GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
^
50% - Moderately

Line of Credit


Acronyms &
abbreviations:
LOC
Filed Under: financial-banking
Tags: banking, lending, line of credit, loan, mortgage lender
 

Definition of line of credit (LOC)

line of credit (LOC)
1. A credit agreement, often arranged before funds are needed, in which a financial institution agrees to lend money to a client up to a maximum amount for a specific period of time. Having a line of credit provides flexibility for customers and enables them to meet short-term cash requirements. Also referred to as a bank line or credit line.

Related Terms and Acronyms:

  • credit card (CC)   A plastic card with a coded magnetic stripe that, when signed, entitles its bearer to a revolving line of credit, with a credit limit and interest rate determined by the borrower's income and credit report.
      ➥  A payment card that gives customers access to a revolving line of credit.
  • credit line   The maximum money amount available in an open-end credit arrangement such as a credit card or overdraft protection.
  • draw period   On a line of credit, the draw period is the fixed time when a borrower can make withdrawals from the account. After the draw period expires, the borrower can renew the credit line or may be required to pay the outstanding balance in full, or over time.
  • equity line of credit (ELOC)
  • home equity line of credit (HELOC)   An open-ended loan, paid as revolving debt, that is backed by the equity in the property.
      ➥  Also known as a Home Line of Credit.
  • interest-crediting methods   A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.
  • personal loan   A loan made for personal, family, or household use as opposed to a business-type loan or a long-term mortgage loan to finance real estate.
  • repayment period   In a home equity line of credit, that portion of the life of the loan that follows the draw period. During the repayment period, the borrower cannot take out any more money, but must pay down the loan.
  • revolving credit   A line of credit that does not have a specified repayment schedule but may require a minimum payment to cover interest and contribute to paying off principal. Typical of credit card loans, chequing account cash reserve or overdraft accounts that have pre-approved lines of credit.
  • unsecured loan   An advance of money that is not secured by collateral.

More Related Terms and Acronyms

Search the Glossary

Mortgage Calculator
How does an adjustment in the size of your down payment change how much you'll end up paying for your new home? The difference can be staggering. Use our mortgage calculator and see how a simple change can save you tens of thousands of dollars.
Mortgage Calculator
 
Mortgage Rates
Just a small difference in rates can save you tens of thousands of dollars on your mortgage, so now just imagine what an even bigger difference will do. Take advantage of our very low mortgage rates and apply today.
Mortgage Rates
 
Mortgage Rate History
Rates are at historic lows. Want to see how the prime and mortgage rates have changed over the last ten years? Find more information with our mortgage rate history tables and graphs.
Mortgage Rates History