Home Equity Line of Credit in Ontario

A home equity loan and a HELOC have some key differences. With a home equity loan, you receive a lump sum of money and then make fixed payments over a set period of time. A HELOC, on the other hand, functions more like a credit card. You're approved for a certain amount of credit and can draw on that credit as needed, up to your limit.

With a home equity loan, you know exactly how much money you'll receive and what your payments will be. This can make budgeting and planning easier since there's no uncertainty about how much you'll need to repay. A HELOC can give you more flexibility since you can borrow only what you need at any given time, but this also means that your monthly payments may vary depending on how much you've borrowed.

Another difference between these two types of loans is how they're secured. A home equity loan is backed by the value of your home, so if you default on the loan, your lender could foreclose on your home. A HELOC is typically backed by the equity in your home as well, but some lenders may allow collateral from other sources such as investments or vehicles.

Both a home equity loan and a HELOC can be great options for accessing the equity in your home, but it's important to understand the key differences between them before making a decision. Consider all factors carefully before choosing which option is right for you.