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Thread: School me on HELOC's

  1. #61
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    My parents have used helocs for years vs mortgages.

    Much better way to have access to money, less expensive. If the banks like you, your rate will be mortgage rate-ish.

    It gives you a lot of options.

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    Originally posted by Inzane
    I've been an advocate of HELOCs for years.

    However I'm a geek about it. About 5 years ago per my account manager's suggestion I transferred all my remaining mortgage debt into my HELOC. At that time I built a spreadsheet to simulate a conventional fixed term mortgage going forward with things like interest rate and payment as inputs. I used that as my plan to track my current status vs. the benchmark. This was a great way to insure you're not falling behind. It also allowed me to easily see how much I was reducing my overall interest owed and how how many months I was knocking off by paying down faster.

    My HELOC is split into 3 parts. The main one is for mortgage and household stuff (renos etc), the second one is for car payments (I use a spreadsheet tracker for this purpose too), and the third one is for investment use (I like to keep this separate for tax return purposes where applicable).

    A properly setup HELOC combined with discipline is a great financial tool. It gives you ultimate flexibility and IMO maximizes your ability to keep your money working for you. For example it seems pointless to keep a large chunk of cash sitting around in a bank account as an "emergency fund" where it's doing nothing and making nothing, when you could put that amount against your HELOC to offset the interest you'd otherwise pay, and then only pull that money out WHEN you need it.
    You'd probably be better off with a manulife one account if you're doing that. Automated version of what you're doing but when you lock in terms to the sub accounts you get a traditional mortgage for that portion of funds with better rates

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    Originally posted by Inzane
    About 5 years ago per my account manager's suggestion I transferred all my remaining mortgage debt into my HELOC. At that time I built a spreadsheet to simulate a conventional fixed term mortgage going forward with things like interest rate and payment as inputs.
    Couldn't you achieve the same and pay less interest using a short term VRM with good prepayment terms?

    I couldn't see replacing a VRM with a pure HELOC being advantageous unless my balance was low enough that I could pay it off in less than a 5 year term or I needed the flexibility to end the mortgage (moving, etc).

    Originally posted by HiTempguy1
    If the banks like you, your rate will be mortgage rate-ish.
    I guess the banks must not like me . The cheapest HELOC I've found currently available to me is the NBC engineer package at P+0.5% (they have P+0% for doctors). I know there's people clinging onto legacy rates at either P+0 or P-0.5%, but as far as I know these are no longer obtainable since pre-'08 recession.

    On the other hand, I see 5 year closed VRMs as low as 2% with 20/20 prepayment terms, which is equivalent to P-0.7%.

    So essentially a 1.2% spread for mere mortals like myself.
    Originally posted by max_boost
    Hey baller, any problem money can solve is no problem at all. Don't sweat it.

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    Originally posted by Strider


    Couldn't you achieve the same and pay less interest using a short term VRM with good prepayment terms?
    Have not done the detail math myself but you are correct.

    1) $100K at 3% HELOC = $3K of interest/yr = $250 minimum payment/mth

    2) $100K at 2%, 25yr amort, 2year term = $2K of interest/yr = ~$400 minimum payment per month.

    HELOC is more flexible if you need cash flow. How much interest you pay depends on how fast you pay down the principle.

    Short term VRM is lower interest cost but everything is fixed in place for the term and you will owe $4K in interest for your for the term. No way around it.

    So it really depends on what you are after and how long you plan to hold on to the loan.
    Last edited by Xtrema; 01-21-2017 at 01:09 PM.

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    Bump.


    When I got my mortgage, my Mortgage Advisor signed me up for RBC Homeline Plan. When I login to my banking I see my Mortgage and then I see a Royal Line Of Credit. Everyime I've made mortgage payments, this Royal Line of Credit goes up. Is this my HELOC I see everyone always talking about?


    I had called in to talk to a Wealth Advisor regarding a Car Loan, he mentioned the rates for the loans right now aren't very good 5-6% and said I should use a HELOC if I'm purchasing the vehicle as its around 3%. Is using HELOC for a car purchase kosher? I'm new to all this, always paid cash for my cars but this one is brand new and I don't have $50k in the bank. Originally was going to Finance the car through the dealership as I always see 0.9% financing etc etc but if Heloc is better...pleae school me
    Originally posted by GTS Jeff
    You know those bored stay at home moms who's entire lives revolve around driving their kids to soccer, various cleaning accessories, and worrying about neighbourhood rapists? The kind of people that watch the View and go "uh huh..." Those unfulfilled people who try to fill the void in their empty lives by writing whiny letters to the editor complaining about shit that no one really cares about?

    Well imagine if instead of writing that letter to the editor, she just posts on a car forum for car enthusiasts. That's Kritafo.

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    What rate is the dealership offering you? Is this new or used?
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Servus may still have 3.49% car loan rates going on.

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    Quote Originally Posted by dj_rice View Post
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    Bump.


    When I got my mortgage, my Mortgage Advisor signed me up for RBC Homeline Plan. When I login to my banking I see my Mortgage and then I see a Royal Line Of Credit. Everyime I've made mortgage payments, this Royal Line of Credit goes up. Is this my HELOC I see everyone always talking about?
    Yes, that's your HELOC

    I had called in to talk to a Wealth Advisor regarding a Car Loan, he mentioned the rates for the loans right now aren't very good 5-6% and said I should use a HELOC if I'm purchasing the vehicle as its around 3%. Is using HELOC for a car purchase kosher? I'm new to all this, always paid cash for my cars but this one is brand new and I don't have $50k in the bank. Originally was going to Finance the car through the dealership as I always see 0.9% financing etc etc but if Heloc is better...pleae school me
    Yes, just make sure you plan your debt repayment plan because prime rate is going up, your borrowing cost isn't fixed so it will go up with it.


    If your rate is 3.0 and dealer is 0.9% on a 50K car, you pretty much have to get a $3-4$K off before it make sense to do HELOC.

    IE:

    $50K at 0.9% for 3 years = ~ $51500 in total cost
    $50K at 3% for 3 years = ~$54500 in total cost
    Last edited by Xtrema; 07-17-2017 at 11:26 AM.

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    If dealer is offering an interest rate that is less than HELOC, why even look at HELOC? Best to be using dealer's financing and leaving HELOC for a rainy day.

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    Quote Originally Posted by ee2k View Post
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    If dealer is offering an interest rate that is less than HELOC, why even look at HELOC? Best to be using dealer's financing and leaving HELOC for a rainy day.
    As others have mentioned, cash incentives. If you look at Nissan's site and quote a car, you'll see it has the rate, as well as effective rate. Effective rate takes into account the cash incentives you're not getting thru finance so you can see the actual rate of borrowing through them due to higher selling price.
    Originally posted by SEANBANERJEE
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    And some manufacturers have the opposite if a cash incentive where they give you a better deal if you finance. Always check both.
    Quote Originally Posted by killramos View Post
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    You realize you are talking to the guy who made his own furniture out of salad bowls right?

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    Quote Originally Posted by Xtrema View Post
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    Yes, that's your HELOC



    Yes, just make sure you plan your debt repayment plan because prime rate is going up, your borrowing cost isn't fixed so it will go up with it.


    If your rate is 3.0 and dealer is 0.9% on a 50K car, you pretty much have to get a $3-4$K off before it make sense to do HELOC.

    IE:

    $50K at 0.9% for 3 years = ~ $51500 in total cost
    $50K at 3% for 3 years = ~$54500 in total cost
    Splitting hairs but how are you calculating those numbers? I'm getting

    Monthly payments: 50695/52331 for 0.9/3.0 respectively
    Biweekly: 50685/52396 for 0.9/3.0 respectively

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    Quote Originally Posted by J-hop View Post
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    Splitting hairs but how are you calculating those numbers? I'm getting

    Monthly payments: 50695/52331 for 0.9/3.0 respectively
    Biweekly: 50685/52396 for 0.9/3.0 respectively
    It's not a detail depiction, just yearly interest x 3, just to show that you must have more cash on table before HELOC make sense over dealer finance.

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    Quote Originally Posted by Xtrema View Post
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    Yes, that's your HELOC



    Yes, just make sure you plan your debt repayment plan because prime rate is going up, your borrowing cost isn't fixed so it will go up with it.


    If your rate is 3.0 and dealer is 0.9% on a 50K car, you pretty much have to get a $3-4$K off before it make sense to do HELOC.

    IE:

    $50K at 0.9% for 3 years = ~ $51500 in total cost
    $50K at 3% for 3 years = ~$54500 in total cost

    Thanks!! I'll keep this in mind during the negiotiations
    Originally posted by GTS Jeff
    You know those bored stay at home moms who's entire lives revolve around driving their kids to soccer, various cleaning accessories, and worrying about neighbourhood rapists? The kind of people that watch the View and go "uh huh..." Those unfulfilled people who try to fill the void in their empty lives by writing whiny letters to the editor complaining about shit that no one really cares about?

    Well imagine if instead of writing that letter to the editor, she just posts on a car forum for car enthusiasts. That's Kritafo.

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    Quote Originally Posted by dj_rice View Post
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    Thanks!! I'll keep this in mind during the negiotiations
    Go to unhaggle and they should show you all the available incentives for the month. So you know what everyone gets instead of some BS numbers. The only number unhaggle won't show is dealer holdbacks.

    For example, Acura MDX has 1.9% + $2500 off or $4500 off cash. So for $2000 difference on a $70K car, it's still cheaper to take their finance offer than HELOC.

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    Quote Originally Posted by Xtrema View Post
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    Go to unhaggle and they should show you all the available incentives for the month. So you know what everyone gets instead of some BS numbers. The only number unhaggle won't show is dealer holdbacks.

    For example, Acura MDX has 1.9% + $2500 off or $4500 off cash. So for $2000 difference on a $70K car, it's still cheaper to take their finance offer than HELOC.
    Awesome. Looking of picking up a 2017 Infiniti Q50S Red Sport or 300HP Silver Sport. Both non-Tech package as I don't like that DAS steering system. Dependant of what kind of deal I can snag, hoping for the Red Sport, no MSRP for me!


    Just went on Unhaggle and Finance is 60 months/under 0.99% + $3500 off or $6000 cash off. My HELOC rate is 3.45%. I'm terrible at math and yes I'm asian but not that kind of asian.

    Bi-Weekly Payment
    (60 Month Term)
    $410
    Finance Discount ($3,500)
    Rate % 0.99
    Effective Rate % 5.97


    With that effective rate, wouldn't it make more sense to do the HELOC then?
    Last edited by dj_rice; 07-17-2017 at 09:21 PM.
    Originally posted by GTS Jeff
    You know those bored stay at home moms who's entire lives revolve around driving their kids to soccer, various cleaning accessories, and worrying about neighbourhood rapists? The kind of people that watch the View and go "uh huh..." Those unfulfilled people who try to fill the void in their empty lives by writing whiny letters to the editor complaining about shit that no one really cares about?

    Well imagine if instead of writing that letter to the editor, she just posts on a car forum for car enthusiasts. That's Kritafo.

  17. #77
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    Quote Originally Posted by Xtrema View Post
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    It's not a detail depiction, just yearly interest x 3, just to show that you must have more cash on table before HELOC make sense over dealer finance.
    Ok, but just for the DJ's case it makes a difference when he is haggling what the absolute difference between heloc and dealer financing is

    (Just didn't want him taking the numbers as is)
    Last edited by J-hop; 07-17-2017 at 02:34 PM.

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    Quote Originally Posted by dj_rice View Post
    This quote is hidden because you are ignoring this member. Show Quote
    Awesome. Looking of picking up a 2017 Infiniti Q50S Red Sport or 300HP Silver Sport. Both non-Tech package as I don't like that DAS steering system. Dependant of what kind of deal I can snag, hoping for the Red Sport, no MSRP for me!


    Just went on Unhaggle and Finance is 60 months/under 0.99% + $3500 off or $6000 cash off.
    I heard there were some desperation deal on Q50 2.0T offered to the Infiniti staffs and get them off the lot.

    Not sure if it will applied to the higher lines of Q50.

  19. #79
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    I have a friend that bought a q50s redsport in Feb and got a smoking deal on a 2017. He haggled for two months to wear them down though with an offer on the table. They finally agreed at the end of Feb. If i recall correctly, it was over $15K off MSRP in total (including incentives) for a cash deal.

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    Quote Originally Posted by dj_rice View Post
    This quote is hidden because you are ignoring this member. Show Quote
    Awesome. Looking of picking up a 2017 Infiniti Q50S Red Sport or 300HP Silver Sport. Both non-Tech package as I don't like that DAS steering system. Dependant of what kind of deal I can snag, hoping for the Red Sport, no MSRP for me!


    Just went on Unhaggle and Finance is 60 months/under 0.99% + $3500 off or $6000 cash off. My HELOC rate is 3.45%. I'm terrible at math and yes I'm asian but not that kind of asian.

    Bi-Weekly Payment
    (60 Month Term)
    $410
    Finance Discount ($3,500)
    Rate % 0.99
    Effective Rate % 5.97


    With that effective rate, wouldn't it make more sense to do the HELOC then?
    That's $820 per month (sometimes more) for a car for 60 months? I shudder ...

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