How is a Home Equity Line of Credit different from a loan?

Hello Susan, my name is Kelly and I am a Mortgage Specialist with RBC. To answer your questions, a Home equity Line of credit is different in a couple ways. First, it is secured against the equity in your home and therefore offers you a lower interest rate then a standard loan. Second, it is a revolving facility, so that you have continuous access to the use of credit on an ongoing basis, once you pay off a loan the money is gone, with a line of credit even when it is paid off the credit is sitll available for you to use whenever you need it. If you are looking to see how you can obtain one please do not hesitate to contact me and we can discuss it further.

Thank you

The big difference between a HELOC (Home Equity Line of Credit) and a standard loan is the fact that the Heloc is secured by the equity you have in your house. This allows you to receive better rates on the HELOC than you would on a standard loan.

Hello Susan,

Basically it works the same way as a Line of Credit. Since it works the same, as soon as you make a payment, you you will have access to that money at all times. The main difference is that it is attached to your home providing you a lower rate on the money borrowed.

They are many other details on this product and tons of use for it.

Let's chat!

Danny Kellman
647-929-5346
danny.kellman@verico.ca

Susan,

My colleague Kelly is absolutely correct. A home equity line of credit is as the name implies a line of credit secured against your home based on the amount of equity that you have. Because it is secured against your home, it normally offers the lowest interest rate. If you don't own a home or have very little equity, a regular line of credit may also be an option. A line of credit can be used over and over again like a credit card.

A loan is money borrowed with a set payment amount to repay that loan based on the interest rate and term. Sometimes, a loan is secured like a car loan. Once it is paid off, you cannot use the money again but have to apply for another loan.

For more information you can visit the following links:

http://www.rbcroyalbank.com/products/personalloans/index.html
http://www.rbcroyalbank.com/mortgages/rbc-homeline-plan.html

You can also contact RBC directly to speak to a credit specialist at 1-800-769-2511.

Hello Susan, I am a Realtor in Toronto. Home Equity Line of Credit...it is self explanatory, and what our friends from RBC explained is abosolutely right. The question is Why do you need it????? Very important to understand. More than that we need to understand "How Money Works". I attended a seminar and learnt a lot. This knowledge helped me and my clients save hundreds of dollars on a monthly basis. My advise is, before you speak to anyone about this, attend this seminar, absolutely free. I can refer you to a location close to you. You can reach me at 416-402-8089 or write to me at realestatebuzzz@gmail.com

Hello
A HELOC is secured against the property and is generally at lower rates than a personal loan because the risk is less for the lender. The loan generally strictly relies on the applicants ability to repay and is not secured against anything else
Many thanks
Darick

With a HELOC, your property is collateral in case you default. With a normal loan, there is no collateral & therefore the risk is higher for the lender and that is why interest rates are higher for a standard loan rather then a HELOC

Let's get technical.

A Home Equity Line of Credit (HELOC) is a LOAN and a Loan is a thing that is borrowed, esp. a sum of money that is expected to be paid back with interest.

The difference between a HELOC and a PERSONAL loan, is the security for the lender. With a HELOC there is a collateral charge on your property and with a personal loan the lender only has a promise from you in writing that you will repay it.

A HELOC typically has a lower interest rate than a personal loan depending on your credit and debt servicing.

Personal loan typically a higher interest rate that a personal loan depending on you credit and debt servicing. This may not always be the case depending on what the purpose of the loan is e.g. student loans generally have a lower interest rate.

With all the words thrown around these days it can be sometimes confusing for consumers to know what a loan is. So simply just remember- If your borrowing money that you have to repay with interest its a loan. It does not matter what it is called.

There is a few exceptions to this though. A MORTGAGE, lien, collateral charge are NOT loans; they are the SECURITY for the loan.

Hope this was helpful and educating.

Jared Stanley
Victoria BC Mortgage Broker

I just wanted to add one thing that has not been mentioned yet. With a HELOC your payment will be based upon you current balance and is usually an interest only payment. As it is a revolving account if you do not make more than the requested amount you may never pay it off. A loan on the other hand has a set payment and will include interest and principle and will be paid out within a few years depending on the original agreement. A LOC is a great option but should be paid down as quick as possible to be worth while. If you want to realize your Manulife number, larger payments are required! Kind of wish they would advertise that fact as well.
Cheers Darcy