Home Equity Line of Credit (HELOC)

The HELOC is a combination of a revolving line of credit and a fixed or ARM mortgage product under one credit limit. The idea here is that the mortgage lender will register two charges on your property. In first place will be the portion of the credit limit that represents the locked in “mortgage.” The remaining balance will be represented and available as a line of credit as a second charge on the property. As the outstanding balance on the first charge mortgage decreases, the available balance on the second charge line of credit increases by the same amount.

With the use of a HELOC you can enjoy the benefit of a low Fixed or ARM interest rate while also having the flexibility of a revolving credit facility.

All Interest rates, payment and prepayment options of the locked in portion are subject to the specific policies for each product.

Interest Rate

The interest rate on the revolving portion of the HELOC changes at the beginning of every month, based on the lender’s current prime interest rate. Should the prime rate remain unchanged, the interest rate would stay the same. The interest rate on any locked in portion of the HELOC will be determined by the respective policies of the product as discussed at the time of the arrangement.

Payments

The revolving credit line is paid monthly. The minimum monthly payment required each month when using the HELOC is an interest only payment based on the then current interest rate. You will be notified of your payment amount in advance via a monthly HELOC statement.

The locked in portion of the HELOC is subject to the specific payment options of the specific product you determine to be most appropriate.

Statements

Monthly statements reflecting your account balance, and payments as well as all activity under the Credit Line will be mailed directly to you. In addition, the statement will also provide you with information regarding the payments and/or balances of the remaining locked in portion of your HELOC.

Pay Down

As aforementioned, as the locked in portion of the HELOC is paid down, the available revolving limit increases. This switch is done automatically and the available revolving limit information is provided in your monthly statement. The revolving credit balance can be paid monthly by setting fixed payments of through the use of the lender’s customer service representative and authorizing the lender to direct debit your Regular Payment Account as a lump sum payment against the principal balance.

For more information about home equity lines of credit, contact one of the qualified mortgage professionals at Alberta Mortgage or Apply Online.