HELOC - Home equity line of credit has emerged as a new option in the world of credit cards. Home equity line of credit also known as HELOC, is a line of credit that is based on a fixed maximum amount. Under the home equity line of credit the borrower has the option to borrow a maximum amount. You can borrow the amount again, as soon as you repay your first amount. The home equity line of credit provides a loan that is kept secured against your home. The loans provided by the home equity line of credit are based on the interest rates that are much low as compared to other credit cards.
There are major benefits that you can enjoy through the home equity line of credit. The most important is your home equity line of credit can be used to repay your expenses of your debt consolidation, to pay the tuition fees of your college, to book your new car and other such expenses. Apart from that, when you go in for home equity line of credit, you get the leverage of major deduction in the taxes. The interest rate of the home equity line of credit is much lower than other credit cards. As the home equity line of credit is secured against your home, the risk involved in it is high. The possibility to loose your home always persists when you are unable to make the payments.
Maximum amount allowed to be borrowed When you go in for your home equity line of credit, you are allowed to borrow a maximum amount, which is not fixed. The lender judges your maximum amount by analyzing your creditworthiness. The maximum amount to be borrowed through the home equity line of credit also depends on the lender. There are some lenders who lend up to 80% of the appraised value levied on your house. The amount includes your first mortgage, and your home equity line of credit.