# Secured Line of Credit - What is a good rate?



## andrewrmunro (Mar 27, 2013)

What is a good rate for a secured line of credit these days?

Could I get something at Prime, or P-0.5?
I dont want to pay lots of money to get it setup either. I already have an unsecured line of credit at P+3% which I would get rid of if I could get secured line of credit setup for under $200 if not free.
My home is worth $500,000 with a $260,000 mortgage.
Is this something that can be found?

My wife has a variable income so looking to use this to help when needed which shouldnt be much.


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## OptsyEagle (Nov 29, 2009)

Without giving them some other business, not a chance. Expect prime plus 1% and if they think you are just going to leave it for future use (with nothing currently in mind) they will demand the set up fees.

Also, I would expect the only one willing to give you the best rate is the bank who currently has the 1st mortgage on it already, since the others would need to take a 2nd mortgage position. That in itself will kill your ability to use competition in your favour, so I would not hold out hope for the rates you posted.

Since I have been surprised before, let me know if I am wrong. Good luck.


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## andrewrmunro (Mar 27, 2013)

My mortgage is coming up for renewal. What secured rate could I get if I offered to bring my $260k mortgage with me?


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## larry81 (Nov 22, 2010)

andrewrmunro, i suggest you print the ratehub mortgage page for your own city and ask simply ask your bank to match the best offer.

I suggest you get a HELOC, rate should between P+0 and P+1 

http://www.ratehub.ca/best-mortgage-rates


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## OptsyEagle (Nov 29, 2009)

andrewrmunro said:


> My mortgage is coming up for renewal. What secured rate could I get if I offered to bring my $260k mortgage with me?


Now you are talking their language. I doubt you will ever see anything on a HELOC below prime but you might be able to negotiate to something slightly lower then prime + 1%. If you do, ask them to give you a 5 year guarantee on that rate. Remember, they can offer you a rate today and as soon as they have the 1st mortgage, increase it tomorrow and you are pretty much snookered.

Also, I don't know if you have a current plan to use the HELOC but you need to give the impression that you are about to borrow heavily on it. A line of credit with a zero balance has no value to them and hence they will resist giving you any value for it. You see what I mean.

Good luck. Let us know how it turns out.


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## 1980z28 (Mar 4, 2010)

This is my rate from today,cibc

Interest Rate: CIBC Prime 1 @ 2.85% -0.01%


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## newfoundlander61 (Feb 6, 2011)

I also have a secured LOC with CIBC, just checked.

Interest Rate: CIBC Prime 1 @ 2.85% +1.0% = 3.85%


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## Eclectic12 (Oct 20, 2010)

OptsyEagle said:


> ... If you do, ask them to give you a 5 year guarantee on that rate.
> Remember, they can offer you a rate today and as soon as they have the 1st mortgage, increase it tomorrow and you are pretty much snookered.


Are there reports of this happening?

My HELOC was setup when I started the mortgage and has been running a couple of years after the mortgage was retired. It has been steady until the prime rate was dropped, which meant my HELOC rate dropped as well.



OptsyEagle said:


> ... Also, I don't know if you have a current plan to use the HELOC but you need to give the impression that you are about to borrow heavily on it. A line of credit with a zero balance has no value to them and hence they will resist giving you any value for it...


Maybe it was because I went through a mortgage broker ... but I explicitly told the broker I had no plans for it. It wasn't until about a year and a half later that I used it.


Cheers


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## OptsyEagle (Nov 29, 2009)

Eclectic12 said:


> Are there reports of this happening?
> 
> My HELOC was setup when I started the mortgage and has been running a couple of years after the mortgage was retired. It has been steady until the prime rate was dropped, which meant my HELOC rate dropped as well.
> 
> ...


I have no idea if they increase the rates very often, I am just trying to think like a banker. I know they all did it during the credit crisis. Most HELOCs were at prime and most banks moved them to prime plus 1% in 2009. In this case, once they have the 1st mortgage, the ability for other banks to compete on the HELOC is diminished. Not eliminated but diminished, since the new bank needs to take a 2nd position to the bank with the 1st mortgage. 

The broker is different then talking directly to a banker. If you want the bank to pay set up fees and house appraisal costs, they have to believe that there is something in it for the bank, other then just an expense. A LOC that is never used, is of no value to them. They would have lots of those types of LOC on the books, so I suggest the OP give the impression that they will be borrowing on it immediately.

None of this might matter, but it can't hurt. All just my opinion.


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## uptoolate (Oct 9, 2011)

Mine is currently 2.85 at TD.


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## OptsyEagle (Nov 29, 2009)

uptoolate said:


> Mine is currently 2.85 at TD.


When did you get it?


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## Eclectic12 (Oct 20, 2010)

OptsyEagle said:


> I have no idea if they increase the rates very often, I am just trying to think like a banker.
> I know they all did it during the credit crisis. Most HELOCs were at prime and most banks moved them to prime plus 1% in 2009.


Interesting ... I will have to check when mine was created. I recall that it was before the main part of the credit crisis hit (i.e. 2008).

I didn't start using it until around Mar 2009 - where from the date created until today, the only changes have been to drop the interest rate charged, in line with how prime was dropping. It would seem that the terms when it was created have stayed in effect, despite retiring the mortgage.




OptsyEagle said:


> ... A LOC that is never used, is of no value to them. They would have lots of those types of LOC on the books, so I suggest the OP give the impression that they will be borrowing on it immediately.


With the amount of debt, I'm thinking there are lots of people who are using their LOC ... but without stats, my impression may not be the case.

IAC, it likely won't hurt to give the impression it will be used.


Cheers


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## OptsyEagle (Nov 29, 2009)

Eclectic12 said:


> With the amount of debt, I'm thinking there are lots of people who are using their LOC ... but without stats, my impression may not be the case.
> 
> IAC, it likely won't hurt to give the impression it will be used.
> 
> ...


I have no stats as well, but I know my LOC is empty. My main point is that a bank will need to pay some 1st mortgage registration costs at the Land Registry Office to register the lien and most likely would want the house appraised, depending on the loan to value ratio applied for. If a person was going to borrow $100,000 tomorrow on their new LOC, the bank can easily see the profit involved and negotiating away these set up costs should be simply a matter of asking. If you are just setting it up so MAYBE in the future you might use it to pay off something that you might have put on a higher interest rate credit card with them, it is going to be hard for the banker to sell, paying these expenses, to their boss.

That's all I was saying.

I can't speak for anyone's rate of interest. Depending on their negotiating skills and other business with the bank they may get a better rate then prime plus 1% (which is the listed rate these days), but I would ask them to verify it before they list it here, since they may not notice a change that might have occurred in the past.

Prime minus 1%, as someone mentioned above, seems hard to believe. That rate is 1.85% today. If any of this money came from a high interest savings account, the cost to the bank would be 1%. Assuming they are blending their savings accounts with their chequing accounts (paying nothing), I suspect their interest costs to be around 0.75 %. That leaves 1.10% interest margin. From there they need to pay the costs of delinquencies (mostly the foreclosure and legal costs, since I doubt they lose much on the loan itself with these HELOCs) and operational costs. With all those costs, I cannot see much profit left for the bank, at that rate of interest.

So that person must have a lot of business with this bank or they are also not keeping up with the new interest rates being charged.

Anyway, none of what I said comes from banking experience. Just simple math, and I cannot be sure I have all the moving numbers, so it all is just my opinion.


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## uptoolate (Oct 9, 2011)

OptsyEagle said:


> When did you get it?


I think that I have had it since about 2004. It used to be P -0.25 or -0.50 but it hasn't been below bank prime since 2009. I have only used it twice and for relatively small amounts and short times.


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## valuemortgage (Mar 4, 2015)

TD recently came up with a new Heloc product, and the rate being offered was P+0%. This was only available at branches, and mortgage brokers could not get it. National Bank has P+0% for professionals in certain fields.


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## KevinWaterloo (Mar 5, 2015)

I just re-negotiated my secured line-of-credit with Scotiabank. I am using the LOC for investment purposes only. When I set it up originally in the mid 2000's the rate was prime - 0.75%. It was slowly raised to prime + 0.75% after the 2008 crisis. I was able to get it back to prime by moving more of my business to Scotiabank.


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## tiffbou2 (Jul 4, 2013)

valuemortgage said:


> TD recently came up with a new Heloc product, and the rate being offered was P+0%. This was only available at branches, and mortgage brokers could not get it. National Bank has P+0% for professionals in certain fields.


I just got this, P+0%. I have my mortgage with TD. In January, they were offering a $1000 rebate to set it up too. So we paid $700 to get it set up, but got $1000 back so we actually MADE money setting it up. The person who set it up for us was a manager and personal friend - he said he'd never seen them offer that before. But maybe they will again in the future.


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## 0xCC (Jan 5, 2012)

tiffbou2 said:


> The person who set it up for us was a manager and personal friend - he said he'd never seen them offer that before. But maybe they will again in the future.


I'm pretty sure that before the 2008 meltdown P+0% for HELOCs were fairly common. I am not able to look up my old paperwork at the moment but I think it was sometime in early-mid 2009 that our TD HELOC switched from P+0% to P+1%.


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## OptsyEagle (Nov 29, 2009)

Prime plus 0% and $300 cash for your trouble sounds pretty sweet.

OxCC. Yes, it was right in 2009 where all the banks raised the rates on their HELOCs. I suspect competition has probably moved into this space, by now (6 years later), and getting them at prime, is probably a little more doable. With interest rates where they are I cannot see minus percentages with prime, but I am willing to be surprised.

Myself, I will worry about it when it comes time that I might want to borrow on it. I can't see that time coming but if it does, you can be sure they are not going to get their extra 1% from me.


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## uptoolate (Oct 9, 2011)

A can't imagine that a bank is charging anyone $700 to setup up a HELOC. Well I can imagine it but I can't imagine anyone actually paying it.


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## OptsyEagle (Nov 29, 2009)

uptoolate said:


> A can't imagine that a bank is charging anyone $700 to setup up a HELOC. Well I can imagine it but I can't imagine anyone actually paying it.


I think it goes over a lot better when they hand you a $1000 to pay for it. lol.

I agree, no one would pay that, so I suspect a little shell game is going on, but at the end of the day, he found prime plus 0% AND $300 under the shell he picked, so I doubt he will complain.


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## uptoolate (Oct 9, 2011)

No in the end a great deal! Kudos!


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## 1980z28 (Mar 4, 2010)

????


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## tiffbou2 (Jul 4, 2013)

0xCC said:


> I'm pretty sure that before the 2008 meltdown P+0% for HELOCs were fairly common. I am not able to look up my old paperwork at the moment but I think it was sometime in early-mid 2009 that our TD HELOC switched from P+0% to P+1%.


Nope. This was just this past January.



uptoolate said:


> A can't imagine that a bank is charging anyone $700 to setup up a HELOC. Well I can imagine it but I can't imagine anyone actually paying it.


According to paperwork, $300 of that was house appraisal fee, and $400 was "in house registration fee". But again, $1000 rebate.



OptsyEagle said:


> I think it goes over a lot better when they hand you a $1000 to pay for it. lol.
> 
> I agree, no one would pay that, so I suspect a little shell game is going on, but at the end of the day, he found prime plus 0% AND $300 under the shell he picked, so I doubt he will complain.


*She* is not complaining.


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## heyjude (May 16, 2009)

I got a HELOC from TD when I bought my present home in 2009. The interest rate was prime + 1% but I have since negotiated it down to prime + 0.5 % because I do a lot of business with them. I paid off the balance after selling my previous home and have only used the HELOC a couple of times since, to pay for renovations. Currently the balance is $0. I like to keep it open as an emergency fund, rather than holding a lot of cash with a negative real return.


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## sags (May 15, 2010)

TD Bank changed all their convention mortgages to collateral charges, and include the HELOC as a mortgage lien on the home.

This can have implications that most people don't understand.

Garth Turner has written several blogs about the effects of collateral mortgages. 

http://www.greaterfool.ca/2010/10/25/pricks/ (October 2010)

http://www.greaterfool.ca/2013/01/29/what-a-deal/ (January 2013)

http://www.greaterfool.ca/2014/01/22/surprise-8/ (January 2014)


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## valuemortgage (Mar 4, 2015)

Collateral charges have a purpose, and for certain clients in certain situations, they may actually save you money. Having said that, there is no such a thing as "one size fits all", so clients need to be educated on the subject. Not for everyone, but they are not evil.


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## Letran (Apr 7, 2014)

wait... are there actually HELOC's that are prime or prime minus?

Mine are all with RBC and they are all prime +.05 I have been told I could negotiate better (by my own RBC mortgage specialist) but she said I have to talk to the branch. When I did get around to asking I was told it was the industry lowest and cannot go lower. Since they are all empty I did not care so much. 

Now that I might use it (maybe) I would be very interested to know. Who? what? and where? and how? Do I need to put the boxing gloves on and head to the bank?


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## andrewrmunro (Mar 27, 2013)

What about the rates at PC Financial? Does anyone have a secured line of credit at PCF? 
Anyone have luck getting the $150 setup fees waived as well?


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## valuemortgage (Mar 4, 2015)

Letran said:


> wait... are there actually HELOC's that are prime or prime minus?


Will be next to impossible to get something like this, today. In the past, people were offered P- something and kept those products. Currently, the ongoing rate is P+.50%.


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## carverman (Nov 8, 2010)

OptsyEagle said:


> I
> The broker is different then talking directly to a banker. *If you want the bank to pay set up fees and house appraisal costs, they have to believe that there is something in it for the bank*, other then just an expense. A LOC that is never used, is of no value to them. They would have lots of those types of LOC on the books, so I suggest the OP give the impression that they will be borrowing on it immediately.


+1 ^ I had one for a while with CIBC and it was just to have an extra $20k available in case need to take my divorce case to appeal court in Toronto. The CIBC branch I was dealing with would only go up to $10K
with a unsecured LOC because of my monthly commitments at the time..legal fees/spousal and child support
that ended up eating up 75% of my take home pay.

In the end, I never used it and cancelled it about a year later. I don't remember if there was an appraisal fee as the amount that I wanted to borrow was probably low enough that the value of my house was well above that.. around $160K at the time in my particular "working class" neighbourhood,
where prices are traditionally low anyway. 

However, the bank put a lien against my house for the HELOC, and when I went to cancel it, they charged me about $100 to lift the Lien and cancel the HELOC. 

Their rate at the time was only about 1 to 1.5% less than what I could get with an unsecured LOC,
so in the end it wasn't worth it to me since I never used it, but if I had needed it, it was setup for me.


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## OptsyEagle (Nov 29, 2009)

Carverman, I cannot say for sure, but your case sounds like where the bank is issuing an "unsecured" line of credit and then just attaches it to the house for a little extra security for them. Usually in those cases the interest rate is offered as if there is no security at all and the house is just a little bonus for them. It would be incredibly rude to charge you for appraisals and since the LOC was already priced for no security at all, they probably don't bother even appraising it. As for the set up fee. That would also be rude to charge, since again, the home lien should not be necessary for the loan. It is even a little rude to charge the discharge fee, but my experience with financial companies is they tend to direct a lot of rudeness when you are discontinuing their business, as compared to when you are just setting it up.


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## carverman (Nov 8, 2010)

OptsyEagle said:


> As for the set up fee. That would also be rude to charge, since again,* the home lien should not be necessary for the loan.* It is even a little rude to charge the discharge fee, but my experience with financial companies is they tend to direct a lot of rudeness w*hen you are discontinuing their business, as compared to when you are just setting it up*.


I don't remember any setup fee charged when they set up the "secured LOC " for me, but when I decided to cancel the secured LOC (to switch to PCF), they advised me in writing that there was a cancellation fee
and charged my checking account, to pay their lawyer to lift the lien. 

I was annoyed and went back to see the branch manager to get the lien discharge papers, and told them I would never do any further business with CIBC as I was never advised upfront that any fees would be charged.

Since they were charging me $$ a month for my checking account, (which included the cancelled checks returned) I had already decided to leave them and paid off my mortgage with them. I was fed up with CIBC at that point as they
were just gouging me, IMO.
Left them in 1996 to go with PCF who don't charge any fees for maintaining an account. Been with PCF ever since. 

I guess, that is the benefit of a virtual bank..they don't have any local branch offices with rent and part time staff,
so you save on those monthly fees that other banks charge.


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## 0xCC (Jan 5, 2012)

You may find this funny or you may not; moving from CIBC to PCF means you didn't change where your money is ultimately held, your money is still held at CIBC. (Read the last line of this page: http://www.banking.pcfinancial.ca/m...pcf-en.html?region=ON&language=en&signinop=OB)


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## Eclectic12 (Oct 20, 2010)

0xCC said:


> I'm pretty sure that before the 2008 meltdown P+0% for HELOCs were fairly common. I am not able to look up my old paperwork at the moment but I think it was sometime in early-mid 2009 that our TD HELOC switched from P+0% to P+1%.


I recall being offered P-1.0% ... but that was around 2006. In mid-2008, it was more like P+1.0%.


Cheers


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## simarbhalla (Oct 22, 2020)

andrewrmunro said:


> What is a good rate for a secured line of credit these days?
> 
> Could I get something at Prime, or P-0.5?
> I dont want to pay lots of money to get it setup either. I already have an unsecured line of credit at P+3% which I would get rid of if I could get secured line of credit setup for under $200 if not free.
> ...


Check out with Home Trust Secured Visa card because it provides the best rate for a secured line of credit.


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