line of credit
- Thread starter Pda
- Start date
Very simple there are 2 types of lines of credit secured and unsecured.
Secured means the lender has a way to cover the money the lend you for example your house car boat etc.
Unsecured is the opposite for example a credit card if you expend 10k from your credit card then you leave to your country of origin there is no way for the lender to cover the 10k.
I hope it helps.
Secured means the lender has a way to cover the money the lend you for example your house car boat etc.
Unsecured is the opposite for example a credit card if you expend 10k from your credit card then you leave to your country of origin there is no way for the lender to cover the 10k.
I hope it helps.
When you buy a house, if you don't pay the entire amount (we speak about 500K to 1 mil) than you take a mortgage from bank. Mortgage means you borrow money from bank and every month you pay them back with a significant %. Usually between 2.5 to 3.5 and up.
when you take a line of credit - bank appreciate the entire cost/value of your house and say that your house on the market cost 500K and they are ready to give you 50% credit line. Means that you have an open "credit line" = opportunity to borrow in the bank at any given moment up to 250K. If you don't need money now it remains only as opportunity to borrow. The moment you take this money (or part of it) and ask you to pay % on the sum you took. You can use this money for a month and then put back everything + % for time you used them or use them as mortgage and pay every month % + any amount you can return.
People usually take credit line to invest in business (when they now they will have more money later) or when they earn a lot now and can pay off their mortgage with credit line faster than if they would pay only mortgage.
when you take a line of credit - bank appreciate the entire cost/value of your house and say that your house on the market cost 500K and they are ready to give you 50% credit line. Means that you have an open "credit line" = opportunity to borrow in the bank at any given moment up to 250K. If you don't need money now it remains only as opportunity to borrow. The moment you take this money (or part of it) and ask you to pay % on the sum you took. You can use this money for a month and then put back everything + % for time you used them or use them as mortgage and pay every month % + any amount you can return.
People usually take credit line to invest in business (when they now they will have more money later) or when they earn a lot now and can pay off their mortgage with credit line faster than if they would pay only mortgage.
Please note interest rate is way high in Canada compared to USA. Though i'm not specifically speaking about line of credit but one example would be credit card (around 22% in Canada as compared to 5% to 10% in USA)
I was online shopping ,credit card usage (went upto around 10K) and then paid everything off eventually(after 5 years) and swore never to buy anything if I don't have the cash in my chequing. So much happier and satisfied with my life than before.
Just wanted to let that out though you not here asking for any advise.
I was online shopping ,credit card usage (went upto around 10K) and then paid everything off eventually(after 5 years) and swore never to buy anything if I don't have the cash in my chequing. So much happier and satisfied with my life than before.
Just wanted to let that out though you not here asking for any advise.