Home Equity Line of Credit
Eligibility for a Home Equity Line of Credit (HELOC) can vary depending on the lender and specific loan requirements. Lenders generally prefer borrowers with a good credit score, as it demonstrates a history of responsible financial management. A higher credit score can increase the likelihood of approval and may also result in more favourable interest rates and loan terms. To qualify for a HELOC, you typically need to have a certain amount of equity in your home. Lenders usually require a minimum loan-to-value ratio, such as 80% or lower, which means you should have at least 20% equity in your property. There are some lenders that can go to a higher ratio, but the interest rate is usually higher.
A HELOC can be obtained while keeping a mortgage in first position.
With a HELOC, a borrower can keep a low-interest mortgage and get a HELOC only for the additional cash that is needed.