Line of credit is in fact a flexible agreement between the two parties; the lending institution and the one who obtains the loan. It basically focuses on the amount that is to be paid over a specified period of time and its specifications like term length and interest rates etc. It could probably be secured by collateral. HELOC is the secured type of line of credit. The secured lines of credit usually have a lower interest rate than the non-secured ones.
Home Equity Line of credit is a loan offered to the borrower keeping his home as collateral. As the most precious possession of people is their home so it is placed as collateral in order to insure that the individual make payments in time. There are different types of HELOC plans but usually you need to set the time period in which you are to borrow the money, say 15 years. Then after this period you are to repay the amount you have drawn with interest. The time period in which you can use the credits is called draw period. Some of the HELOC plans offer a renewal of the draw period once it is finished but there are also the ones that don't. In case the HELOC deal you are having, provides you with this facility you can easily take out more money.
Usually, HELOC plans or any other line of credit plan don't bound you to draw credits every month or any other period, but there are also some plans that require a minimum amount that you need to draw over specified episodes. However, many deals require you to take out a particular figure of credit at least at the starting period, to set the account in motion. Afterwards you will be provided with an exclusive checkbook to draw money from your line of credit. A few plans may supply you a credit card or some other tool to draw the credit.
The interest rate and its application vary with the different types of plans. Usually in a line of credit arrangement, you are only to pay the interest on the amount you have drawn. However, since the HELOC varies greatly from the LOC deals so expect deviations and differences. These interest quotients are more than often variable throughout the term and depend on market indices.
The different HELOC plans also have different repayment policies. There are some that ask for the whole payment at the end of the draw period. Such deals do not allow you to clear up your loan in the mid of the draw period. Some others set specific fixed episodes of time where you can have the ability to repay the total amount in small parts and gradually clear the payment. A home equity line of credit ceases or foreclosures if you fail to make the repayments in due time. This is where a property kept as collateral comes in view.
Home Equity Line of credit is a loan offered to the borrower keeping his home as collateral. As the most precious possession of people is their home so it is placed as collateral in order to insure that the individual make payments in time. There are different types of HELOC plans but usually you need to set the time period in which you are to borrow the money, say 15 years. Then after this period you are to repay the amount you have drawn with interest. The time period in which you can use the credits is called draw period. Some of the HELOC plans offer a renewal of the draw period once it is finished but there are also the ones that don't. In case the HELOC deal you are having, provides you with this facility you can easily take out more money.
Usually, HELOC plans or any other line of credit plan don't bound you to draw credits every month or any other period, but there are also some plans that require a minimum amount that you need to draw over specified episodes. However, many deals require you to take out a particular figure of credit at least at the starting period, to set the account in motion. Afterwards you will be provided with an exclusive checkbook to draw money from your line of credit. A few plans may supply you a credit card or some other tool to draw the credit.
The interest rate and its application vary with the different types of plans. Usually in a line of credit arrangement, you are only to pay the interest on the amount you have drawn. However, since the HELOC varies greatly from the LOC deals so expect deviations and differences. These interest quotients are more than often variable throughout the term and depend on market indices.
The different HELOC plans also have different repayment policies. There are some that ask for the whole payment at the end of the draw period. Such deals do not allow you to clear up your loan in the mid of the draw period. Some others set specific fixed episodes of time where you can have the ability to repay the total amount in small parts and gradually clear the payment. A home equity line of credit ceases or foreclosures if you fail to make the repayments in due time. This is where a property kept as collateral comes in view.
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