We are a retired couple purchasing a new home for cash and would like to arrange a Secured Line of Credit ("LOC") for the maximum amount (80 % LTV) at the best interest rate possible to enable us to use our equity for other investments. Our previous LOC with BMO had an interest rate of Prime less one half per cent and the bank placed it without charging any appraisal or other fees. The problem is that they would only go 35% of the value of the property. Can anyone tell me from there experience where we might find a better deal and the interest rate.
Best Rates for Secured Line of Credit (HELOC)
- Thread starter Ronstar
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Hi, all the big banks are going MAX 65% LTV not 80% LTV. The rate your looking at is 3.2% although I have heard they might still offer 2.7%.
You might want to try credit unions, or private lending?
The big banks should do it without any legal or appraisal fees as long as you ask.
You might want to try credit unions, or private lending?
The big banks should do it without any legal or appraisal fees as long as you ask.
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With good credit and ample equity in your house you can get a LOC rate of prime (currently 2.7% .. a healthy 440% premium over the central bank's 0.5%) .. but likely not 80% LTV.
Decide what is more important to you: 80% LTV or a low rate. You can get 2.5% mortgages for five years, though. Convenience comes at a price.
Decide what is more important to you: 80% LTV or a low rate. You can get 2.5% mortgages for five years, though. Convenience comes at a price.
As an update I have found that Federally regulated financial institutions are restricted to a 65% LTV. Local Credit Unions also appear to be following that guideline. Some lenders are asking for appraisal and setup fees but these seem to be negotiable. I have been offered prime by several lenders and one big five bank has indicated there is discretion to request a lower rate once the loan is approved. One lender advised "We can still finance up to 80% but any amount over 65% needs to go into a mortgage fixed/variable product".
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A Home Equity Line of Credit (HELOC) with a bank can only be up to a maximum of 65% LTV. Some credit unions will consider 80% LTV. HELOCs are always prime or prime plus. The average interest rate is prime plus 50 bps (0.50%). At times, banks may waive the fees, but they are not usually very high anyways. The reason for only accessing 35% of the value could be that the bank's qualifying parameters limited them to 35%. To truly understand the reason for the lower LTV, I’d have to complete review of your personal situation to assess if you can access more of your equity. You can reach us at [email protected] or by calling 1-844-411-8463.