In this column I am going to go over the qualifications and process you would normally go through to get a Home Equity Line Of Credit.
The first step is you either need to have 20% equity in your home already or have 20% down payment minimum when you are purchasing.
This allows you to enter into a conventional mortgage where you do not pay CMHC fees.
If you have 20% equity or have 20% down payment then up to 65% of your mortgage can become a line of credit and the other 15% or whatever percentage is left over if you did less then a 65% HELOC can be a fixed or variable rate mortgage.
So let’s say you are buying and have 20% down on a $400,000 purchase. So your total mortgage would be $320,000. $260,000 of this could be a line of credit and the other $60,000 can be fixed or variable. You may have more be fixed / variable if you so choose.
Home Equity Lines of Credit or HELOC’s are currently Prime (2.7%) + 0.5% = 3.2%. If prime goes up then so does your rate. They are also interest only payments, so you can choose to pay a very small amount or you can choose to pay everything off at once with no penalty.
Since it is a line of credit, you may pay it down and re-advance whenever you choose and there are no penalties for paying it down as much as you want.
If you have any other questions on this contact us anytime!