Equity Credit Line (Noun)
Meaning
A loan secured by equity value in the borrower's home.
Classification
Nouns denoting possession and transfer of possession.
Examples
- A home equity credit line allows borrowers to draw on the available funds as needed, making it a convenient option for ongoing expenses or projects.
- Many homeowners use an equity credit line to finance home repairs or renovations, as the interest rates are often lower than those of personal loans or credit cards.
- Lenders typically offer an equity credit line as a percentage of the home's value, usually up to 80%, minus the outstanding mortgage balance.
- An equity credit line can provide a safety net for unexpected expenses or emergencies, such as medical bills or car repairs, by allowing homeowners to tap into their home's equity.
- Unlike a traditional loan, an equity credit line often has a variable interest rate and may have fees associated with maintenance, inactivity, or early repayment.