HELOC from different lender than Mortgage

[killramos]

Hey guys i know that beyond is the capital of the HELOC so i figure you guys would know this.

Can you apply for a HELOC with a different bank/lender than you have your mortgage with?

For example my mortgage is with some backwater lender who happened to have great rates (B2B), can i apply for a HELOC with my bank RBC?

I am planning on moving everything to RBC in the future ( 3-4 years) assuming they can be reasonable on rates but I didn't check off a few of the boxes for the big banks to lend to me when I initially applied.

[cet]

Yes you can. At one time I had my mortgage through ING and a HELOC through TD

[killramos]

Originally posted by cet
Yes you can. At one time I had my mortgage through ING and a HELOC through TD

:thumbsup:

Good to know i have the option. Oddly enough opening it would actually save me money on my banking fees...

[ExtraSlow]

No hassle at all, very common.

[tpurcell4]

It is harder to get done, but if you are with one of the Big 5 banks you may be able to get one of the other Big 5 banks to do so. You will be restricted based on the equity available since the finance department of Canada restricted HELOCs to 65% loan to value. Banks will structure a 1st mortgage with a HELOC to 80% LTV if they have both mortgages otherwise they will likely only be able to go up to a maximum of 65% of the value of the home (total combined). ATB was going as high at 80% behind the BIG 5, but recently changed their guidelines to a total combine 65% based on how much your mortgage registered on your title is (we were notified of this change last week).

Good luck!

[broken_legs]

Easy to do. As sort of explained above, be aware that if your LTV goes above 80%(??) youll be paying CMHC insurance on that HELOC regardless of which lender gives it to you.

[tpurcell4]

Originally posted by broken_legs
Easy to do. As sort of explained above, be aware that if your LTV goes above 80%(??) youll be paying CMHC insurance on that HELOC regardless of which lender gives it to you.

That is an excellent point, however one of the rule changes a couple of years ago removed the ability to refinance beyond 80% LTV (unless you are getting a private mortgage to 85% and sometimes 90% LTV). So you won't have CMHC fees to pay, however you may have a hefty private lender and broker fee to pay, not to mention an interest rate in excess of 10% should you need to pull out more equity than is available up to 80%.

Long story short, if you "NEED" the money beyond 80% LTV, there are options, if you don't need that money, then stay at 80% or less LTV.

Cheers,

Todd

[killramos]

Thanks it's not something I need but I figure it is a good idea to set up so it's available when I do actually need it. If this compounds with saving me money on banking fees then why not.

[max_boost]

Just get 65% and call it a day. When your mort is up use your heloc to pay it off if you have room. Rates usually at prime+.5 so it's higher than variable mort but then you just pay it down as often as you want. heloc is good shit. :bigpimp:

[Yuubah]

You can, put they will probably quote you a higher rate for your HELOC.

[tpurcell4]

Originally posted by max_boost
Just get 65% and call it a day. When your mort is up use your heloc to pay it off if you have room. Rates usually at prime+.5 so it's higher than variable mort but then you just pay it down as often as you want. heloc is good shit. :bigpimp:

:thumbsup:

That is one of the best ways to use it. If you plan to have the HELOC maxed for consumer debt then don't do it. If you want to use it as a way to pay off your mortgage faster it is a great idea. If you want to use it to further your investment portfolio in can be a great idea (do your research and find good reputable adviser's if you do not know what you are doing)!

[TomcoPDR]

Originally posted by max_boost
Just get 65% and call it a day. When your mort is up use your heloc to pay it off if you have room. Rates usually at prime+.5 so it's higher than variable mort but then you just pay it down as often as you want. heloc is good shit. :bigpimp:

Thread complete once the HELOC king has spoken

[icky2unk]

Originally posted by tpurcell4


:thumbsup:

That is one of the best ways to use it. If you plan to have the HELOC maxed for consumer debt then don't do it. If you want to use it as a way to pay off your mortgage faster it is a great idea. If you want to use it to further your investment portfolio in can be a great idea (do your research and find good reputable adviser's if you do not know what you are doing)!

Would this be equivalent to "The Smith Manoeuvre"?

[killramos]

Originally posted by icky2unk


Would this be equivalent to "The Smith Manoeuvre"?
Only if the goal to to deduct interest on your mortgage from taxable income.

[icky2unk]

Originally posted by killramos

Only if the goal to to deduct interest on your mortgage from taxable income.

That's essentially what is being implied by the previous message right?

Sorry not 100% familiar with HELOC and mortgages etc.

[killramos]

Originally posted by icky2unk


That's essentially what is being implied by the previous message right?

Sorry not 100% familiar with HELOC and mortgages etc.

Not exactly.

HELOC is 100% flexible versus a mortgage. The bank doesn't fine you if you want to pay off your HELOC... Obviously this only works if you own the majority of equity in your home.

One advantage would be for example if you had a 6% fix rate and rates tanked to 2%. In such a case you could save alot of interest by paying down your mortgage (as much as you can) with the HELOC which is lower interest.

Smith Manouvre requires you to invest money with your HELOC and interest paid would become tax deductible.

[icky2unk]

Originally posted by killramos


Not exactly.

HELOC is 100% flexible versus a mortgage. The bank doesn't fine you if you want to pay off your HELOC... Obviously this only works if you own the majority of equity in your home.

One advantage would be for example if you had a 6% fix rate and rates tanked to 2%. In such a case you could save alot of interest by paying down your mortgage (as much as you can) with the HELOC which is lower interest.

Smith Manouvre requires you to invest money with your HELOC and interest paid would become tax deductible.

Awe okay makes sense!!

Thanks

[macman64]

If you place the HELOC with someone other than the organization who owns the mortgage you won't have value you have payed off in your term until the end of the term. So on your 3 of your term what you have payed off won't be available in the HELOC until year 5 you renew and go expand the HELOC.

A few products exist where if you have the mortgage and HELOC with the same organization as you pay down the mortgage the HELOC grows.

[ExtraSlow]

That's a good point, if someone wants the maximum possible room in the HELOC, it's worth keeping this in mind, although I'd imagine that's not a common need.