Real Estate

HELOC - Not sure which to go with...help please!

  • Last Updated:
  • Mar 30th, 2017 11:46 am
[OP]
Newbie
May 20, 2007
16 posts
1 upvote
Whitby

HELOC - Not sure which to go with...help please!

I'll try to summarize. Hoping for advice, I'm not very good with this stuff. The wife and I want to get a HELOC. We have a current mortgage with a non-big bank up for renewal in July 2017 (I use a broker). Option 1) I saw CIBC offers HELOC's even if you don't have your mortgage with them, so they offered me Prime +.5 which I guess is pretty standard. There is a promo of Prime -.5 for the first 6 months. I don't bank with CIBC day-to-day. I checked with TD, but their rates are crazy. Option 2) Spoke to my broker. He suggests breaking my current mortgage, and locking in on a new one with a HELOC product attached to it. He said this will kill two birds with one stone because it locks me in at today's rates, as he's pretty sure they will be higher when I'm set to renew. He could get me a mortgage with a HELOC product at the same rate as CIBC of prime +.5. He could probably lock my mortgage in at 2.69% or 2.79% now. I questioned why this is higher than what we are seeing elsewhere in mortgage rates currently which is about 2.49%. He said that's the rate for a mortgage with the HELOC product attached to it.

So. Based on this I don't know whether I should go with CIBC or break my mortgage to lock in a lower mortgage rate now, and get a HELOC at the same time. The penalty to break my current mortgage is probably $2500, but if the ongoing mortgage rate will be cheaper its probably worth it. CIBC also wants to take a crack at my mortgage business when it's time to renew, so I'm thinking they will offer me a good rate...but who knows what that will be at that time. Any thoughts or words of wisdom? If I go CIBC am I limiting my options to get a mortgage elsewhere if I have a HELOC under them?

Thanks in advance from a guy that doesn't know who to listen to!!!
7 replies
Deal Addict
Feb 2, 2014
3564 posts
603 upvotes
Toronto
aj_blade wrote:
Dec 14th, 2016 4:43 pm
I'll try to summarize. Hoping for advice, I'm not very good with this stuff. The wife and I want to get a HELOC. We have a current mortgage with a non-big bank up for renewal in July 2017 (I use a broker). Option 1) I saw CIBC offers HELOC's even if you don't have your mortgage with them, so they offered me Prime +.5 which I guess is pretty standard. There is a promo of Prime -.5 for the first 6 months. I don't bank with CIBC day-to-day. I checked with TD, but their rates are crazy. Option 2) Spoke to my broker. He suggests breaking my current mortgage, and locking in on a new one with a HELOC product attached to it. He said this will kill two birds with one stone because it locks me in at today's rates, as he's pretty sure they will be higher when I'm set to renew. He could get me a mortgage with a HELOC product at the same rate as CIBC of prime +.5. He could probably lock my mortgage in at 2.69% or 2.79% now. I questioned why this is higher than what we are seeing elsewhere in mortgage rates currently which is about 2.49%. He said that's the rate for a mortgage with the HELOC product attached to it.

So. Based on this I don't know whether I should go with CIBC or break my mortgage to lock in a lower mortgage rate now, and get a HELOC at the same time. The penalty to break my current mortgage is probably $2500, but if the ongoing mortgage rate will be cheaper its probably worth it. CIBC also wants to take a crack at my mortgage business when it's time to renew, so I'm thinking they will offer me a good rate...but who knows what that will be at that time. Any thoughts or words of wisdom? If I go CIBC am I limiting my options to get a mortgage elsewhere if I have a HELOC under them?

Thanks in advance from a guy that doesn't know who to listen to!!!
Your broker may just be saying that do make $$$...same with CIBC.

What is your current rate? How much is the mortgage balance? And what is the penalty (don't guess, call up your lender and ask)?

If your mortgage is set to renew in July, you can get an approval (and rate hold) in March. Not sure how much more rates will rise in Q1 2017...might be smart to wait.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
Sr. Member
User avatar
Sep 19, 2013
790 posts
194 upvotes
Winnipeg
I know its a cliche but its difficult to decide with uncertain future. I would go for only the HELOC now. That way I can have lenders pitch for my mortgage business later and also you will have a choice. If you lock now, you are stuck. Its not like you are locking at the same rate, you *are* paying a premium. Yes, there is a downside that all rates maybe higher later, but given the situation I will take that risk and will live with it.
[OP]
Newbie
May 20, 2007
16 posts
1 upvote
Whitby
Hi Kevin - Thanks! My current rate is 3.09%. The balance is $305K. The penalty is $2300. I'm starting to think I'll go to CIBC to get their HELOC at Prime +.5 (After the initial promo which is Prime -.5). That way, I know CIBC will want my mortgage and will likely play ball and be competitive, and also my broker will be competitive to keep my business. That's my thoughts anyway, do you think this is wise?
[OP]
Newbie
May 20, 2007
16 posts
1 upvote
Whitby
Thanks Amit! :-) I think I'm leaning in that direction.
Deal Addict
Feb 2, 2014
3564 posts
603 upvotes
Toronto
aj_blade wrote:
Dec 15th, 2016 2:25 pm
Hi Kevin - Thanks! My current rate is 3.09%. The balance is $305K. The penalty is $2300. I'm starting to think I'll go to CIBC to get their HELOC at Prime +.5 (After the initial promo which is Prime -.5). That way, I know CIBC will want my mortgage and will likely play ball and be competitive, and also my broker will be competitive to keep my business. That's my thoughts anyway, do you think this is wise?
Do you need to draw from the HELOC now? If not, why not just wait and set the HELOC up with the mortgage in July?
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
Newbie
Nov 15, 2007
26 posts
Toronto
prime +0.5% seems little high.
I saw from previous post, ppl were getting prime +0.2% or even at prime.
Not sure if these rates still available?
Deal Addict
User avatar
Feb 16, 2004
1427 posts
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York Region
zzeuss wrote:
Mar 20th, 2017 12:59 pm
prime +0.5% seems little high.
I saw from previous post, ppl were getting prime +0.2% or even at prime.
Not sure if these rates still available?
These rates are not available. I am shopping for HELOC now and most banks offer prime +.5% or even 1%.

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