Can a Line of Credit be re-financed? Is it like a mortgage, with a term?
HELOCs typically have a 10 year draw and 5 year payback. During the draw time you can pay interest only if you wish. The rate can range from Prime minus 1.5 to Prime plus (quite a bit).  Of course, you can always shop around for a better deal than you currently have so long as you have equity in your home. You can often convert the outstanding balance of a HELOC into a fixed-rate home equity loan, generally with the same bank.  Doing this can open possibilities to extend the term allowing for lower monthly payments, but resulting in a larger overall payoff cost. Most HELOCs allow for an interest-only payment or in some cases no-payment at all if you still have unused available credit. Not advising that you do this. If you are struggling with the size of the payment converting to a fixed-rate, fixed-term loan may be what you need. The key will be getting the term such that you can manage both the principal and interest that will be included in the payment.
"It has been reported in consumer media (for example Clark Howard's radio program) that the ""no interest for 12 months"" contracts could trick you with the terms and the dates on the contract. Just as an example: You borrow $1000 on 12/1/2013, same as cash for 12 months.  The contract will state the due date very clearly as 12/1/2014.  BUT they statements you get will take payment on the 15th of each month. So you will dutifully pay your statements as they come in, but when you pay the final statement on 12/15/2014, you are actually 14 days late, have violated the terms, and you now owe all the interest that accumulated (and it wasn't a favorable rate). That doesn't happen all the time.  Not all contracts are written that way.  But you better read your agreement. Some companies use the same as cash deal because they want to move product. Some do it because they want to trick you with financing.  Bottom line is, you better read the contract." You don't always have a choice. If you RTA, this is about loans that BoA bought from other lenders, or banks they acquired. If there is such a thing as a conventional mortgage contract that cannot be sold to another bank, I have never heard of it.   Any bank you borrow from is generally free to re-sell the loan to any other bank. You agree to the contract, not the name on the letterhead. The loan is very likely to be syndicated, yes. I only state 7-10 because all of our loans to this point have been 7 year terms. And in many ways, this loan is just one of those loans, multiplied out in a modular sense. "So there are a few angles to this.   The previous answers are correct in saying that cash is different than financing and, therefore, the dealer can rescind the offer.  As for financing, the bank or finance company can give the dealership a ""kickback"" or charge a ""fee"" based on the customer's credit score.   So everyone saying that the dealers want you to finance....well yes, so long as you have good credit.  The dealership will make the most money off of someone with good credit.  The bank charges a fee to the dealership for the loan to a customer with bad credit. Use that tactic with good credit...no problem.  Use that tactic with bad credit.....problem." I doubt it.  Securitizations refer to deals that issue tranched bonds backed by a specific cash flow asset. That asset can be mortgages, credit cards, auto loans, syndicated loans, aircraft loans, trade finance...pretty much any type of loan.  - MBS refers to any securitization backed by mortgages. - CLO refers to any securitization backed by syndicated loans. - CMS refers to any securitization backed by commercial mortgage debt. - ABS refers to the rest (car loans, credit cards, airplanes, etc)  CDO refers to a securitization of other securitizations. The underlying securitizations could be MBS, CLO, CMS, ABS, whatever. Most common CDOs are securitizations of MBS or CLO, with the vast majority being MBS from the go-go years '05-'07. And don't even get me started on synthetic structures.  To my knowledge (and again I could be wrong here, please let me know if you've seen otherwise) the market for CDOs has been firmly dead since '07. ABS is still very active, although less than in the mid-oughts, and CLO is around still too. These two proved the best application of the concepts behind securitization: their underlying loans were truly diversified, so a general economic downturn hurt them less then the national collapse in the housing market. MBS issuance that does not involve Fannie/Freddie/Ginnie is rare but still exists. The lack of non-prime issuance of MBS is a huge reason for why the average American can't refi or take out a mortgage: there's no MBS issuance to package the loan into!  Edit: typos "As a legal contract, a mortgage is a form of secured debt. In the case of a mortgage, the debt is secured using the property asset as collateral. So ""no"", there is no such thing as a mortgage contract without a property to act as collateral. Is it a good idea?  In the current low interest rate environment, people with good income and credit can obtain a creditline from their bank at a rate comparable to current mortgage rates.  However, if you wish to setup a credit line for an amount comparable to a mortgage, then you will need to secure it with some form of collateral." You can. You can take out a conventional mortgage and keep the cash.  A mortgage is nothing but a secured loan against your home. You can open a HELOC and treat it as a negative-equity bank-account. Note that both a mortgage and a HELOC tend to have significant up-front or administrative costs attached to them.  It costs the loaning institution some money to ensure they are in a safe position, and they will want to pass it on to you. They don't want you taking out such a loan and not using it. On the other hand, the interest rates on such a loan are often much lower than interest rates on other loans. If you have a reliable source of significant income, getting a completely unsecured line of credit may be possible with a rate only a few percentage points higher than a HELOC without having to pay a cent in fees.  The bank doesn't have to appraise your home or ensure ownership before such a loan, just assess income (which is easy, especially if you have a regular paycheck auto-deposited into an account at the same branch; toss in some signatures from your employer and good to go). If that is feasible, you could end up with a lower rate.  Withdraw from the line of credit, pay off your other loans, then work to repay the line of credit. If an unsecured line of credit has a rate 1-3% higher than a secured one, and you are borrowing 5000$ against it and pay it off over 2 years, the total interest you would save from a secured line is about 50$-150$. Note that in some jurisdictions your home is protected against loss from bankruptcy, unless you have used it as collateral for a loan, or it is easier to claim the home if you are insolvent if you have used it as collateral.  Determining what the consequences of securing your loan against the house could itself be expensive. How you answer is actually dependent on when they ask. If it is early in the process the question/answer is to determine the type of loan you are looking for: Auto loan, home loan, home improvement loans, education loans; all have products that are geared to those uses. In many cases they will use the item you are purchasing as collateral for the loan. In return for this they will offer you a low interest rate, because they know they can protect their money be repossessing the collateral.  For these standard loans they will ask for more specifics before they give a check for the money because they need to know exactly what you are spending the money on, and they will need to file legal paperwork to protect their money. If it isn't one of those standard loans then you are looking at a loan that is only backed by your signature. That loan could have a high interest rate. They are asking as part of the process of assessing their risk. Unless you are putting a lie on a form, I am not sure being untruthful puts you in jeopardy.  In some cases they don't care. People get lines of credit without knowing exactly what they are going to spend the money on. For alternative financing, pursue a line of credit or a Home Equity Line of Credit.  (From the comments of @ChrisInEdmonton and @littleadv on the original question) The eligibilty of the deduction is based on what the borrowed money is used to purchase and NOT what asset is used as collateral.  So at the beginning of your mortgage, 10% of the interest is deductible because the entire loan was used to purchase the condo.  But when you withdraw money from the account the additional interest is usually not deductible.  It can get confusing with all the withdrawals and payments that will be coming in and out of the account if you happen to use it a lot like a chequing account. An easy example would be if you only paid the interest on the loan...  Say you had a $100 000 loan at 5% APY (for simplicity's sake).  After one year, you would have paid $5000 interest.  $500 of the would be deductible given that your office is 10% of the condo.  Then you buy a $1000 couch and continue to only pay interest for the next year.  You would have paid $5100 interest...  $5000 on money borrowed to buy the condo, and $100 on money borrowed to buy the couch.  So you can still only deduct $500. What happens when you pay back $500 against the line of credit?  Could you designate that 100% of the money should be applied to the non-deductible interest?  Or does it have to applied proportionally?  I don't know. I think it'd would be wise to separate the loans somehow.  Manulife may even have some tools to facilitate that.  However, I wouldn't recommend the Manulife One product.  I looked into when I was buying my house two years ago, and at that time it was too expensive.  The rate was the same that other banks were charging for a home equity line of credit (which was prime at the time).  You can replicate the Manulife One in a cheaper way using a traditional mortgage and a home equity line of credit...  The majority of the loan will be the traditional mortgage at (hopefully) a cheap rate.  Then you can use your line of credit as the chequing account. Also - the more credit facilities you have, the risikier you get. Say Company A lends you $8.000 for a down-payment - let's say you then go out and max out your other 100k facilities - you now have debt of 108k. What guarantee does the Company A have of repayment? Fewer credit facilities = better chance of getting a new loan. If you go traditional financing there is a chance it'd be syndicated amongst a bank group. That is going to add a little depth to your credit agreement id imagine. You thinking a term loan with a 7-10 amortization? I've never seen a LOC more than 5 years out. "I think everything in your case is just simply missing one important rule of how credit works. Essentially, your MIL cannot get a loan. You can. You are making her a large loan that she cannot get for herself. That is all. That is the essence of what this deal is. It is not without interest - she makes a financial contribution toward your son, you get the deal in 2 years assuming she doesn't default (she will), etc. Imagine it this way: you are sitting in the dealership with the dealer and your MIL. She wants a loan to pay for the car. The dealership says, ""you are way not credit worthy."" So your MIL says, ""why doesn't my son-in-law take out the loan instead?"" Now the dealership says, sure, that's fine. From the dealer's standpoint, every other part of your arrangement is irrelevant - boring, even. The only magic trick is in who takes the loan out, no other difference. You're letting your MIL pull a car out of her sleeve like a magician, and in taking the deal you're believing her.  This sentence: I am pretty sure that the ex-MIL will not let me down (I've loaned her large sums of money before and she always promptly repaid).  is everything. You're making a rather large bet that the things that can go wrong in two years - including any situation involving your wife's welfare - are rather miniscule. And furthermore, that the few times she's paid you back - that did NOT convince banks and dealer she is more creditworthy - justifies her good creditworthiness. Is the interest worth it? Do you really believe that your MIL needs to wring a car out of you before she would consider contributing to her grandson's well-being (which is, essentially, the interest)? But wait, it's NOT everything. Her daughter (my ex-wife) would drive it for 2 years and then turn the car over to our son. Even if your MIL is creditworthy, the woman you described as follows: Her daughter, though, is a loose cannon. Will be holding and returning the collateral in this deal. Things she can do include: So I'm arguing two points: Obviously my opinion on this is clear. I hope I did a decent job of explaining where the components of this deal (credit, interest, collateral) play out in the eyes of a dealer or bank, and get lost in the mechanics of the rules you worked out with your family." "In a domestic setting, Letters of Credit are often used to build public works needed to support a development.  So if you're bulldozing a few 3 story buildings to build a 50 story tower, the municipality will build appropriate water/sewer/gas/road infrastructure, and draw from the developer's letter of credit to fund it. The 'catch' to the developer is that these things usually aren't revokable -- once the city/town/etc starts work, the developer cannot cut-off the funding, even if the  project is cancelled. A letter of credit definitely isn't a consumer financing vehicle. The closest equivalent is a ""line of credit"" tied to an asset like a home." You could do that once, maybe, if the lender negotiates rather than going to court and taking you for everything you have plus having you wages garnished for the next several decades. And in the process, you would destroy your credit rating, making it impossible to borrow again any time soon. Doing this deliberately is fraud ... But worse than that, it's blatently stupid. You are likely to lose far more than you could gain.