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June 26, 2023

Interest rates are continually rising, and the prices of homes have risen over the past years.  This is giving rise to some significant advantages for those who are homeowners because rising home values begat higher equity values. Is it now time to take out a line of credit on your home as a safety net, and what are the downsides?

First, let's discuss what a line of credit actually is. A line of credit is a flexible borrowing arrangement that allows an individual or business to access funds to a predetermined credit limit. It is a form of revolving credit, similar to a credit card, where the borrower can borrow, and re-pay funds as needed within the established limit.

The beauty about a line of credit, is the flexibility of the terms. The borrower has the flexibility to withdraw any amount up to the approved limit, and they are only charged interest on the amount borrowed. The remaining available credit can be accessed again once the borrowed the amount is repaid, without the need to reapply for a new loan.

With so many homeowners with increasing equity, is now a good time to attain a secure line of credit using your home equity?  Many have seen their home values go up exponentially, and that may be an opportunity for those to tap into their home equity for emergency situations. Remember this, if you do not use the funds, there is no interest rate charged. The funds will sit in an account until you decide to use them, however, there may be fee’s associated with the loan.

Many lines of credit can be secured or unsecured. Secured line of credit, requires collateral, such as a property or deposit, which can be used by the lender to recover the outstanding debt if the borrower fails to repay.  As mentioned previously, many homeowners have seen their equity values in their homes go up.

Lines of credit account are commonly used by businesses to cover short-term expenses. Individuals may use lines of credit for various purposes, such as home renovations, education expenses, or financial safety nets.

One curious opportunity I discovered while talking this over in my brain.  Most people understand credit cards and are used to that concept, but are not as comfortable with HELOC.  Individuals seem to much rather borrow on credit at outrageous 20% rates, versus borrowing from their own home equity at much lower rates.  Furthermore, the total amount of the line of credit only shows up based on the amount that is outstanding., 

It's important to note that the terms and conditions of lines of credit can vary, depending on the institution and or lender, so it's essential to carefully review the agreement, and understand the repayment terms, interest rates, fees, and other associated conditions before using the line of credit. If you have questions, please do not hesitate to reach out or send questions to

9i Capital Group Llc is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.