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A colleague of mine has some rental properties, both with mortgages a home with a HELOC and an office building that is used as a chiropractic office. The top floor of that building is residential and is rented out. This building is owned outright and she asked if there is a way to get a line of credit based on her business property. If so what is that called and how does that work?

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A Home Equity Line Of Credit (HELOC) is simply a special type of secured credit. Secured credit is credit provided to you, where the lender has some rights to an associated asset in the event that you default. In the case of a HELOC, much like a mortgage, if you default on the payment terms, the bank may be legally able to foreclose on your house, sell the foreclosed property, and take the money owed to it from the proceeds, leaving you with any net remainder.

Whether your friend will be able to have a bank offer her credit secured against her business assets would depend on a variety of factors. She should talk to her bank to see whether it would be possible in her case.

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