Secured Line of Credit
KNOWLEDGE EXPECTED OF: QAFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
- Define a secured line of credit.
- Explain the purposes for which a secured line of credit may be used.
- Explain for whom a secured line of credit may be suitable.
- Identify collateral that may be used for a secured line of credit, such as:
- Cash or cash equivalents
- Principal residence
- Other real property
- Non-registered investment assets
- Business assets
- Permanent life insurance
- Explain that a line of credit secured against real property (often known as a Home Equity Line of Credit or HELOC) uses a registered charge (conventional or collateral) to secure the credit.
- Explain costs that may be associated with obtaining a secured line of credit, such as:
- Appraisal fees
- Survey fees
- Legal fees
- Discharge & disbursement fees
- Administration fees
- Mortgage broker fees
- Property inspection fees
- Title insurance fees
- GST / HST
- Environmental assessment fees
- Registration fees
- Identify the maximum thresholds permitted for a secured line of credit based on the type of collateral used.
- Estimate the terms for a secured line of credit.
- Determine how each of these factors may impact the suitability of a secured line of credit:
- Purpose of credit or borrowed funds
- Amount of credit requested / required
- Ongoing need for borrowing capacity
- Fiscal responsibility
- Expected variability of interest rates
- Cost, including interest and fees
- Impact on cash flow
- Payment options (schedule, amounts, options)
- Expected prepayments
- Collateral requirements
- Expected lifetime of collateral (if applicable)
- Closure requirements / costs
- Tax impact
- Evaluate how each of the factors may impact the suitability of a secured line of credit.
KNOWLEDGE EXPECTED OF: CFP® Professionals
Highest Knowledge Level: Evaluation
Knowledge Levels and Associated Verbs
|
Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
|
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
|
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
|
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
|
||||||
|---|---|---|---|---|---|---|---|---|---|
|
Define
To state exactly the meaning of
|
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
|
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
|
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
|
Compare
To note the similarities and differences between two or more things
|
Estimate
To determine an approximate value for
|
Calculate
To find the value using mathematics
|
Convert
To change from one form or purpose to another
|
Evaluate
To reach a conclusion or make a through careful study
|
Interpret
To give the meaning of / to construe or understand / to translate orally
|
Hold cursor over or click on each term to read its definition.
- Define a secured line of credit.
- Explain the purposes for which a secured line of credit may be used.
- Explain for whom a secured line of credit may be suitable.
- Identify collateral that may be used for a secured line of credit, such as:
- Cash or cash equivalents
- Principal residence
- Other real property
- Non-registered investment assets
- Business assets
- Permanent life insurance
- Explain that a line of credit secured against real property (often known as a Home Equity Line of Credit or HELOC) uses a registered charge (conventional or collateral) to secure the credit.
- Explain costs that may be associated with obtaining a secured line of credit, such as:
- Appraisal fees
- Survey fees
- Legal fees
- Discharge & disbursement fees
- Administration fees
- Mortgage broker fees
- Property inspection fees
- Title insurance fees
- GST / HST
- Environmental assessment fees
- Registration fees
- Identify the maximum thresholds permitted for a secured line of credit based on the type of collateral used.
- Estimate the terms for a secured line of credit.
- Determine how each of these factors may impact the suitability of a secured line of credit:
- Purpose of credit or borrowed funds
- Amount of credit requested / required
- Ongoing need for borrowing capacity
- Fiscal responsibility
- Expected variability of interest rates
- Cost, including interest and fees
- Impact on cash flow
- Payment options (schedule, amounts, options)
- Expected prepayments
- Collateral requirements
- Expected lifetime of collateral (if applicable)
- Closure requirements / costs
- Tax impact
- Evaluate how each of the factors may impact the suitability of a secured line of credit.
