What to do with a paid off house?

Leveraging, renting vs owning, making an investment or buying a home?
rharvey199
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Re: What to do with a paid off house?

Post by rharvey199 » 19 Apr 2017 10:20

current house suits our needs and no desire to upgrade and take on debt to do it. i'm staying put and getting my portfolio up to the "FU" threshold :D

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Re: What to do with a paid off house?

Post by cashinstinct » 19 Apr 2017 18:30

To avoid fraud, one could consider getting a HELOC on property
(To avoid someone else registering a mortgage on your property)

As long the person has self-control not to use Heloc for "stupid" reasons.

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Re: What to do with a paid off house?

Post by gobsmack » 20 Apr 2017 09:14

cashinstinct wrote:
19 Apr 2017 18:30
To avoid fraud, one could consider getting a HELOC on property
(To avoid someone else registering a mortgage on your property)
I never heard of anyone doing this. Is this advisable? I am wondering if more people in the forum are doing this. I've never had a HELOC. Aren't they expensive to set up?

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adrian2
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Re: What to do with a paid off house?

Post by adrian2 » 20 Apr 2017 09:22

gobsmack wrote:
20 Apr 2017 09:14
I've never had a HELOC. Aren't they expensive to set up?
CIBC usually has annual promotions (late summer, IIRC) waiving the setup costs.
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Koogie
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Re: What to do with a paid off house?

Post by Koogie » 20 Apr 2017 10:51

gobsmack wrote:
20 Apr 2017 09:14
cashinstinct wrote:
19 Apr 2017 18:30
To avoid fraud, one could consider getting a HELOC on property
(To avoid someone else registering a mortgage on your property)
I never heard of anyone doing this. Is this advisable? I am wondering if more people in the forum are doing this. I've never had a HELOC. Aren't they expensive to set up?
We bought our current house two years ago. Our lawyer advised that doing this should be considered practically mandatory these days to avoid title fraud. She then went on to tell us a few choice stories about title fraud her practice had encountered. This is from one lawyer, at one medium sized office in a medium sized Canadian city.

So we went to TDCT and got a HELOC. They insisted on a HELOC worth 65% of the value of the house and rebated us the opening fees after 90 days. Essentially free. And there are no ongoing costs unless you use it.
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Re: What to do with a paid off house?

Post by OnlyMyOpinion » 20 Apr 2017 11:58

I read somewhere that court rulings have gone against banks/mortgage cos, and in favour of the propery owners in cases where a fraudulent mortgage was issued or title transferred without them doing proper appraisal and ownership due diligence.
Anybody know more in that regard? How pervasive a problem is this, and is it more of a marketing effort towards helocs?
We have 4 clear title, non-rental properties in our immediate family, 3 in the last 10 yrs, and to my recollection none of the RE lawyers suggested this. Title insurance was suggested at purchase time for one in lieu of a RPR, but I had the RPR done, and mentioned for another but then not recommended as necessary.

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Re: What to do with a paid off house?

Post by AltaRed » 20 Apr 2017 12:00

Another way to thwart title fraud is to have tenant-in-common title obviously with at least 2 owners, albeit that is messier when it comes to JTWROS issues. A 'divided' title pretty much prevents encumbrances without 'other owners' knowledge.
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Re: What to do with a paid off house?

Post by longinvest » 20 Apr 2017 12:22

OnlyMyOpinion wrote:
20 Apr 2017 11:58
Anybody know more in that regard? How pervasive a problem is this, and is it more of a marketing effort towards helocs?
It probably depends on the province where the house is located.

In Quebec I would not worry about it. Here's the outcome of a case that happened in Montreal:

Google translation: A house is sold without the owners' knowledge (Radio-Canada - La facture)
A judge of the Superior Court declared the bill of sale passed before the notary of Saint-Lambert invalid.
In other provinces, I would probably buy title insurance:

https://www.canada.ca/en/financial-cons ... fraud.html
  • Consider buying title insurance to protect against title fraud. Title insurance covers losses related to title fraud
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Re: What to do with a paid off house?

Post by gobsmack » 20 Apr 2017 14:16

longinvest wrote:
20 Apr 2017 12:22
In Quebec I would not worry about it. Here's the outcome of a case that happened in Montreal:

Google translation: A house is sold without the owners' knowledge (Radio-Canada - La facture)
It sounds like it was still a big hassle for them though. After 8 months, they were still trying to get their title cleared. It also says the couple will be suing the bank in order to recover legal costs! If a HELOC costs nothing (i.e., provided you don't borrow from it), it would probably have been worth it in their case.

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Re: What to do with a paid off house?

Post by longinvest » 20 Apr 2017 14:23

gobsmack wrote:
20 Apr 2017 14:16
longinvest wrote:
20 Apr 2017 12:22
In Quebec I would not worry about it. Here's the outcome of a case that happened in Montreal:

Google translation: A house is sold without the owners' knowledge (Radio-Canada - La facture)
It sounds like it was still a big hassle for them though. After 8 months, they were still trying to get their title cleared. It also says the couple will be suing the bank in order to recover legal costs! If a HELOC costs nothing (i.e., provided you don't borrow from it), it would probably have been worth it in their case.
The notary involved in the fraud was likely to lose his license. All real estate transactions have to go through notaries, in Quebec, and are registered in a government registry. The pool of fraudulent notaries is likely to dry up pretty fast.

But, I agree that it was a big hassle for the owners.

I would lean more towards direct protection through title insurance than weaker indirect protection through a HELOC, even if this would drive less business to banks*. :wink:

* My VCN ETF holding has a significant allocation to banks.
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Re: What to do with a paid off house?

Post by AltaRed » 20 Apr 2017 14:59

longinvest wrote:
20 Apr 2017 14:23
I would lean more towards direct protection through title insurance than weaker indirect protection through a HELOC, even if this would drive less business to banks*. :wink:

* My VCN ETF holding has a significant allocation to banks.
But....but... it is soooo fashionable to have a HELOC these days. An essential have-to-have to be 'in' with the social crowd. My HELOC is bigger than yours and at only prime+X type of thing!
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Re: What to do with a paid off house?

Post by Acer79 » 27 Apr 2017 09:39

We do have a HELOC and it is used as a form of protection from title fraud. The one thing I would stay clear from is the collateral charges the banks put on your HELOC's or mortgages, the banks are not on your side and when they tell you its free to setup, its usually not and somewhere down the line they are charging you for it.

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Re: What to do with a paid off house?

Post by Acer79 » 27 Apr 2017 09:40

AltaRed wrote:
20 Apr 2017 14:59
longinvest wrote:
20 Apr 2017 14:23
I would lean more towards direct protection through title insurance than weaker indirect protection through a HELOC, even if this would drive less business to banks*. :wink:

* My VCN ETF holding has a significant allocation to banks.
But....but... it is soooo fashionable to have a HELOC these days. An essential have-to-have to be 'in' with the social crowd. My HELOC is bigger than yours and at only prime+X type of thing!
And my HELOC is bigger then yours lol with only prime - 0.5% :rofl:

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Re: What to do with a paid off house?

Post by adrian2 » 27 Apr 2017 09:45

Acer79 wrote:
27 Apr 2017 09:39
The one thing I would stay clear from is the collateral charges the banks put on your HELOC's or mortgages, the banks are not on your side and when they tell you its free to setup, its usually not and somewhere down the line they are charging you for it.
I seriously doubt that.
Can you substantiate?
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Re: What to do with a paid off house?

Post by Acer79 » 27 Apr 2017 10:28

adrian2 wrote:
27 Apr 2017 09:45
Acer79 wrote:
27 Apr 2017 09:39
The one thing I would stay clear from is the collateral charges the banks put on your HELOC's or mortgages, the banks are not on your side and when they tell you its free to setup, its usually not and somewhere down the line they are charging you for it.
I seriously doubt that.
Can you substantiate?
Just google horror stories on collateral charges, there is nothing in this world that is free, if they are giving it to you then there has to be something in it for them!

http://www.integratedmortgageplanners.c ... customers/

https://www.thestar.com/business/2015/0 ... seman.html

https://www.canadianmortgagetrends.com/ ... gages.html

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Re: What to do with a paid off house?

Post by adrian2 » 27 Apr 2017 11:35

Acer79 wrote:
27 Apr 2017 10:28
adrian2 wrote:
27 Apr 2017 09:45
Acer79 wrote:
27 Apr 2017 09:39
The one thing I would stay clear from is the collateral charges the banks put on your HELOC's or mortgages, the banks are not on your side and when they tell you its free to setup, its usually not and somewhere down the line they are charging you for it.
I seriously doubt that.
Can you substantiate?
Just google horror stories on collateral charges, there is nothing in this world that is free, if they are giving it to you then there has to be something in it for them!

http://www.integratedmortgageplanners.c ... customers/

https://www.thestar.com/business/2015/0 ... seman.html

https://www.canadianmortgagetrends.com/ ... gages.html
Nothing about HELOC's in those links (your original post started with "We do have a HELOC and it is used as a form of protection from title fraud.")

I do have a HELOC for investment purposes, currently at $0 balance, and it was setup for free at CIBC. Free means free.
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Re: What to do with a paid off house?

Post by freedom_2008 » 27 Apr 2017 14:31

We have HELOCs on our current home and a previous house for two purposes: 1. a protection from title fraud as others have stated; 2. a low interest whatever backup fund as one wouldn't qualify for much mortgage in pensionless retirement, regardless your total net-assets. Note that ours were setup before retirement as one might not qualify afterwards (even for HELOC).

Our HELOCs are from TD. They didn't charge any fee to set them up (used their in-house lawyer), but when we sold our previous house, TD did charge a small fee ($75?) to discharge the HELOC, even we never used the fund. Another note is that the max HELOC amount has been keeping increasing in recent years, without being asked/agreed by us. Maybe it is adjusted by house value increasing?

To OP: with HELOC rate as prime - 0.5%, you probably could borrow from it and buy some GIC or whatever ..., that is a really good rate :thumbsup:
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Re: What to do with a paid off house?

Post by Wallace » 27 Apr 2017 19:09

When your mortgage is paid off it is like flying over a mountaintop. All of a sudden everything is clearer. My one regret over the years is that I've stayed in the same place for 45 years. We have friends who moved every time they needed a bathroom renovation, and they have done very well over the years. I, OTOH, have ploughed money into renovating family rooms, kitchen, basement, replacing decks, and fixing the inevitable leaks, upgrading lights, switches, doors and handles and it all adds up. In fact the adjusted cost base of the house with major renovations included is not far from the selling price.

I've ended up with a very nice house, but it is a nice house based on a 1970s design and I'm pretty sure that if I had moved into a new place every ten or fifteen years I would have been ahead financially and had a modern place to boot.

So if the OP is contemplating some major renovations in the next few years he might consider building a new place instead. He might be able to get more house and still have no mortgage.
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Re: What to do with a paid off house?

Post by SQRT » 27 Apr 2017 21:01

I took a heloc off my cottage a couple of years ago and was able to reduce my insurance by about $700 per year. Check to see if a mortgage free house would cost less in insurance.

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