Part Two:  Heightened Financial Potential Through Your Property’s Equity: Benefits and Strategies

In the first post of this series, we looked at the concept of equity and the Home Equity Line of Credit (HELOC), also referred to as a Line of Credit here. This second post of this three-part series looks into the reasons why a HELOC is more than just a financial tool and how it fits as a strategic piece of your financial future.

Even those who have other assets benefit from using property equity instead as Lines of Credit can:

• Preserve your investments so they can keep appreciating
• Shield you from paying taxes and potentially bumping up into a higher tax bracket, which can be triggered when liquidating certain investments
• Potentially preserve access to Old Age Security (OAS) in some cases

Setting up a Line of Credit can secure future access to funds and a safety net for things like:

• Staying in your home rather than accessing its value by selling and downsizing or renting
• Accessing the equity in a rental property rather than selling it
• Managing cash flow in retirement
• Funding renovations
• Funding the deposit or down payment on a future property, or future properties, without the need to sell the current property first
• Helping family with down payments
• Making other investments
• Meeting other expenses
• Assisting with cash flow needs prior to selling the property
• Reducing (but not eliminating) the risk of title fraud on your property if you don’t have a mortgage on it
• Raw land purchases and funding construction costs, which can be simplified and more cost effective when funds are obtained through a line of credit on other residential property

Again, it should be noted Lines of Credit are demand loans.  Unlike mortgages with rates secured for a period of time, lines of credit rates can be changed, and lenders can request repayment at any time.  However, those circumstances are rare.

Anyone who looking into a HELOC should apply before they reduce their working income.  Some borrowers can qualify after retirement, but they may not qualify for as much as they might before they stop working.  Setting up a line of credit to plan for future use can be done at any point in one’s career.

You can in some cases apply for a HELOC after retirement, but advance planning before you reduce your income from work allows you to set yourself up to access the most equity possible.

Stay tuned for the last post in this series and in the meantime, for more information, please feel free to reach out any time.