Home Equity Lines of Credit (HELOCs): Fully Open. Fully Awesome.
When a mortgage just won't do, many home owners will choose a Home Equity Line of Credit, or a HELOC for short. HELOCs allow you to borrow against the equity in your home with as much flexibility as possible, and repay that money with equal flexibility. Because a HELOC is fully open, you can pay it in full at any time without penalty. Most HELOCs allow you to borrow up to 80% of the value of your home, subject to approval, with up to 65% of the value being fully re-advanceable. Payments on that amount can be as low as interest-only for added cashflow flexibility.
HELOCs are a great option for borrowers with good to excellent credit who want access to their home equity for things like renovations, investing in rental properties, investing in the stock market, or just as a rainy day fund. If not managed properly, one downside to HELOCs can be that there is no minimum principal payment, so they can actually take longer to pay off if you're not disciplined. Get professional advice from a First Foundation Mortgage Broker to find out if a HELOC is right for you!