HELOC's

[joseph]

Where have you guys found best to obtain a HELOC in terms of interest etc.? Do you usually just go through the bank your mortgage is with?

[dj_rice]

Mine was tied into my mortgage even though I never asked for a HELOC. They called it their Homeline Plan I believe.

Mine is currently 3.35%, it use to be 3.5%. Prime + .35%

[Kloubek]

Same here with the RBC homeline plan. It's actually really nice to have a LOC that goes up as you pay your mortgage down. Tricky ploy really to ensure you continue to focus your entire debt load with them.

[TomcoPDR]

You came to the right forum, home of Canada's heloc king.

[Kanto_Terrors]

Originally posted by joseph
Where have you guys found best to obtain a HELOC in terms of interest etc.? Do you usually just go through the bank your mortgage is with?

Exactly the question I have in my mind today. I'll be watching this thread closely.

Thanks.

[89coupe]

I wouldn't do it, cash is KING.

If you need to borrow, then you should ask yourself, do I really need it.

Other then a mortgage I feel debt is just trouble.

Just my 2 cents.

[G]

^word....I actually did not bother setting up the HELOC after I sold the house.

[Yuubah]

I find your HELOC rate is deteremind by your relationship with the bank. So if you have tons of assets with one bank, your best bet would be to apply for a HELOC with them and insist on a preferred rate.

The range is usually Prime to Prime + 0.5%. It's easiest to ask for the lower rate when you first apply.

I believe ATB offers everyone Prime for the first year, then Prime + 0.5% afterwards.

[joseph]

My mortgage is currently fixed at 3.29%. So I should be looking for something around that range then right?

[TimLacroix]

Originally posted by joseph
Where have you guys found best to obtain a HELOC in terms of interest etc.? Do you usually just go through the bank your mortgage is with?

There are a variety of options for HELOC's. Some depend on what you do and what lenders are offering.

Prime is currently 2.85%

ATB used to offer HELOC at Prime for a year but this promo finished a couple of months ago.

Most lenders offer HELOC's at Prime + 0.50% = 3.35%

There are a couple of other options. There is one lender offering Prime + 0.25% (for all clients0.

There is another lender offering Prime and Prime + 0.25%. Restriction is for:

Prime for Doctors Program

Prime + 0.25% for Engineers Program

[interlude]

Originally posted by TomcoPDR
You came to the right forum, home of Canada's heloc king.



Originally posted by 89coupe
I wouldn't do it, cash is KING.

If you need to borrow, then you should ask yourself, do I really need it.

Other then a mortgage I feel debt is just trouble.

Just my 2 cents.

I'm with 89coupe, but TomcoPDR is correct. max_boost lives quite the life leveraging HELOC. Beyond baller for sure

[ee2k]

Originally posted by 89coupe
I wouldn't do it, cash is KING.

If you need to borrow, then you should ask yourself, do I really need it.

Other then a mortgage I feel debt is just trouble.

Just my 2 cents.

But how can I pay for my annual vacation? Or the new car I want to get?

I was having exploratory conversations with my bank guy about my finances, and he told me that these funds are easily available to me for the above-stated purposes. I already have a hard time accepting purchasing a vehicle on payments, let alone a vacation on debt.

[joseph]

Lol vacation on debt would definitely not be the idea. HELOC's can be great if they're used properly.

[r3ccOs]

Originally posted by 89coupe
I wouldn't do it, cash is KING.

If you need to borrow, then you should ask yourself, do I really need it.

Other then a mortgage I feel debt is just trouble.

Just my 2 cents.

I have a 40k unsecured LOC @ 3% that is available but I do not use for anything other than having available funds to place into investments in the interm of liquidating other ones.

That being said... if you look at a mortgage of one who
1. owns the majority of their home (i.e. >70% like me)
vs.
2. a new home buyer who owns only 5% of their home

When both homes appreciate, they appreciate at the same rate, and the person who is more recently into their home, and with less invested is recieving a larger return on their capital...

regardless of all the retoric around intrest yada yada, it comes down to the intent of the owner, on whether their principle resdent is going to be a long term investment or not....

Also, if you only own 5%, and the market tanks, like it is now... you're more likely to be insolvent on that investment, and be like all new home buyerse in 08', upside down.

However the only real way to leverage your "estate" is to leverage your "investments" for other investments...

The money in the property you own, is still your money and yours to leverage against if you choose to.

Most people use a heloc to consolidate their debt, only to get into more debt... to buy the car of their dreams, or vacation properties... but as you say 89coupe, you have to ask yourself... do I "need" it, if I couldn't have saved for it.

However, what is "stupid" is to keep cash in low returning GICs or saving accounts, whereas you could be earning in any other vehicle.

With a Heloc, you have the opportunity to grow the investment you placed within your home at the lowest intrest possible and far greater returns than just real estate demands.
But with all things, comes risk...

chances are though, if you Heloc your home in a well diversified and performing portfolio funds, you will easily make a good return... and for most people, using a heloc to max out their available RRSP contributions on a good earning year, is the right stradigy.

i.e. you made $150k this year (like ALL beyonders duh)
You have 100k in available RRSP contribution room
you heloc 100k from your house and purchase registered investments (mutual funds, bonds, commoditiies, stocks whatever)
immediately you offset your income by $100k... which will give you a tax return on that year of $37k

You take that $37 and pay that portion of your heloc back off, leaving you with a $100k RRSP investment and $63k loan at the lowest possible intrest rate, as its secured to your house. Obviously work to pay off that $63k investment, but if you invest moderately, its likely the dividands on your investments themselves will offset the intrest costs, and grow at a decent rate (hopefully 8-10% performance over time, if not greater)
heck if you are on top of your investments, its likely you will compounding growth that what your paying back "net" will be negligable.

showing affluence was unfortunately a big obsession with everyone in this province, and is an issue anywhere with "new monies"

my friend would rather floss by showing off his new big estate house, two new Accura's, the new boat (that goes nowhere) and the furnature his stay at home wife spends all the remainder of his income on

he's always saying why are you so "cheap", cause I bought an XLT XTR instead of a King Ranch or Limited...

then one day, while he was snooping in my office, while on my computer, he saw my statement at Woodgundy
*the asshole actually looked into the envelope*

all I can say is he never questioned why I'm always a prudent shopper after that

the thing is... I still don't think that anything I'm doing is "sacrificing"
all that I'm doing is not over extending myself, and not giving myself anything unecessary, that I "wouldn't use" or "extract value" out of.

I to this day, will never buy a piece of furnature from Ashely/Brick/Leon (choose your pos)... because I want more than a 2 year lifecycle out of my furnature...

its about being smart enough to recognizing your use cases, and buying what fulfills those requirements.

Its like some tools, I'll buy from princess auto, cause I'll use it once or twice ever, and it would never make sense for me to go to Snap on or MAC...

[max_boost]

Originally posted by interlude





I'm with 89coupe, but TomcoPDR is correct. max_boost lives quite the life leveraging HELOC. Beyond baller for sure

Yup. So simple. Buy house with cash. Heloc and spend! :bigpimp:

[msommers]

I get the impression that the HELOC is going to be used as investment money. Getting charged ~3% interest but "for sure" making 4%+ on investments.

Having a LOC is nice, it's money there in case shit hits the fan.

[89coupe]

Originally posted by ee2k


But how can I pay for my annual vacation? Or the new car I want to get?

I was having exploratory conversations with my bank guy about my finances, and he told me that these funds are easily available to me for the above-stated purposes. I already have a hard time accepting purchasing a vehicle on payments, let alone a vacation on debt.

HELOC is borrowed money, plain and simple. If you can't pay for your vacation or pay for your car with your earnings, you shouldn't be going.

Its not a magic money tree, you have to pay it back eventually.

[max_boost]

Maybe OP has enough equity where he wants to get a HELOC and pay off his mortgage balance. Just shifting it from one pile to the next. Not a bad strategy. Rate a bit higher vs fixed but has all the flexibility needed for these uncertain economic times. :devil:

[89coupe]

Originally posted by max_boost
Maybe OP has enough equity where he wants to get a HELOC and pay off his mortgage balance. Just shifting it from one pile to the next. Not a bad strategy. Rate a bit higher vs fixed but has all the flexibility needed for these uncertain economic times. :devil:

Just digging a hole if you ask me.

I don't know why anyone would have a fixed mortgage these days, interests rates are so low.

Honestly I feel people are living way beyond their means these days, too much credit.

[Z_Fan]

I use my HELOC to buy things, usually expensive - that I would normally have gone to a bank and acquired a loan for. Example, a Car. I only have a HELOC specifically so I don't need to go through the process of having a loan that has set payments.

Used responsibly, I don't see a problem with that. After 10 years of use on my wife's car, we bought a new car via HELOC and I pay it down monthly - but if I feel like not paying in any given month, then I don't.

So flexibility...

I am planning on using my HELOC in the RRSP scenario in the coming years. Basically draw my maximum RRSP contribution out of my HELOC, receive huge tax refund, pay that back to HELOC, etc. It's a good one time move.

But my HELOC is actually tied to a secondary property, not my primary residence, which actually has more equity in it than the one the HELOC is with. So, for me, even if I make a pretty terrible decision with that HELOC it really doesn't matter to me. But if it were my only form of equity, and you borrow against it for no good reason, well, you're just eroding those funds and it's a total waste.

Use it responsibly or don't use it at all.

[max_boost]

Originally posted by Z_Fan
Use it responsibly or don't use it at all. :thumbsup:

[blitz]

Originally posted by 89coupe
Honestly I feel people are living way beyond their means these days, too much credit.

We can't all be kept men.

[89coupe]

Originally posted by blitz


We can't all be kept men.

I wish that were the case, I wonder how that rumor got started.

It's just my own personal opinion, debt is evil.

[leftwing]

Originally posted by 89coupe


HELOC is borrowed money, plain and simple. If you can't pay for your vacation or pay for your car with your earnings, you shouldn't be going.

Its not a magic money tree, you have to pay it back eventually.

I dont know.... I mean I can either save (for example) 900$ a month for 2 years then buy a new truck all cash in 2 years for $21,600, or I can take a 20,000 (@ 3%) loan out today and buy that new truck now and pay that 900/mo payment for 2 years. The interest cost over the 2 year term is $630. In my opinion paying $630 to have that truck today instead of 2 years would be worth it.

I personally don't like having any debt besides my mortgage, but if you can afford to save xxx/month (on top of other savings) then why not take a loan out to get your item sooner? Providing interest costs are low.

[joseph]

Like someone said the idea is to make money not lose it. Just that I've never looked for one before so was wondering the best way to go about it.:thumbsup:

[max_boost]

Originally posted by leftwing


I dont know.... I mean I can either save (for example) 900$ a month for 2 years then buy a new truck all cash in 2 years for $21,600, or I can take a 20,000 (@ 3%) loan out today and buy that new truck now and pay that 900/mo payment for 2 years. The interest cost over the 2 year term is $630. In my opinion paying $630 to have that truck today instead of 2 years would be worth it.

I personally don't like having any debt besides my mortgage, but if you can afford to save xxx/month (on top of other savings) then why not take a loan out to get your item sooner? Providing interest costs are low.

exactly, cash flow ftw lol

[r3ccOs]

Originally posted by max_boost


exactly, cash flow ftw lol

if you MUST incur debt... i.e. buying a work truck, where quite literially your career and income is almost directly dependant on a funcitonal method of transportation for you and your gear...

A Heloc is not a bad option... if you can best the rate of a standard secured car loan.

This also gives you more flexability in regards to insurance options, however I would always take "full coverage" for a vehicle that has a substantial residual value.

but the problem with most people, is discipline, and thats where having "fixed" payments is far easier to budget for

[icky2unk]

Why not HELOC @ 3.35% write off the interest on taxes and buy a bank ETF at 5.5% and make a spread?

[leftwing]

Originally posted by r3ccOs


if you MUST incur debt... i.e. buying a work truck, where quite literially your career and income is almost directly dependant on a funcitonal method of transportation for you and your gear...

A Heloc is not a bad option... if you can best the rate of a standard secured car loan.

This also gives you more flexability in regards to insurance options, however I would always take "full coverage" for a vehicle that has a substantial residual value.

but the problem with most people, is discipline, and thats where having "fixed" payments is far easier to budget for

Auto-withdrawal is a solid alternative, which can act in the same fashion as a fixed payment. That way you don't even see the money in your account and it goes straight towards the debt. But you're right, some people don't have the discipline to actually pay off the debt.

[max_boost]

I probably did it a bit different than most.

After my 5 year term ended, I had more than enough equity in the property so I used my heloc to pay off my mortgage balance. The flexibility and no fixed payments was attractive to me. I can dump random amounts at any time into the line. Like r3ccOs said you can consolidate everything into it. See a 911 for a good deal? Buy it. This all goes back to being responsible and knowing what you are doing. Now that the balance is close to being paid off, bum is itchy. What next? Going condo shopping today, might just heloc that shit. :rofl:

[r3ccOs]

Originally posted by max_boost
I probably did it a bit different than most.

After my 5 year term ended, I had more than enough equity in the property so I used my heloc to pay off my mortgage balance. The flexibility and no fixed payments was attractive to me. I can dump random amounts at any time into the line. Like r3ccOs said you can consolidate everything into it. See a 911 for a good deal? Buy it. This all goes back to being responsible and knowing what you are doing. Now that the balance is close to being paid off, bum is itchy. What next? Going condo shopping today, might just heloc that shit. :rofl:

lol

really though, its about living within your means....

[89coupe]

Originally posted by r3ccOs


lol

really though, its about living within your means....

Exactly, if the Bank decides tomorrow that they want their money, do you have it?

[max_boost]

Every scenario is different. You gotta know your client 89coupe! :devil:

[blitz]

Originally posted by 89coupe


Exactly, if the Bank decides tomorrow that they want their money, do you have it?

In his situation, his HELCO is essentially a really flexible mortgage. How many people have the cash on hand to pay their mortgage off if the bank calls tomorrow?

In the picture your painting, it could be argued that ANY purchase made with cash is irresponsible if you have a mortgage balance.

[max_boost]

^^^

I am glad some Beyonders can read, comprehend and see the other side. :thumbsup:

[89coupe]

Originally posted by max_boost
^^^

I am glad some Beyonders can read, comprehend and see the other side. :thumbsup:

Don't get me wrong, I'm not saying what you do with your HELOC is wrong or you shouldn't have one.

I'm just saying to those that are looking to get one, make sure you understand that its borrowed money and that if you don't use it responsibly, it can get you into debt really fast.

[icky2unk]

Originally posted by 89coupe


Don't get me wrong, I'm not saying what you do with your HELOC is wrong or you shouldn't have one.

I'm just saying to those that are looking to get one, make sure you understand that its borrowed money and that if you don't use it responsibly, it can get you into debt really fast.

It can also get you out of debt even quicker. Both sides to every tale. If you understand money and what you are doing and can take some risks there are ways to use a HELOC to your own advantage.

I wouldn't advise going to buy a Porsche with it but you can use it for many good other reasons.

[ercchry]

Originally posted by 89coupe


Don't get me wrong, I'm not saying what you do with your HELOC is wrong or you shouldn't have one.

I'm just saying to those that are looking to get one, make sure you understand that its borrowed money and that if you don't use it responsibly, it can get you into debt really fast.

a credit card can too... but the nice thing... i guess about a HELOC is that its secured debt... so your asset exceeds the debt, so you will theoretically not go bankrupt since you can still liquidate the asset it is tied to and still have a positive net worth

[roopi]

Originally posted by ercchry


a credit card can too... but the nice thing... i guess about a HELOC is that its secured debt... so your asset exceeds the debt, so you will theoretically not go bankrupt since you can still liquidate the asset it is tied to and still have a positive net worth

Unless oil goes below $30 and your asset is no longer worth anything. :rofl:

[ercchry]

Originally posted by roopi


Unless oil goes below $30 and your asset is no longer worth anything. :rofl:

then we are all fucked with or without the HELOC... so live it up when you can :rofl:

[89coupe]

Originally posted by ercchry


a credit card can too... but the nice thing... i guess about a HELOC is that its secured debt... so your asset exceeds the debt, so you will theoretically not go bankrupt since you can still liquidate the asset it is tied to and still have a positive net worth

What happens if the HELOC you had was calculated based on last years market value, and you decided to gamble and invest the majority of it on an investment, or buy a Porsche...lol.

Now that market has gone to shit, and you lose your job, and you are forced to sell your home, but wait, your bank valued your home for $100k more then what its worth now and you are forced to sell it. Now you have zero or almost zero equity in your home. Then what?

No home, no equity, an expensive car that is worth 30% less, or investments that have dropped by 50%.

Then what?:devil:

Just playing devils advocate.

[max_boost]

The banks should just give everyone with 35% downpayment a heloc instead of conventional mortgage.

1mill house.
35% downpayment.

Bank gives you a heloc for $650k and guess what? your balance is 650k. pay it off at your own leisure. make interest only payments if you want.

:rofl:

I like my style of marth.

[max_boost]

Originally posted by 89coupe


What happens if the HELOC you had was calculated based on last years market value, and you decided to gamble and invest the majority of it on an investment, or buy a Porsche...lol.

Now that market has gone to shit, and you lose your job, and you are forced to sell your home, but wait, your bank valued your home for $100k more then what its worth now and you are forced to sell it. Now you have zero or almost zero equity in your home. Then what?

No home, no equity, an expensive car that is worth 30% less, or investments that have dropped by 50%.

Then what?:devil:

Just playing devils advocate.

Dude. This is Beyond.

We have the best real estate agent. :D
We have the best mortgage brokers.
We have the best insurance agents.
We have the best stock gurus.
We have the best car guys.
We have the best forum,.

AIN'T NOBODY GOT TIME FOR LOSING MONEY.

[BigMass]

Originally posted by max_boost
The banks should just give everyone with 35% downpayment a heloc instead of conventional mortgage.

1mill house.
35% downpayment.

Bank gives you a heloc for $650k and guess what? your balance is 650k. pay it off at your own leisure. make interest only payments if you want.

:rofl:

I like my style of marth.

this already happens. You can buy a house with a HELOC instead of a conventional mortgage.

https://www.nbc.ca/en/personal/financing/mortgage-solutions/made-to-measure-mortgage/all-in-one-banking/all-in-one-banking.html

the advantage of this is that you don't need an emergency fund in cash. You dump every spare amount into the LOC which will give you more interest than a regular savings account and if times get tough or you need to cash you can withdraw just what you need and pay the interest only portion.

[ercchry]

Originally posted by 89coupe


Now that market has gone to shit, and you lose your job, and you are forced to sell your home,


Originally posted by ercchry


then we are all fucked with or without the HELOC... so live it up when you can :rofl:

but really if you have a HELOC in this situation and its not maxed out, you can weather the storm no problem... hell, swap over the remaining mortgage to the HELOC too and now its only interest payments till someone bombs the saudis

[max_boost]

I have to say the big banks can make things so complicated.

Someone I know wanted to buy a 1mill property and had 500k down. However the bank would only lend him 250k based on his immigrant income so he couldn't buy that 1mill property.

He asked if I had any ideas. I told him, simple. Borrow $500k from a friend so you buy the property with cash. Afterwards get a heloc and pay your friend back.

SAME SHIT. :dunno:

Talking about heloc with friends is like talking about how your gf takes half your shit just because she lived with you for 6 months. Or in recent memory, is the dress white/gold or blue black? :rofl:

[TomcoPDR]

Originally posted by max_boost
I told him, simple. Borrow $500k from a friend so you buy the property with cash. Afterwards get a heloc and pay your friend back.

:

But then you need a friend that has $500k laying around, or a friend that's approve for an unsecure loan (unless their name is on land title caveat, lol) willing to do that for him.

But hey, there're suckers born everyday as they say.


Say Sam, I'm trying to bridge upsizing, you got some $$$ laying around. I'll heloc refund you.

[max_boost]

Originally posted by TomcoPDR


But then you need a friend that has $500k laying around, or a friend that's approve for an unsecure loan (unless their name is on land title caveat, lol) willing to do that for him.

But hey, there're suckers born everyday as they say.


Say Sam, I'm trying to bridge upsizing, you got some $$$ laying around. I'll heloc refund you.

Well I guess that's a no? Tomco? I was gonna ask rage2 next haha

:rofl:

[sabad66]

Originally posted by TomcoPDR


But then you need a friend that has $500k laying around, or a friend that's approve for an unsecure loan (unless their name is on land title caveat, lol) willing to do that for him.

Or a friend with a HELOC that has 500k available credit ;)

[TomcoPDR]

Originally posted by sabad66

Or a friend with a HELOC that has 500k available credit ;)

And the fraud, I mean plot thickens :rofl:

[TYMSMNY]

Originally posted by TomcoPDR


And the fraud, I mean plot thickens :rofl:

Tomco. Can you lend me 100k for no more than 1 year... as a buddy. Ill let you keep the porsche in your garage as collateral. no driving it though. I wanted to buy a bigger house but might be short between this property and the next...