# HELOC Mortgage Shopping



## amitdi (May 31, 2012)

Hi,
What have been your experiences with shopping for a home loan using the Smith Manoeuvre ?

* you have to negotiate 2 interest rates, right? the mortgage rate and the HELOC rate?
* Can I not just get a mortgage from one plan and HELOC from another?
* With HELOC, will I be able to switch lenders for the mortgage part of the loan?
* Do HELOCs always come with collateral charge?
* Apart from a broker, should I also apply to banks and CUs? how many?
* What window do I have to apply within so as not to affect my credit score? I have heard 2 weeks, 8 weeks, etc. any authentic info?


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## Eclectic12 (Oct 20, 2010)

For my HELOC, the mortgage part was the only one that there seemed room for negotiation on rates. Checking with a couple of other institutions showed the HELOC rate as better (plus the HELOC at that point was "nice to have") so I didn't sweat it.

The market is always changing ... but I doubt two different institutions would want to have to sort out claims ... should the mortgage/HELOC go south.

As for switching just the mortgage lender ... again, I doubt any institution would want this complicated a setup.

As for collateral charge ... mine didn't. The mortgage/HELOC were arranged at the same time - no fees for the mortgage or the HELOC.
My understanding is the collateral charge is more about tying you to the financial institution so I'd try to avoid it ... but I'm not familiar with it.
http://www.canadianmortgagetrends.c...-takes-heat-for-its-collateral-mortgages.html

As for where else to apply ... it's up to you and how much time you have. I reviewed the five proposals from the mortgage broker and spot checked using the internet and left it at that.

No idea on the credit scores.

Cheers


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## Mortgage u/w (Feb 6, 2014)

* you have to negotiate 2 interest rates, right? the mortgage rate and the HELOC rate?
- Yes. If you choose a multiple product HELOC, you negotiate a rate for each product. Usually LOCs will be at prime plus 0.50% but can vary from 0% to +4% when tied to your home.

* Can I not just get a mortgage from one plan and HELOC from another?
- Not sure I understand the question but if you mean from 2 lenders, then it can get tricky and not recommended. Most lenders will not allow these products in second lien position. It will also be more costly and complicated when it comes time to discharge the liens. Stick to one product such as a STEP from Scotia, for example, which you can hold as much as 6 different products within the one product. Its one global lien and you have lots of flexibility. Common set-up is as follows: $500k property value will give you a $400k global mortgage (80% of value). You can split that $400k as you wish such as $300k fixed mortgage and $100k LOC or $400k fixed, or $400k LOC or a different combo amount; as mentioned, up to 6 products to make up the $400k. The LOC portion is always re-usable.

* With HELOC, will I be able to switch lenders for the mortgage part of the loan?
- Not free of charge. Title fees will apply. You cannot Switch HELOCs.

* Do HELOCs always come with collateral charge?
- Yes.

* Apart from a broker, should I also apply to banks and CUs? how many?
- A good broker is all you really need unless you have lots of time on your hands. 

* What window do I have to apply within so as not to affect my credit score? I have heard 2 weeks, 8 weeks, etc. any authentic info? 
- Too many variables will affect credit scores so hard to say. Usually, inquiries from banks do not affect much. Another advantage of working with a broker is that only 1 credit bureau is pulled which can then be presented to a multitude of lenders if needed.


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## amitdi (May 31, 2012)

Thanks to Eclectic12 and Mortgage u/w

I think I am pretty good. I think I agree, keeping it simple at one place. Because I guess I will have lot more things to worry about (investments, etc). But just some followup thought.

* With HELOC, will I be able to switch lenders for the mortgage part of the loan?
- Not free of charge. Title fees will apply. You cannot Switch HELOCs.
[amitdi]: Not that I plan to, but if I switch mortgage and not HELOC, doesnt that become the case of loan from 2 places.


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## Mortgage u/w (Feb 6, 2014)

amitdi said:


> Thanks to Eclectic12 and Mortgage u/w
> 
> I think I am pretty good. I think I agree, keeping it simple at one place. Because I guess I will have lot more things to worry about (investments, etc). But just some followup thought.
> 
> ...


Lets not confuse products because the answers will vary greatly:
You can have a HELOC, you can have a Mortgage and you can have a product such as a STEP from Scotia which is a combination of products. A STEP can contain a combination of Mortgages and HELOCs (up to six products). If you have a product such as a STEP, no products under that umbrella can be Switched. Its all or nothing. If you have a regular mortgage and that's it, most of them can be Switched free of charge at maturity. If you have a HELOC, those cannot be Switched. In order to have 2 products from 2 different lenders, you will have to get a standard Mortgage which will be registered in 1st lien and then you will need to find another lender such as Manulife which can register a HELOC in 2nd lien. Since we were using Scotia as an example, their STEP product can only be registered in 1st lien....you will have no need for a 2nd lien product elsewhere when you have a product such as a STEP. See other lenders....they all have similar products to the STEP which they each have their own name for it. Some are better than others but Scotia is one of the better ones. Hope this helps.


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## amitdi (May 31, 2012)

Mortgage u/w said:


> Lets not confuse products because the answers will vary greatly:
> You can have a HELOC, you can have a Mortgage and you can have a product such as a STEP from Scotia which is a combination of products. A STEP can contain a combination of Mortgages and HELOCs (up to six products). If you have a product such as a STEP, no products under that umbrella can be Switched. Its all or nothing. If you have a regular mortgage and that's it, most of them can be Switched free of charge at maturity. If you have a HELOC, those cannot be Switched. In order to have 2 products from 2 different lenders, you will have to get a standard Mortgage which will be registered in 1st lien and then you will need to find another lender such as Manulife which can register a HELOC in 2nd lien. Since we were using Scotia as an example, their STEP product can only be registered in 1st lien....you will have no need for a 2nd lien product elsewhere when you have a product such as a STEP. See other lenders....they all have similar products to the STEP which they each have their own name for it. Some are better than others but Scotia is one of the better ones. Hope this helps.


Got it. Thank s for the detailed explanation.


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