Personal Finance

Mortgage vs heloc

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Sep 13, 2003
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Mortgage vs heloc

just wondering what is a better way to go. Rates are the same. Trying to understand the differences. Mortgage you can get a higher amount but heloc is a lower amount they lend you. However with a heloc you have a loc which you can use.

What's everyone's personal preference and why.
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Jan 2, 2012
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What do you mean "rates are the same"? Variable rate mortgage these days you can get for around P-0.6 (2.4%). Lowest HELOC i've seen is P+0.5 (3.5%).

If you want the lowest rate possible and don't mind a fixed term and more restrictive prepayment privileges... get a mortgage.

If you want a more flexible prepayment schedule with no fixed term but don't mind a higher rate... get a HELOC.
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Jun 29, 2007
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aquariaguy wrote: just wondering what is a better way to go. Rates are the same. Trying to understand the differences. Mortgage you can get a higher amount but heloc is a lower amount they lend you. However with a heloc you have a loc which you can use.

What's everyone's personal preference and why.
"Mortgage you can get a higher amount but heloc is a lower amount they lend you."
Not sure what you mean by that. For instance, say the bank is willing to lend you $500k. You can borrow that amount in any combination of mortgage and/or heloc. In the extreme you can borrow $500k mortgage or $500k heloc, or anything in between as long as total doesn't exceed $500k..
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Speedy1 wrote: "Mortgage you can get a higher amount but heloc is a lower amount they lend you."
Not sure what you mean by that. For instance, say the bank is willing to lend you $500k. You can borrow that amount in any combination of mortgage and/or heloc. In the extreme you can borrow $500k mortgage or $500k heloc, or anything in between as long as total doesn't exceed $500k..
Yup, thats what I mean. Say for $500, let's say any combination of heloc + mtg. Is it better to get all HELOC?
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rob444 wrote: What do you mean "rates are the same"? Variable rate mortgage these days you can get for around P-0.6 (2.4%). Lowest HELOC i've seen is P+0.5 (3.5%).

If you want the lowest rate possible and don't mind a fixed term and more restrictive prepayment privileges... get a mortgage.

If you want a more flexible prepayment schedule with no fixed term but don't mind a higher rate... get a HELOC.
Both HELOC and Mtg are the same rates through TD. 5 year fixed 2.89%. I can get any combination of the two, or a slightly LOWER HELOC.
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Oct 31, 2003
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From what I understand, with a mortgage you can get 80% right away and pay principal and interest immediately. With a heloc, you can get the funds on-demand and then you are able to pay interest only payments.

Also from an investment point of view, its easier to use a heloc because it comes from a separate account and the interest payments are easier to expense.
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aquariaguy wrote: Both HELOC and Mtg are the same rates through TD. 5 year fixed 2.89%. I can get any combination of the two, or a slightly LOWER HELOC.
HELOC at 2.89%? I don't think so. Can you post the link to the site that shows the rate?
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Feb 29, 2008
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I've seen prime +0 for preferred rates on HELOCs. Not below prime.

The main advantage for HELOC, is that as you pay down the HELOC portion, you clear room for additional withdrawals. You also have the benefit of flexible repayment terms. The big disadvanatge is that their is NO obligation to pay for anything other than the interest. You can rapidly dig yourself into a hole.
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Feb 26, 2010
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My bank told me my heloc could only be given for up to 65% LTV....
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ayaz wrote: My bank told me my heloc could only be given for up to 65% LTV....
Up to 80% of the assessed value is possible with an appraisal.

You can actually segment a mortgage up to 5 ways, I.e. vraiablr portion, fixed portion, HELOC portion.
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rob444 wrote: HELOC at 2.89%? I don't think so. Can you post the link to the site that shows the rate?
It's through my TD mortgage specialist or whatever you call them.
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mr_raider wrote: Up to 80% of the assessed value is possible with an appraisal.

You can actually segment a mortgage up to 5 ways, I.e. vraiablr portion, fixed portion, HELOC portion.
The HELOC portion cannot exceed 65% LTV. If property is worth $500,000 then HELOC can only be $325,000 and the balance can be borrowed through mortgage. Only if the collateral mortgage was set up prior to September 2012 (I think), then the HELOC can be up to 80% LTV.

And yes, can we hear more about this 2.89% HELOC TD has?... Sounds too good to be true.
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Feb 26, 2010
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xtreemboarder wrote: The HELOC portion cannot exceed 65% LTV. If property is worth $500,000 then HELOC can only be $325,000 and the balance can be borrowed through mortgage. Only if the collateral mortgage was set up prior to September 2012 (I think), then the HELOC can be up to 80% LTV.

And yes, can we hear more about this 2.89% HELOC TD has?... Sounds too good to be true.
That's exactly what i was told, heloc max 65%, mortgage can go higher.

Also, last week td had a heloc offer of 2,34% fixed 2 years. I think they also had the same offer for mortgage.
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aquariaguy wrote: It's through my TD mortgage specialist or whatever you call them.
I think they haven't explained the HELOC properly to you. You can't get a HELOC at 2.89%. Unless it's a promotional rate that is only valid for a couple of months, then will go back to the regular variable HELOC rate (3.25 - 3.5%).

What they have probably explained to you is a combo mortgage/HELOC product. THe fixed rate mortgage portion is at 2.89%, but the HELOC rate will be higher. Ask them again for clarification.


xtreemboarder wrote: The HELOC portion cannot exceed 65% LTV. If property is worth $500,000 then HELOC can only be $325,000 and the balance can be borrowed through mortgage. Only if the collateral mortgage was set up prior to September 2012 (I think), then the HELOC can be up to 80% LTV.
Or if you go to a lender that is provincially regulated so doesn't fall under the federal OFSI rules (so basically any credit union), they can still offer full 80% LTV HELOCs.
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Mar 28, 2013
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Speedy1 wrote: "Mortgage you can get a higher amount but heloc is a lower amount they lend you."
Not sure what you mean by that. For instance, say the bank is willing to lend you $500k. You can borrow that amount in any combination of mortgage and/or heloc. In the extreme you can borrow $500k mortgage or $500k heloc, or anything in between as long as total doesn't exceed $500k..
Speedy never seen a 500k limitation. Does this apply to Ontario?
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xtreemboarder wrote: The HELOC portion cannot exceed 65% LTV. If property is worth $500,000 then HELOC can only be $325,000 and the balance can be borrowed through mortgage. Only if the collateral mortgage was set up prior to September 2012 (I think), then the HELOC can be up to 80% LTV.

And yes, can we hear more about this 2.89% HELOC TD has?... Sounds too good to be true.
Sorry.I have a pretty 2012 mortgage. You are right. 65% is now max.
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Gnucky wrote: Speedy never seen a 500k limitation. Does this apply to Ontario?
That $500k is just an example. Are you saying you didn't know it could be that high or the limit is only $500k? It can be higher than $500k. Mine is over $1 million and I could have taken all of it as a heloc. I don't think it matter where you are. There are other factors the bank considers.
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rob444 wrote: HELOC at 2.89%? I don't think so. Can you post the link to the site that shows the rate?
That's def a promotional rate, NOT the standard rate of the HELOC.
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Dec 5, 2009
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You are comparing apples to oranges really.

You use a mortgage to buy a house, then you borrow against that house (HELOC) to buy other stuff. But you can't buy your house with the HELOC.

And the 2.89% doesn't sound right so you should clarify that.
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fdl wrote: You are comparing apples to oranges really.

You use a mortgage to buy a house, then you borrow against that house (HELOC) to buy other stuff. But you can't buy your house with the HELOC.
I interpreted the question as coming from someone who already has their house fully paid off. If they then want to access their home equity, they can do so either by getting a mortgage or a HELOC (or both).

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