Business, Legal & Accounting Glossary
Equity line of credit, also known as home equity line of credit, or HELOC, is a type of credit extension, that allows borrowing against home equity over a period of time. In other terms, equity line of credit can be looked at a deed of trust, backed by a borrower’s home. The total equity line of credit amount is determined by credit and the difference between home equity and present market value of the property. Once the equity line of credit is established, the homeowner can begin borrowing against equity using a chequebook or even a credit card. An equity line of credit usually bears a lower rate of interest than a second mortgage. Additionally, most equity line of credit loans have adjustable interest rates rather than fixed. The interest on an equity line of credit is deductible up to $100,000 and maybe deductible for any amount greater than $100,000 depending on how the proceeds are used.
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This glossary post was last updated: 9th February, 2020 | 4 Views.