period of time.
- 'Yes' this loan structure offers a LOC, however requires a much disciplined approach to the everyday management of your finances. This LOC option should only be considered if you are good at controlling the temptation of pulling money for spontaneous purchases.
