Dwayne Kavanagh
Mortgage Agent Level 2 - M22004377
Tel: 416-937-5991 | Cell: 416-937-5991 | Fax: 905-574-7384
When it comes to borrowing money, two popular options are a line of credit (LOC) and a traditional mortgage. Each has its benefits and drawbacks, and the right choice depends on your financial goals and needs.
Interest Rates:
Mortgage: Typically offers lower interest rates, especially if fixed.
Line of Credit: Higher interest rates, often variable, tied to the prime rate.
Repayment Terms:
Mortgage: Fixed repayment schedule with principal and interest included.
Line of Credit: Minimum interest-only payments with flexibility to repay principal anytime.
Access to Funds:
Mortgage: Funds are advanced as a lump sum at the start.
Line of Credit: Revolving access—you can borrow, repay, and borrow again.
A mortgage is better for:
Buying a Home: Lower interest rates make mortgages ideal for financing large purchases.
Long-Term Stability: Fixed payments provide predictability and discipline.
Debt Consolidation: Rolling higher-interest debt into a lower-rate mortgage can save money.
A line of credit works best for:
Short-Term Borrowing: Flexible, interest-only payments for short-term needs.
Home Renovations: Access funds as needed for ongoing projects.
Emergency Access: Acts as a financial safety net for unexpected expenses.
Choosing between a line of credit and a mortgage depends on your goals. If you’re looking for low interest rates and structured payments, a mortgage may be best. If you need flexibility and short-term borrowing options, a line of credit could be the better fit.
As a mortgage professional, I can help you evaluate both options and determine the right strategy for your financial situation.
For additional resources, check out my article on the best free mortgage calculator, where you can explore different scenarios, search for rates, and find tools to plan your next financial move.