HELOC rates

Banking and Saving strategies, maximizing interest rates, budgeting, GICs, HISAs.
Post Reply
Jo Anne
Veteran Contributor
Veteran Contributor
Posts: 3648
Joined: 19 Feb 2005 21:33

HELOC rates

Post by Jo Anne »

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!
TedR
Contributor
Contributor
Posts: 44
Joined: 08 Mar 2017 13:01

Re: HELOC rates

Post by TedR »

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.
lacrosse905
Contributor
Contributor
Posts: 242
Joined: 05 May 2014 20:59

Re: HELOC rates

Post by lacrosse905 »

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.
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: HELOC rates

Post by AltaRed »

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.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
Koogie
Veteran Contributor
Veteran Contributor
Posts: 3972
Joined: 09 Mar 2012 16:44

Re: HELOC rates

Post by Koogie »

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.
pickmepickme
Contributor
Contributor
Posts: 117
Joined: 07 Oct 2008 12:04

Re: HELOC rates

Post by pickmepickme »

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.
User avatar
adrian2
Veteran Contributor
Veteran Contributor
Posts: 13333
Joined: 19 Feb 2005 08:42
Location: Greater Toronto Area

Re: HELOC rates

Post by adrian2 »

My CIBC HELOC is at CIBC Prime @ 3.2% + 0.5% = 3.7%
Imagefiniki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
nile
Contributor
Contributor
Posts: 387
Joined: 07 Feb 2007 08:42

Re: HELOC rates

Post by nile »

My CIBC HELOC is at CIBC Prime @ 3.2%
User avatar
Shakespeare
Veteran Contributor
Veteran Contributor
Posts: 23396
Joined: 15 Feb 2005 23:25
Location: Calgary, AB

Re: HELOC rates

Post by Shakespeare »

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.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
BRIAN5000
Veteran Contributor
Veteran Contributor
Posts: 9064
Joined: 08 Jun 2007 23:27

Re: HELOC rates

Post by BRIAN5000 »

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.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
pmj
Veteran Contributor
Veteran Contributor
Posts: 3412
Joined: 27 Feb 2005 18:15
Location: Ottawa

Re: HELOC rates

Post by pmj »

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.
Peter

Patrick Hutber: Improvement means deterioration
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: HELOC rates

Post by AltaRed »

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.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
User avatar
Koogie
Veteran Contributor
Veteran Contributor
Posts: 3972
Joined: 09 Mar 2012 16:44

Re: HELOC rates

Post by Koogie »

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%
pmj
Veteran Contributor
Veteran Contributor
Posts: 3412
Joined: 27 Feb 2005 18:15
Location: Ottawa

Re: HELOC rates

Post by pmj »

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

Patrick Hutber: Improvement means deterioration
BRIAN5000
Veteran Contributor
Veteran Contributor
Posts: 9064
Joined: 08 Jun 2007 23:27

Re: HELOC rates

Post by BRIAN5000 »

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..
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
pmj
Veteran Contributor
Veteran Contributor
Posts: 3412
Joined: 27 Feb 2005 18:15
Location: Ottawa

Re: HELOC rates

Post by pmj »

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

Patrick Hutber: Improvement means deterioration
Jo Anne
Veteran Contributor
Veteran Contributor
Posts: 3648
Joined: 19 Feb 2005 21:33

Re: HELOC rates

Post by Jo Anne »

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.
User avatar
DavidR
Veteran Contributor
Veteran Contributor
Posts: 1937
Joined: 30 Oct 2005 08:33
Location: Toronto

Re: HELOC rates

Post by DavidR »

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)
User avatar
Mordko
Veteran Contributor
Veteran Contributor
Posts: 6327
Joined: 24 Jan 2016 09:26

Re: HELOC rates

Post by Mordko »

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.
Post Reply