Advantages of Taking Home Equity Loans

Although they have similar names, home equity loans Ontario and home equity line of credit are 2 different products. The home equity loan offers house owners with the lump sum of money, depending on the equity amount within their houses. On the other hand, home equity lines of credit works similar to the credit card: House owners obtain a particular amount of credit depending on the equity of their home and then make purchases from that, much like they do with the credit card. Both kinds of loans offer advantages. However, several house owners go for bad credit loans Ontario due to their stability.


The greatest advantage of both home equity lump-sum loans and home equity line of credit is that they have low interest rates. One 30,000 USD home equity lines of credit has a standard interest rate of about 5.1%. Meanwhile in late July, 2010 the home equity loan of the same amount come with a 7.49% of average interest rate, as reported by Such rates are much lower if compared to the common interest rates obliged by credit card providers. The website of Index Credit Cards shown that the standard interest rate on the consumer credit cards stayed at 16.85% in the middle of July 2010.

The home equity lines of credit provide house owners flexibility about how they use their cash. Actually, house owners never need to use the lines of credit. Several house owners utilize it as a kind of financial protection, considering that they can use the home equity lines to handle emergencies including car expense or roof repairs. However, if homeowners don’t face emergencies, they can just leave the home equity lines of credit untouched. They only have to make payments on the home equity line of credit whenever they utilize it, which is similar to regular consumer credit card.