What is a Secured Line of Credit?
A secured line of credit has similarities to both a traditional loan and a typical credit card. It’s like a loan in that it is acquired from a lending institution but is more like a credit card in that the funds can be used for anything you wish – it is not specifically for home building, business startups or educational costs the way other loan types can be.
A secured line also has a much lower interest rate than a credit card. This combines the convenience of credit with the affordability of a loan. Moreover, your secured line of credit only accrues interest on the amount you spend. That means, even if you have a $10,000 secured line of credit but only want to use $2,000 of it, then you are free to do so without paying interest on the full amount.
What can a Secured Line of Credit be Used For?
Traditionally, a secured line of credit is often used for major home repairs and remodeling projects. However, there are no actual limitations on what you could use the money for. Common uses for a secured line of credit outside of home remodels include:
- Paying medical expenses
- Educational costs
- Buying furniture
- Home redecorating
Ultimately, you can use as much or as little of the secured line of credit as you want without penalty as long as you don’t spend over the approved amount.
Who Should Consider a Secured Line of Credit?
Because of the flexible payment schedules and competitive interest rates on lines of credit, they can be a good option for many people. However, people who have frequent fluctuations in their income, such as freelancers and seasonal workers, are especially well suited to the benefits of a line of credit. Similarly, if you use checks often, a line of credit can act as a buffer for when you spend more and want to avoid overdraft fees.
A secured line of credit can also be beneficial for covering business expenses. While an actual business loan may provide more benefits, a line of credit is often more flexible. As a bonus, a line of credit can also be used as collateral.
Applying for a Secured Line of Credit
At Mortgage Solutions Group, we make it simple and easy to apply for a secured line of credit to meet your needs and schedule. For additional information, call us as at 1-888-233-6164.