Making a Home Equity Line of Credit Work for You

Home Equity Line of Credit
Taking out a home equity line of credit is the first step to securing your financial future. As a homeowner you can leverage your low-interest home equity line of credit to payoff your home loan in half the time, eliminate your debt, and even save for retirement.

You may be asking yourself: “Can getting more credit really help my financial situation?” The answer is a resounding “Yes!” By following Sydney Financial’s proven plan, your home equity line of credit can help you own your home straight-out in ten to twenty years – all without increasing your minimum monthly mortgage payments.

What is a home equity line of credit?
A home equity line of credit is a type of revolving credit that lets you borrow funds "on demand." A lender will give you a home equity line of credit using your home as collateral for the loan. Like a credit card, you may use your home equity line of credit whenever you please. Each month, you must pay a minimum amount towards the principle and interest you’ve accrued. Borrowers use specialized checks or credit cards to draw from their home equity credit line.

The funds in your home equity line of credit will be accessible during a set “draw period,” often ten to fifteen years. After this period, you may have the option to renew.

A home equity line of credit is vastly superior to a typical credit card. Your home equity line of credit will probably offer you a much higher credit limit with a much lower interest rate than any of your credit cards. Because the debt is secured by your home, your interest may even be tax deductable. (Now, that’s a feature no credit card company can compete with!)

Can a home equity line of credit help me payoff my mortgage?
Yes. When you make a mortgage payment, a huge chunk of your check is applied to the interest you owe on your original home loan. During the early years of a loan, payments are approximately 80% interest. Sydney Financial can show you how to leverage your home equity line of credit so that interest does not accrue as fast. Your savings can total in the tens or hundreds of thousands, making it easy to payoff your entire mortgage in half or even a third of the time.

What about debt? Can a home equity line of credit help me control my debt?
A home equity line of credit is an excellent way to help you eliminate credit card debt. Most credit cards charge very high interest rates, over 24% in some instances. You can use your home equity line of credit to consolidate all your debt at a lower interest rate. Since these rates are often ½ the prime credit card rate or less, you’ll save money every month. The extra funds can be applied to pay off your debt or pay down your mortgage even faster.

Is it difficult to qualify for a home equity line of credit?
Qualifying for a home equity line of credit is a simple process. Your lender will consider your income, your debts, and the current value of your home. You provide some basic information and the lender will do the rest. A Sydney Financial expert can walk you through the process and answer any questions you may have.

How much can I qualify for?
A credit limit will be determined by subtracting the balance you owe on your mortgage by a percentage of the appraised value of your home (80% for example). If you have lived in your home for a couple years, chances are your home has appreciated in value. The greater the difference between your home’s appraised value and the amount you owe, the higher your credit line.

How do I learn more about getting a home equity line of credit?
You can take control of your family’s financial future by taking out a home equity line of credit. To learn more, let one of our home equity line of credit experts contact you. In the meantime, be sure to check out Sydney Financial Group’s informational video.