Fixed Rate home Equity line of CreditHouse with fixed interest rate Equity Credit line
Lenders often add a spread (over prime) and annuity charges to this, so buyers watch out, if you have a large, used line of credit, it goes up.
Unless you are paying down the line, you have overthrown your goal, and probably brought yourself a great deal of pecuniary hardship later on as rate rises. Jo-Jo of mortgages that have been repaid to line of credit, repaid back to mortgages in a few years, about my careers.
Do not know for sure how the interest rate for home loan and credit line comparisons are in your county. It is never a good thing here in Singapore to get a line of creidt to get to foot for a home construction loan. What is it? My case is that I am living in an HDB apartment and the interest rate is very low because as Singaporeans we get preferred interest subsidized by the government - it is only 3% to 5% per year.
I' ve taken credit facilities from a bank before and interest rates have never really moved much over the years. Simply ask yourself whether it is prudent to draw on a line of credit that averages more than 10% p.a. to make payment for a home loans that averages less than 10% p.a. You will get the reply very quickly.
The interest rate for a credit line is usually higher than for a mortgages. Even in most cases, if you are paying an outstanding loan, it could only cut the amount of capital you owe, but the payment would the same. Dependent on the size of your current home loan, you can enter the phase in which your payment is more in the capital than in the interest - a very good thing.
So if you are refinancing your mortgage to get the payouts, your payback would begin at the beginning where most of your payout amount would go towards interest and less towards principal. Housing leases are debts guaranteed. Therefore, they bear much less interest than credit lines or other uncovered credits.
Thatsnk about it so, your home loans, i.e. mortgages, can be 3.5% annual interest rate. Typically a credit line has an interest rate of about 18-20% if you have a good credit, i.e. over 720 points. To repay a debt at an interest rate of 3.5%, why should you lend 20% interest?