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Discussion Starter #1
I'm looking for some advice. I have a paid for house worth 500k. No other debt. I was considering putting a rental suite in my basement will cost me about 80k total. Was looking at acquiring a heloc to fund this. Is this something a mortgage broker would look into or do I just visit different banks and see what they offer to set this up. I have read that there are quite a few fees involved with this such as appraisal , legal fees and etc. Will different institutions wave these fees?? Anyone have experience with this. Thanks in advance.
 

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Brokers will generally give you the best deal. If you have a bank you’re comfortable with, then you can start there. If you’re looking for variable rates, I generally find they are pretty similar.

if you’re looking to only borrow $80,000, it may be difficult to get the bank or broker to waive the setup fees. If you’re looking to set up a line of credit for $400,000 (80% of the value), but only end up using $80,000...you may get some/all the fees waived. Bankers and brokers are usually compensated on the limit of the new account, with some residual compensation for how much is actually carried as an ongoing balance.

setup fees were around $800 in Ontario when I left the industry last year. Appraisal was $300 on the high end. As low as $100. And the legal fees to register the lien were around $500, you can use the banks in-house service or have your lawyer do the legal work.
 

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If you tell me how you earn your income, I can assist with a preliminary list of documents you’ll likely need to provide. All registered owners of the property will need to be part of the application. ( in most cases).
 

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Discussion Starter #4
I am the sole owner of the property. I work for a major company and have been there 33 years. Zero debt, perfect credit.
 

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IF I had a property valued at $500K and wanted an $80K loan I certainly would not even entertain paying an appraisal fee or an admin fee. It is as scam. Shop around, don't be afraid to push back on fees. Money is a commodity. Our bank offered us a Heloc several times. No fees attached. Just sign and the money is the account.

It is a very different situation if you are looking for a HELOC that is 50 percent or more than the value of the home. But 15-20 percent..no issue. Given the value of your home, the money you want, your free and clear title, and your record of employment I have no doubt that lenders will be tripping over themselves to get your business IMHO. Don't be intimidated by these folks. This is no different than the tool rental business. They are renting you money....not doing you a huge favour. Shop for your best offer.
 

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Just to be clear, my comments were around the opportunity to have the fees waived.....not around the prospects for obtaining an approval. Most advisors, brokers, lenders are measured on volume.....and unfortunately, many would not even take such an application on. They will try and convince and you to take on a LOC for 400k, but only use 80k. That way, they can get paid on the 400 new account. The work involved in getting you 400 approved vs the 80 approved, is the same from the broker/lender. A broker/advisor Taking on too many “small deals”, will not earn enough commission to be sustainable.

having the fees waived is not tied to the strength of the application.....rather it’s tied to the cost/time/profit of the application and approval.

as an example, a 80,000 LOC would have earned me a commission of $400 based on standard pricing. A discount on rate, would lower that commission. So, if you’d ask me to waive any fees, I would respectfully decline the deal for 80. I’d actually be out of pocket $400 If I waived all the fees. Advisors who are salaried will also have a “budget” to contend with, in respect to fee waivers, or others may need management approval. Your best bet in getting the fee waived For a small account is to lean on your existing bank.
 

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I am the sole owner of the property. I work for a major company and have been there 33 years. Zero debt, perfect credit.
I’d start by gathering your most recent property tax bill. 2 months worth of paystubs. 2019 T4. If your income is variable (with any bonuses, commissions etc), then I’d gather your 2019 and 2018 NOAs.
 

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The bank, most otherlenders, will have access to your home information. At least enough data to realize that you far more equity than your request. Depending on your credit score you may not need anything else. You should have zero problem getting a Heloc with 4 -5 X collateral and an income. And yes, if you ask for 80 they will give you more in the hope that you take it over time.
 

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Discussion Starter #10
The bank, most otherlenders, will have access to your home information. At least enough data to realize that you far more equity than your request. Depending on your credit score you may not need anything else. You should have zero problem getting a Heloc with 4 -5 X collateral and an income. And yes, if you ask for 80 they will give you more in the hope that you take it over time.
Thanks Ian, are you thinking that all fees should be waived? I guess I will have to shop around as well because I have this feeling that they will wave the extra fees but will tack on a ,2 or .3 % higher rate than I could of got somewhere else.
 

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I’d start by gathering your most recent property tax bill. 2 months worth of paystubs. 2019 T4. If your income is variable (with any bonuses, commissions etc), then I’d gather your 2019 and 2018 NOAs.
Thanks for your contributions based on your long experience. You add a lot of good information to the forum.

Based on my 50 years of experience financing homes, atvs, boats, furniture and anything else that moves.......I think your posts are dead on.
 

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Bank lenders have quotas. The want and need to lend money. Especially these days when home sales etc. are low and there is less demand for money. That is a big part of their job reviews, salary reviews etc. Especially to good risks. If it were me......I would shop for the very best rate I could get. I doubt that there will be too much savings to be had here because rates are so low. But a dollar in your pocket is better than one in the lenders.

When you have a deal on the interest rate (and a backup institution in mind) move forward to completion.. Simply say no to the fees and make it clear that you are willing to borrow elsewhere. You are in the drivers seat and you have absolutely nothing to loose by indicating your indifference to walking to another institution. But you do have to be prepared to walk out the office. You have the collateral, the income stream, and the presumably the excellent credit rating. These are your tools.
 

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Discussion Starter #13
Thanks for all the great advice I will start doing some shopping around in the next few weeks.
 
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