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What’s Better, a Home Equity Loan or a HELOC?



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Homeowners are in a fortunate position. They have a title deed to the roof over their head, so unlike renters, their monthly payments build equity they can leverage in valuable ways.

Two of the most popular ways are home equity loans and HELOCs, or home equity lines of credit. Which of the two is better?

It’s hard to say because homeowners also have unique lifestyles, financial goals, and economic circumstances. Let’s delve deeper and see what makes each option so compelling.


Table of Contents

Home Equity Loans

A home equity loan is a loan made as a one-time lump sum payment against your home’s equity. The longer you’ve lived in the home, the more of it you’ve paid off, and the better a rate you’ll get.

The industry leaders can find home equity loans in Ontario that let homeowners access substantial cash when they need it most. Typically, people use home equity loans to consolidate their finances or reinvest in their homes.

That way, they’re using their home’s equity to make their home more valuable, which can pay for itself or even result in a net profit if you do it right. That it’s a lump sum payment makes home equity loans useful for specific payments rather than open-ended access to more cash than you may need.

It doesn’t matter what your debt, credit, or income levels are — leading mortgage brokers can help you access 85% of your home’s value. Bundling several high-interest debts into one manageable payment with favourable rates is smart and can save you considerable money.

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When you need a large sum of money on short notice and the bank isn’t likely to lend you money, or they’ve rejected your application already, consider a home equity loan.


A home equity line of credit is like a home equity loan, except you can borrow an open-ended amount on credit and only repay what you borrow. Both schemes leverage your home’s equity to get better rates than you’d otherwise get.

HELOCs are great for investment opportunities or emergencies requiring money on an ongoing basis. For example, it can be hard to predict the exact cost of a home renovation upfront because the scenario can shift and evolve.

Using a HELOC for a home renovation is wise because it uses your home’s equity to reinvest back into your home. While homeowners can use their home and the HELOC money however they want, a degree of caution is in order.

If you spend recklessly and can’t make repayments, there’s a risk you could lose your home. Leading mortgage brokers can set up your home equity loan or HELOC to match your lifestyle, so you can safely cover the essentials without the risk of going under.

Between the soaring costs of groceries and interest rates, people are struggling everywhere. Homeowners may love having a cozy place for their family to live without realizing it’s also a major financial asset. Speak to your mortgage broker to determine whether a HELOC or home equity loan is right for you. They’ll secure great terms and explain any questions you may still have.

Shabbir Ahmad is a highly accomplished and renowned professional blogger, writer, and SEO expert who has made a name for himself in the digital marketing industry. He has been offering clients from all over the world exceptional services as the founder of Dive in SEO for more than five years.

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