# Using Line of Credit to pay off Mortgage



## ltphung (Jun 10, 2010)

Has anyone used their line of credit to pay off some of their mortgage?

My mortgage right now is 3.85% for 5 years fixed. I've got 3 more years left of the 5 year term.

My line of credit is prime +1. I think prime right now is 1% right?

Can't I use my line of credit to pay off part of my mortgage?

Does anyone have any thoughts? Pros/Cons? How can I do this safely? 

Thanks!


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## CanadianCapitalist (Mar 31, 2009)

Prime is 3.0% right now. Prime + 1 would be 4%. Why would you want to pay more when you have a cheaper mortgage?


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## Four Pillars (Apr 5, 2009)

Yes, you can. I wrote about how I did it here:

http://www.moneyville.ca/article/980303--how-to-break-a-mortgage-and-not-pay-a-penalty

As CC noted, it doesn't make sense in your case.


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## andrewf (Mar 1, 2010)

3.85% is not a terrible rate. Next time, go with variable!


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## Jungle (Feb 17, 2010)

Besides that, talk to your lender. Everyone is doing prime + 0.50 % now. Banks are matching, but only if you ask.


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## Addy (Mar 12, 2010)

Jungle said:


> Besides that, talk to your lender. Everyone is doing prime + 0.50 % now. Banks are matching, but only if you ask.



3.5% for five yr fixed? I have yet to see it quite that low, unless you're talking 3 or 4 yr term.


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## Financial Cents (Jul 22, 2010)

If mortgage @ 3.85%, work on paying off mortgage vs. using LOC for mortgage @ 4%.

CC and Mike are right, prime is @ 3% now.

Bank of Canada lending rates are @ 1%.

http://www.bankofcanada.ca/rates/daily-digest/


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## Sampson (Apr 3, 2009)

Jungle said:


> Besides that, talk to your lender. Everyone is doing prime + 0.50 % now. Banks are matching, but only if you ask.


I was told that some are at prime, but I will follow up because it sounds too good to be true.


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## Jungle (Feb 17, 2010)

Sorry I was talking about HELOCs. Not mortgage rates.


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## marina628 (Dec 14, 2010)

i got a locked in 5 year mortgage at 3.49% in October 2010.BMO ran the offer first and then TD matched the offer for us.


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## Financial Cents (Jul 22, 2010)

Nice Marina!

We got about the same rate in December 2010. 

I'm still kinda kicking myself with the 5-year term, we could be saving quite a bit more with the variable. Still a good rate (fixed), but I've learned nobody has a friggin' clue where rates will be; might as well get the lowest rate whenever you can. Lesson learned.


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## slacker (Mar 8, 2010)

The others have already done price comparison. But a line of credit is much more flexible than a mortgage. That means you can pay it off quicker or slower, depending on your circumstance.


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## RetireYoung (Jun 29, 2011)

I had my HELOC rate at TD Bank reduced from Prime+1% (the rate than most banks unilaterally increased their rates to, justified by the low interest rate environment). They reduced it to Prime+0.25% about 3 months ago. I tried hard for Prime+0% with my good credit and history at the bank, but this was the lowest I could get. The main point is that there are better deals to be had on HELOC rates than Prime+1% (where many people are at today) and even better than Prime+0.5%.


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