One is not like the other
Lines of credit and mortgages have similarities and big difference's but hey are not the same.
Line of Credit
- Lines of Credit are secured by your home (HELOC), and you can access money when you need it.
- Lines of credit often allow you the option to just pay the interest or make balloon payments, there is no set payment amount.
- Interest rates on line of credit are variable rates and often higher than a fixed mortgage rate.
- There are no term lengths associated with lines of credits.
- Lines of credit are registered on the title of your home.
- A mortgage is generally as set amount of money you borrow at one time.
- There is a monthly payment associated with it.
- Borrowers can choose a fixed rate or a variable rate.
- You will have a monthly payment
- You can borrow up to 95% of the property's value
- Mortgages have terms and amortizations
- Mortgages have penalties if you break your term.
- Mortgages are registered on title of the property.