# HELOC rates



## Addy (Mar 12, 2010)

We have a few threads on current mortgage rates being offered to forum members but I could not find one on HELOC rates. 

Anyone here care to share what rate you were offered and by whom?

Does the amount of the loan impact the rate offered?


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## Jungle (Feb 17, 2010)

There's a thread here, and here.

But we're getting prime + 0.5%, had to fight and write a letter to head office for it. This is with Scotiastank. You're richer than you stink!


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## Sustainable PF (Nov 5, 2010)

Jungle said:


> There's a thread here, and here.
> 
> But we're getting prime + 0.5%, had to fight and write a letter to head office for it. This is with Scotiastank. You're richer than you stink!


we have the same rate, no fight tho. BMO.


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## Dana (Nov 17, 2009)

Ditto for us at National Bank. Not much negotiating.


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## the-royal-mail (Dec 11, 2009)

I have a LOC and they keep increasing the rates. When I first signed up for it about 10 years ago the rate was prime + 2%. They keep increasing it. Now they say it's prime + 3.35%.


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## the-royal-mail (Dec 11, 2009)

And I argued with them about it and they wouldn't budge on the rate.


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> I have a LOC and they keep increasing the rates. When I first signed up for it about 10 years ago the rate was prime + 2%. They keep increasing it. Now they say it's prime + 3.35%.


Are you sure your rate is P + 3.35% or just 3.35%, which would be P + 0.05% at this time.
P + 3.35% sounds a lot higher than the norm and you should definetely be able to negotiate or switch.


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## the-royal-mail (Dec 11, 2009)

Nope. It's what I stated. And the statement came in the mail last month to prove it. They seemed 100% inflexible when it came to this rate. In fact, they sent letters out last year to all their LOC holders saying they were raising the rate by 1% to everybody, tough, deal with it, was the message.

But I'm not willing to go through the hassle of switching all my accounts over to another bank over this issue. That's a lot of work and takes a lot of time and phone calls and hassle on my part.


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> But I'm not willing to go through the hassle of switching all my accounts over to another bank over this issue. That's a lot of work and takes a lot of time and phone calls and hassle on my part.


TRM, surely you realize that is a very high rate.
Your effective rate is 6.35% (P + 3.35%).
At 6.35% you can use it only for very short term consumer loans, if at all.
You can't use it for investing at those rates.

If you are such a long time and loyal customer, they should give you some relief.
Have you tried negotiating or threatened to move all your accounts?


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## the-royal-mail (Dec 11, 2009)

I recently went through all this account movement nonsense when I "moved" from one region of the country to another. Huge hassle. I would only be willing to make that threat if I was actually willing to follow through on it.

I did try and negotiate this and as I say, they were completely unwilling to budge.

Just to be clear, this is a LOC...not sure what is meant by HELOC...I presume these are the same.


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## Jungle (Feb 17, 2010)

HELOC=Home Equity Line of Credit. Secured against your house, thus lower rate given.


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## andrewf (Mar 1, 2010)

That rate is worse than an unsecured LOC. Crazy.


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## andrewf (Mar 1, 2010)

I didn't see the later replies. HELOCs typically enjoy a rate of the going floating rate mortgage plus 1% or 1.5%. Unsecured LOCs are basically credit card levels of interest!


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> Just to be clear, this is a LOC...not sure what is meant by HELOC...I presume these are the same.


No, they aren't.
I see now what you meant....should have read carefully in the first place.
So yeah your LOC rate is not too, too bad.
As an HELOC rate it would have been very bad.


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## the-royal-mail (Dec 11, 2009)

Ooops. I think I ended up hijacking the thread in that case. Sorry Addy. 

But can someone tell me where my LOC rates stand in comparison to others out there? You can PM me or I can start a new thread on this. My CC interest is about 19%, so in case of extended adversity (after my savings tiers run out) I am using a 6-7% LOC rate. I don't have a house to peg this against. If I buy a house tomorrow it sounds like I should cancel this LOC and get one of those 1-1.5% HELOCs. Nobody told me about this when I had my condo!


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> But can someone tell me where my LOC rates stand in comparison to others out there?


Unsecured LOC rates range between P + 2% to P + 5%.
So you are about right in the middle.
As long as the LOC is not being used for consumer spending, wasteful indulgencies or investing, you are ok.
An HELOC works better for investing because the interest rates are lower and the chances of the loan getting called in randomly are slightly lower than an unsecured LOC.
On the other hand, an HELOC ties up 80% of your home value.
For debt averse folks, that is not a good feeling.


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## the-royal-mail (Dec 11, 2009)

HaroldCrump said:


> ...HELOC ties up 80% of your home value.
> For debt averse folks, that is not a good feeling.


Thanks Harold for your valuable input. This should hopefully bring this thread back on track. Can you explain your comment above? This is new to me and I don't understand how a HELOC works. Why is 80% of your home value tied up?


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## Sustainable PF (Nov 5, 2010)

the-royal-mail said:


> I have a LOC and they keep increasing the rates. When I first signed up for it about 10 years ago the rate was prime + 2%. They keep increasing it. Now they say it's prime + 3.35%.



Ours is awful as well. Prime + 3.25%. We have our mortgage, a chequing account, over draft insurance and life insurance w/ BMO and they still give us a crummy rate.


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## Sustainable PF (Nov 5, 2010)

the-royal-mail said:


> Thanks Harold for your valuable input. This should hopefully bring this thread back on track. Can you explain your comment above? This is new to me and I don't understand how a HELOC works. Why is 80% of your home value tied up?


You require 20% equity in your home before you can get a HELOC. The remaining 80% is made available to you as you gain more equity in the home. So if I had 20% of my home paid for and was able to pay 10% of the home value off I would be able to access that 10% of equity to borrow @ the HELOC interest rate. This is often done for home renovations or investing leverage.


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## Jungle (Feb 17, 2010)

Sustainable PF said:


> You require 20% equity in your home before you can get a HELOC. The remaining 80% is made available to you as you gain more equity in the home. So if I had 20% of my home paid for and was able to pay 10% of the home value off I would be able to access that 10% of equity to borrow @ the HELOC interest rate. This is often done for home renovations or investing leverage.


Royal's posted in other threads that he rents. So, he would have to buy property first.


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## the-royal-mail (Dec 11, 2009)

Thanks all. I did own a condo for a few years but have since sold it. I guess the reason they never mentioned this HELOC thing was because I didn't have 20%.

After selling the condo I was able to apply for more regular LOC available credit, now that my monthly liabilities were so much less.


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## GeniusBoy27 (Jun 11, 2010)

Even unsecured, a prime + 3.25% seems awfully high, unless you have a really bad credit rating. If you're going that high, maybe a loan would be an alternative, to get the rates down (and also force you to pay back the principle faster?)


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## the-royal-mail (Dec 11, 2009)

Nope. My credit rating is and has always been the best possible. R1? And I've been with this bank for nearly 20 years. They showed no flexibility when I tried to argue with the rate, only giving me the reason and history behind the rate changes but not showing the slightest bit of flexibility in cutting me a break.


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## Four Pillars (Apr 5, 2009)

the-royal-mail said:


> Nope. My credit rating is and has always been the best possible. R1? And I've been with this bank for nearly 20 years. They showed no flexibility when I tried to argue with the rate, only giving me the reason and history behind the rate changes but not showing the slightest bit of flexibility in cutting me a break.


I would suggest that you shop around for a better deal.


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## GeniusBoy27 (Jun 11, 2010)

Agreed. That's a ridiculous rate. You should shop around.


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> Nope. My credit rating is and has always been the best possible. R1? And I've been with this bank for nearly 20 years. They showed no flexibility when I tried to argue with the rate, only giving me the reason and history behind the rate changes but not showing the slightest bit of flexibility in cutting me a break.


Hmm...do you use the LOC at all?
Have you taken out loans on it, then repaid it and done this a few times?

If you haven't ever used it, that may be a reason the bank is not interested in negotiating.
Banks like people that pay them interest.
If they know you are a conservative saver and not likely to use the LOC on a regular basis, they have no incentive to lower your rate.
In fact, what you are asking for is risky for them.
Because, they know that the only time you are likely to use the LOC is in case you are in financial trouble (job loss or some such thing).
And that is exactly the situation when they don't want to give you a lower rate.

For best chances of success, you have to offer them something....like interest.
So you may have to use the LOC and make a small monthly interest payment.


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## the-royal-mail (Dec 11, 2009)

Hi Harold, you are 100% right. I have only used the LOC twice. One time when I needed a few extra bucks in my bank account on a particular month and another time when I was in a crisis and ended up needing every penny. I was making the payments but it took me quite a while to pay back that loan and they got a lot of interest $ from me at the time. I don't like payments and I don't like interest. I avoid these things like the plague. I just want to have the LOC ready on a moment's notice as another line of defence after my rainy day savings are exhausted.


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## Jungle (Feb 17, 2010)

My unsecured loc @TD is at least 8-9% interest. I never use it, no balance. I've had it for 5-6 years now. 

You could always use a 0% credit card from MBNA. Pay a 1% transfer fee, min payment is 1% (goes to principal) and must be paid back in 15 months. The links are on RFD, finance section.


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