HELOC rates

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Jo Anne
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HELOC rates

Post by Jo Anne » 07 Sep 2017 23:25

My husband and I have an appointment at Scotiabank next week to take care of some financial housekeeping, and while there, I would like to arrange a HELOC. I have googled but not been able to ascertain the best rate we might be offered, and I want to get the lowest rate possible (IOW, I don't want them to screw us). I see that Scotiabank Prime is 3.2%, but I'm not sure how that relates to HELOC rates.

Details:

We are looking for a HELOC of about $50,000. Not that we need that much, but it seems like a nice round number.
Our paid-for house is worth around $275,000. We have no debt.
We have a very long history as Scotiabank customers, and our investments are all with Scotia iTrade.
We want the HELOC because in the next 6-8 months we will likely need to buy a cheap-ish second vehicle (DH's truck is on it's last legs), and we would also like to buy a small travel trailer. We're looking at $30,000 max for both of these. I don't fancy selling securities to cover these purchases, and I expect that we will be able to pay off the HELOC within 3 years.
Our don’t think our net worth is relevant to this decision, but who knows.
Both of our Equifax credit scores are >850.

Does anyone have any idea of what kind of rate we might be offered, and what we should hold out for?

Thanks to all!

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Re: HELOC rates

Post by TedR » 08 Sep 2017 07:40

My HELOC rate with TD Canada Trust is TD prime + 0.5%. That is 3.7% as of today. I don't think this is a particularly sweet deal. You may be able to do better.

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Re: HELOC rates

Post by lacrosse905 » 08 Sep 2017 10:38

Joanne,we keep an open HELOC at TD for $50,000 just in case we need it. Like you.... don't want to sell securities or go into other stuff to finance an expense like a vehicle. It was 2.4% earlier in the year. When I checked yesterday it was 2.7%, and it is 3.2% this morning. We have a small balance. I have tried to negotiate with them in the past for a better rate due to the fact that all of our accounts are with TD. They would not budge. 3.2% is probably the best you are going to get right now and it could go higher with another BofC rate increase in the future.

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Re: HELOC rates

Post by AltaRed » 08 Sep 2017 10:39

Prime +0.5 was as good as I could get at Scotia 5 years ago when I had to carry a second house for a few months. Course they also knew it would be short term.
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Re: HELOC rates

Post by Koogie » 08 Sep 2017 11:02

Also at TD and also paying prime + 0.50%

We bought our current house a few years ago and paid cash at the time. We got the HELOC at the recommendation of our lawyer. TD wanted to give us a HELOC worth 65% of the value of the house. We don't really use it so we said fine since it doesn't cost anything on an ongoing basis if you don't use it and who knows....

There were opening fees, TD lawyer fees and perhaps appraisal fees (circa 400$ if memory serves). TD agreed to rebate them to us after 90 days based on history, TDDI account size, etc.. I kept an eye on that and it was credited back on the 91st day.
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Re: HELOC rates

Post by pickmepickme » 08 Sep 2017 11:11

If your house is fully paid off, why not just go for a LOC? By choosing a HELOC, you're giving your house back to the bank, and they will always have a claim on it. We have a fully paid off house too and use a LOC instead. Ours is also for $50,000, but since we've never actually taken advantage of it, I don't even remember what the interest rate is. I do know that it was a smidge higher than the HELOC, but for me, the comfort of owning our home outright was well worth the small difference in rates.

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Re: HELOC rates

Post by adrian2 » 08 Sep 2017 11:15

My CIBC HELOC is at CIBC Prime @ 3.2% + 0.5% = 3.7%
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Re: HELOC rates

Post by nile » 08 Sep 2017 11:47

My CIBC HELOC is at CIBC Prime @ 3.2%
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Re: HELOC rates

Post by Shakespeare » 08 Sep 2017 11:47

I spell my HELOC RRSP, and keep cash there. Or, I could sell a TFSA security, rebuy in the RRSP, and take money from the TFSA if I don't want to pay withdrawal taxes.

But that's for amounts in the $10-15K region.
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Re: HELOC rates

Post by BRIAN5000 » 08 Sep 2017 12:28

If you're going to get a HELOC and especially if you have to pay for it, many are free, you might as well get the maximum your property will support, once and done. What rate they give you up front may be good but may change at any time for absolutely little reason other that they can raise it.
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Re: HELOC rates

Post by pmj » 08 Sep 2017 14:46

Also check your house insurance. Ours dropped about 25% when I recently paid off the mortgage and cleared the lien off title.
We were advised that BNS's rate is P + 0.5 for HELOCs more than $50k.
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Re: HELOC rates

Post by AltaRed » 08 Sep 2017 15:18

pickmepickme wrote:
08 Sep 2017 11:11
If your house is fully paid off, why not just go for a LOC? By choosing a HELOC, you're giving your house back to the bank, and they will always have a claim on it. We have a fully paid off house too and use a LOC instead. Ours is also for $50,000, but since we've never actually taken advantage of it, I don't even remember what the interest rate is. I do know that it was a smidge higher than the HELOC, but for me, the comfort of owning our home outright was well worth the small difference in rates.
Agreed except the interest rate delta will be considerably more than a smidgeon. A LOC is basically an unsecured consumer loan.
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Re: HELOC rates

Post by Koogie » 08 Sep 2017 15:29

AltaRed wrote:
08 Sep 2017 15:18
Agreed except the interest rate delta will be considerably more than a smidgeon. A LOC is basically an unsecured consumer loan.
True but they do tend to be smaller. I also have an unsecured line for 25K (a hold over from when I started my company 15 years ago). Our HELOC is at 3.70%, the unsecured line is at 5.45%
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Re: HELOC rates

Post by pmj » 08 Sep 2017 15:37

If the LoC rate is (say) 1.5% more than a HELoC, that's $750/year on (say) $50k. How does that compare to $???/year additional house insurance?
Peter

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Re: HELOC rates

Post by BRIAN5000 » 08 Sep 2017 16:16

pmj wrote:
08 Sep 2017 15:37
If the LoC rate is (say) 1.5% more than a HELoC, that's $750/year on (say) $50k. How does that compare to $???/year additional house insurance?
A LOC is generally free to set up where a HELOC may cost a few hundred or more if you don't shop it.
We have a very long history as Scotiabank customers, and our investments are all with Scotia iTrade.
IMO this means something but not very much they will size you up and extract as much as they think they can from you. If you're prepared you may do ok.
Our don’t think our net worth is relevant to this decision, but who knows.
Of course it is, so is the use of funds and for what and your repayment time frame etc..
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little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: HELOC rates

Post by pmj » 08 Sep 2017 18:06

BRIAN5000 wrote:
08 Sep 2017 16:16
A LOC is generally free to set up where a HELOC may cost a few hundred or more if you don't shop it.
That's a good point - ours was set up with the mortgage, under one lien, so probably at no additional cost.
Peter

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Jo Anne
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Re: HELOC rates

Post by Jo Anne » 08 Sep 2017 22:43

Thanks for all the replies.

Good to know I shouldn't pay more than prime + 0.5%. And we will see if we can negotiate the fees. We already have an unsecured LOC with Scotiabank (never been used) but I seem to recall that the interest rate is something like 9%, so that's out.

We go to the bank next Thursday. I'll let y'all know how it went.

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Re: HELOC rates

Post by DavidR » 09 Sep 2017 10:17

Jo Anne wrote:
08 Sep 2017 22:43
...We already have an unsecured LOC with Scotiabank (never been used) but I seem to recall that the interest rate is something like 9%, so that's out.
I think you can do a lot better on an unsecured line than 9.0. My unsecured Line at TD is at Prime + 1.5. (Also have a HELOC at P+0.5)

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Re: HELOC rates

Post by Mordko » 09 Sep 2017 14:08

We have recently taken out a HELOC with National Bank via Investors Group "Solutions Banking" for $150K. The rate is Prime plus 0.25%. IG covered all the set-up fees. We needed to withdraw a minimum of $75K so that the lawyers fees are reimbursed but paid back $74K straight after. Happy with the product so far.

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