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Discussion Starter #1
What is a good rate for a secured line of credit these days?

Could I get something at Prime, or P-0.5?
I dont want to pay lots of money to get it setup either. I already have an unsecured line of credit at P+3% which I would get rid of if I could get secured line of credit setup for under $200 if not free.
My home is worth $500,000 with a $260,000 mortgage.
Is this something that can be found?

My wife has a variable income so looking to use this to help when needed which shouldnt be much.
 

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Without giving them some other business, not a chance. Expect prime plus 1% and if they think you are just going to leave it for future use (with nothing currently in mind) they will demand the set up fees.

Also, I would expect the only one willing to give you the best rate is the bank who currently has the 1st mortgage on it already, since the others would need to take a 2nd mortgage position. That in itself will kill your ability to use competition in your favour, so I would not hold out hope for the rates you posted.

Since I have been surprised before, let me know if I am wrong. Good luck.
 

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Discussion Starter #3
My mortgage is coming up for renewal. What secured rate could I get if I offered to bring my $260k mortgage with me?
 

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My mortgage is coming up for renewal. What secured rate could I get if I offered to bring my $260k mortgage with me?
Now you are talking their language. I doubt you will ever see anything on a HELOC below prime but you might be able to negotiate to something slightly lower then prime + 1%. If you do, ask them to give you a 5 year guarantee on that rate. Remember, they can offer you a rate today and as soon as they have the 1st mortgage, increase it tomorrow and you are pretty much snookered.

Also, I don't know if you have a current plan to use the HELOC but you need to give the impression that you are about to borrow heavily on it. A line of credit with a zero balance has no value to them and hence they will resist giving you any value for it. You see what I mean.

Good luck. Let us know how it turns out.
 

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... If you do, ask them to give you a 5 year guarantee on that rate.
Remember, they can offer you a rate today and as soon as they have the 1st mortgage, increase it tomorrow and you are pretty much snookered.
Are there reports of this happening?

My HELOC was setup when I started the mortgage and has been running a couple of years after the mortgage was retired. It has been steady until the prime rate was dropped, which meant my HELOC rate dropped as well.

... Also, I don't know if you have a current plan to use the HELOC but you need to give the impression that you are about to borrow heavily on it. A line of credit with a zero balance has no value to them and hence they will resist giving you any value for it...
Maybe it was because I went through a mortgage broker ... but I explicitly told the broker I had no plans for it. It wasn't until about a year and a half later that I used it.


Cheers
 

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Are there reports of this happening?

My HELOC was setup when I started the mortgage and has been running a couple of years after the mortgage was retired. It has been steady until the prime rate was dropped, which meant my HELOC rate dropped as well.


Maybe it was because I went through a mortgage broker ... but I explicitly told the broker I had no plans for it. It wasn't until about a year and a half later that I used it.


Cheers
I have no idea if they increase the rates very often, I am just trying to think like a banker. I know they all did it during the credit crisis. Most HELOCs were at prime and most banks moved them to prime plus 1% in 2009. In this case, once they have the 1st mortgage, the ability for other banks to compete on the HELOC is diminished. Not eliminated but diminished, since the new bank needs to take a 2nd position to the bank with the 1st mortgage.

The broker is different then talking directly to a banker. If you want the bank to pay set up fees and house appraisal costs, they have to believe that there is something in it for the bank, other then just an expense. A LOC that is never used, is of no value to them. They would have lots of those types of LOC on the books, so I suggest the OP give the impression that they will be borrowing on it immediately.

None of this might matter, but it can't hurt. All just my opinion.
 

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I have no idea if they increase the rates very often, I am just trying to think like a banker.
I know they all did it during the credit crisis. Most HELOCs were at prime and most banks moved them to prime plus 1% in 2009.
Interesting ... I will have to check when mine was created. I recall that it was before the main part of the credit crisis hit (i.e. 2008).

I didn't start using it until around Mar 2009 - where from the date created until today, the only changes have been to drop the interest rate charged, in line with how prime was dropping. It would seem that the terms when it was created have stayed in effect, despite retiring the mortgage.


... A LOC that is never used, is of no value to them. They would have lots of those types of LOC on the books, so I suggest the OP give the impression that they will be borrowing on it immediately.
With the amount of debt, I'm thinking there are lots of people who are using their LOC ... but without stats, my impression may not be the case.

IAC, it likely won't hurt to give the impression it will be used.


Cheers
 

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With the amount of debt, I'm thinking there are lots of people who are using their LOC ... but without stats, my impression may not be the case.

IAC, it likely won't hurt to give the impression it will be used.


Cheers
I have no stats as well, but I know my LOC is empty. My main point is that a bank will need to pay some 1st mortgage registration costs at the Land Registry Office to register the lien and most likely would want the house appraised, depending on the loan to value ratio applied for. If a person was going to borrow $100,000 tomorrow on their new LOC, the bank can easily see the profit involved and negotiating away these set up costs should be simply a matter of asking. If you are just setting it up so MAYBE in the future you might use it to pay off something that you might have put on a higher interest rate credit card with them, it is going to be hard for the banker to sell, paying these expenses, to their boss.

That's all I was saying.

I can't speak for anyone's rate of interest. Depending on their negotiating skills and other business with the bank they may get a better rate then prime plus 1% (which is the listed rate these days), but I would ask them to verify it before they list it here, since they may not notice a change that might have occurred in the past.

Prime minus 1%, as someone mentioned above, seems hard to believe. That rate is 1.85% today. If any of this money came from a high interest savings account, the cost to the bank would be 1%. Assuming they are blending their savings accounts with their chequing accounts (paying nothing), I suspect their interest costs to be around 0.75 %. That leaves 1.10% interest margin. From there they need to pay the costs of delinquencies (mostly the foreclosure and legal costs, since I doubt they lose much on the loan itself with these HELOCs) and operational costs. With all those costs, I cannot see much profit left for the bank, at that rate of interest.

So that person must have a lot of business with this bank or they are also not keeping up with the new interest rates being charged.

Anyway, none of what I said comes from banking experience. Just simple math, and I cannot be sure I have all the moving numbers, so it all is just my opinion.
 

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When did you get it?
I think that I have had it since about 2004. It used to be P -0.25 or -0.50 but it hasn't been below bank prime since 2009. I have only used it twice and for relatively small amounts and short times.
 

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TD recently came up with a new Heloc product, and the rate being offered was P+0%. This was only available at branches, and mortgage brokers could not get it. National Bank has P+0% for professionals in certain fields.
 

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I just re-negotiated my secured line-of-credit with Scotiabank. I am using the LOC for investment purposes only. When I set it up originally in the mid 2000's the rate was prime - 0.75%. It was slowly raised to prime + 0.75% after the 2008 crisis. I was able to get it back to prime by moving more of my business to Scotiabank.
 

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TD recently came up with a new Heloc product, and the rate being offered was P+0%. This was only available at branches, and mortgage brokers could not get it. National Bank has P+0% for professionals in certain fields.
I just got this, P+0%. I have my mortgage with TD. In January, they were offering a $1000 rebate to set it up too. So we paid $700 to get it set up, but got $1000 back so we actually MADE money setting it up. The person who set it up for us was a manager and personal friend - he said he'd never seen them offer that before. But maybe they will again in the future.
 

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The person who set it up for us was a manager and personal friend - he said he'd never seen them offer that before. But maybe they will again in the future.
I'm pretty sure that before the 2008 meltdown P+0% for HELOCs were fairly common. I am not able to look up my old paperwork at the moment but I think it was sometime in early-mid 2009 that our TD HELOC switched from P+0% to P+1%.
 

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Prime plus 0% and $300 cash for your trouble sounds pretty sweet.

OxCC. Yes, it was right in 2009 where all the banks raised the rates on their HELOCs. I suspect competition has probably moved into this space, by now (6 years later), and getting them at prime, is probably a little more doable. With interest rates where they are I cannot see minus percentages with prime, but I am willing to be surprised.

Myself, I will worry about it when it comes time that I might want to borrow on it. I can't see that time coming but if it does, you can be sure they are not going to get their extra 1% from me.
 

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A can't imagine that a bank is charging anyone $700 to setup up a HELOC. Well I can imagine it but I can't imagine anyone actually paying it.
 
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