Types of Mortgages

Below is a clear breakdown of private mortgages, secured lines of credit, personal lines of credit, and the main types of revolving debt:

Private Mortgage

Private mortgage is a short-term loan funded by an individual or a private company (such as a Mortgage Investment Corporation), rather than a traditional bank or credit union.

Private mortgages are often seen as the “lender of last resort.” They are designed for borrowers who:

  • Have strong equity in their property
  • Cannot qualify under strict bank income rules or stress tests

They offer flexibility—but often at higher rates than bank financing.

Secure Line of Credit (SLOC)

A secured line of credit is a flexible loan backed by an asset you own—typically your home. Since the lender has collateral, these credit lines offer:

  • Much lower interest rates
  • Higher credit limits
  • Easier access to funds

Think of it as a credit card backed by your home:

  • Revolving Credit: If you’re approved for $100,000, you can borrow $10,000, repay it, and have the full $100,000 available again.
  • Pay Only on What You Use: Interest applies only to the amount borrowed.
  • Interest-Only Payments: Monthly payments are usually interest only, unless you choose to pay down the principal.

HELOC: The Most Common Secured Line of Credit

A Home Equity Line of Credit (HELOC) lets you borrow against your home’s equity.

  • Borrow up to 65%–80% of your home’s value (minus your mortgage balance).
  • In 2026, HELOCs are often priced at Prime + 0.5% to Prime + 1%, making them one of the most affordable ways to access capital.

Personal Line of Credit

A personal line of credit is an unsecured revolving loan.

Unlike a HELOC, it is not backed by an asset—approval depends on your income and credit score. Think of it as the middle ground between a credit card and a personal loan.

  • Revolving Credit: Typical limits range from $5,000 to $50,000.
  • Variable Rates: In 2026, PLOCs commonly fall between 8% and 12%.
  • Easy Access: Funds can be transferred through online banking, a linked account, or by writing cheques.

What is a Revolving Credit?
 

Revolving debt lets you borrow, repay, and borrow again without reapplying. Your available credit replenishes as you make payments. The four main types are:

Credit Card

The most common type of revolving credit.

  • Spend against your limit (e.g., $5,000). Repay what you used, and your limit resets.
  • Many cards offer 21–25 days of interest-free time if you pay in full.
  • Highest interest rates – 19.99% to 29.99%.

Personal Line of Credit

An unsecured revolving line tied to your bank account.

  • Move funds as needed—no physical card required.
  • Interest accrues immediately, no grace period.
  • Interest rates are often 8%–13% depending on credit strength.

HELOC

Revolving loan backed by your home.

  • Lower rates and higher limits.
  • Interest rates are typically Prime + 0.5% to 1%, making it the cheapest revolving option.
  • A draw period of interest only borrowing.

Business Line of Credit

Designed for cash-flow management in business operations.

  • Used for inventory, payroll, or covering expenses until invoices are paid.
  • Smaller limits may be unsecured; larger ones often need security (equipment, receivables)