# RBC Homeline Plan vs Mortgage Refinancing



## tofurkey (May 28, 2012)

Hey everyone. First time poster. A question for everybody. My wife and I have accumulated quite a bit of debt over the years and wanted to look into the RBC Homeline Plan. I understand how it works mostly, but is it better to do than to just refinance my mortgage. A little background, 23000 in CC debt, currently paying off a 24000 loan, and as well around $1000/mortgage per month. What is the best option in your opinion, and will they even let me do this?


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## Eclectic12 (Oct 20, 2010)

tofurkey said:


> Hey everyone. First time poster. A question for everybody. My wife and I have accumulated quite a bit of debt over the years and wanted to look into the RBC Homeline Plan. I understand how it works mostly, but is it better to do than to just refinance my mortgage. A little background, 23000 in CC debt, currently paying off a 24000 loan, and as well around $1000/mortgage per month. What is the best option in your opinion, and will they even let me do this?


There is not really enough info to tell for sure. 

For example, have you focused on debt repayment or is the debt still growing? What is you cash-flow? Have you cut your expenses?

I'm thinking the RBC homeline plan is a combination mortage + home equity line of credit (HELOC). This would imply some of the debt would be on the HELOC. While there is no clear answer as to when interest rates will rise, what is the current rate and if rates do rise, what is your plan for dealing with it.

From what I've seen others do - if they have dealt with expenses plus focused on debt repayment, the advantage of a HELOC is a cheaper interest rate plus unlimited re-payment priviledges (especially useful if one has a variable but large bonus paid once a year). The disadvantage is that even if interest rates don't rise, some financial institutions have been known to bump up the HELOC rate to add to their profits. If interest rates go up, then the HELOC may not be as affortable.

The advantage of the mortgage is that for the term of the mortgage, the interest/payments won't change. Then too, there is usually pre-payment options that are negotiated. The disadvantages are the pre-payment has a limit and depending on what you negotiate, the HELOC interest rate will likely be lower than the mortgage rate.

Either way, it is important to be focused on paying off the debt. To many roll their debt into their mortgage, keep spending or don't control expenses so that they are no further ahead.


Also - if the HELOC route is used, make sure to ask what costs and what the options are to roll the HELOC debt into the mortgage, if rates rise too much.


Cheers


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