Real Estate

Decision for HELOC - PCF vs. CIBC

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Decision for HELOC - PCF vs. CIBC

Hey guys. Wasn't sure if I should start a new thread as there's a few HELOC threads I've posted in, but thought I would start a new one as it's slightly different topic. Just looking for some thoughts. We are planning a big reno this year and looking to set a HELOC up pretty soon.

So I've narrowed it down to a couple of choices.

PCF @ p+.5 and $150 in fees.

CIBC @ p-.5 until November 2017 and p+.5 after that. Appraisal fees waived ($320). I'll save on legal fees ($510) due to the promotional rate until Nov based on say a $100k HELOC.

So basically the CIBC route seems the best way if we set it up now. Both wife and I self-employed and it seems that CIBC might be easier to deal with us as they go by stated income and didn't require NOA's.

Any reason why PCF would be a better choice regardless?

Thanks in advance.
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Aggy wrote: Hey guys. Wasn't sure if I should start a new thread as there's a few HELOC threads I've posted in, but thought I would start a new one as it's slightly different topic. Just looking for some thoughts. We are planning a big reno this year and looking to set a HELOC up pretty soon.

So I've narrowed it down to a couple of choices.

PCF @ p+.5 and $150 in fees.

CIBC @ p-.5 until November 2017 and p+.5 after that. Appraisal fees waived ($320). I'll save on legal fees ($510) due to the promotional rate until Nov based on say a $100k HELOC.

So basically the CIBC route seems the best way if we set it up now. Both wife and I self-employed and it seems that CIBC might be easier to deal with us as they go by stated income and didn't require NOA's.

Any reason why PCF would be a better choice regardless?

Thanks in advance.
Do you have a first mortgage on the property (or do you own it free and clear)? If so, who is your current mortgage lender?
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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CdnRealEstateGuy wrote: Do you have a first mortgage on the property (or do you own it free and clear)? If so, who is your current mortgage lender?
Mortgage is with rmg.
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So anything borrowed by November will have that prime - .5% locked in?
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alanbrenton wrote: So anything borrowed by November will have that prime - .5% locked in?
Yeah. It's on their website iirc.
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Just came back from PCF. I got the answers I wanted, but came home with more questions ;)

I should have no problem getting a HELOC, but they gave me another option. Since I was looking for 100k, I could refinance our mortgage at 100k more and have immediate access to the funds. Our goal is to pay off the 100k in 10 years. He gave a 5 year variable at 2.3 (possiblly 2.2). I have a current rate with RMG at 1.95 with 3 years left so I'd have to do some math and see which is better - refinance or just get a HELOC.

They also said I could refinance and apply for a HELOC and avoid the $150 appraisal charge. That way I could always have the HELOC for emergency after paying off the 100k.

Grrr...I'm more confused now.
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Aggy wrote: Just came back from PCF. I got the answers I wanted, but came home with more questions ;)

I should have no problem getting a HELOC, but they gave me another option. Since I was looking for 100k, I could refinance our mortgage at 100k more and have immediate access to the funds. Our goal is to pay off the 100k in 10 years. He gave a 5 year variable at 2.3 (possiblly 2.2). I have a current rate with RMG at 1.95 with 3 years left so I'd have to do some math and see which is better - refinance or just get a HELOC.

They also said I could refinance and apply for a HELOC and avoid the $150 appraisal charge. That way I could always have the HELOC for emergency after paying off the 100k.

Grrr...I'm more confused now.
Sounds like a pretty easy decision...

If you have the equity, and it will cost the same or less in refi fees, then go with the mortgage. Would you prefer to carry 100K for 10 years @ 3.2% or at 2.3%?

If you were planning to repay the 100K in a shorter time like 6mo to a year, it might make sense to have the flexibility of. HELOC... Doesn't make sense to carry it for 10 years imo
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Aggy wrote: Just came back from PCF. I got the answers I wanted, but came home with more questions ;)

I should have no problem getting a HELOC, but they gave me another option. Since I was looking for 100k, I could refinance our mortgage at 100k more and have immediate access to the funds. Our goal is to pay off the 100k in 10 years. He gave a 5 year variable at 2.3 (possiblly 2.2). I have a current rate with RMG at 1.95 with 3 years left so I'd have to do some math and see which is better - refinance or just get a HELOC.

They also said I could refinance and apply for a HELOC and avoid the $150 appraisal charge. That way I could always have the HELOC for emergency after paying off the 100k.

Grrr...I'm more confused now.
So PCF is offering a 2nd mortgage or are you breaking your mortgage with RMG?
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Szharkov wrote: So PCF is offering a 2nd mortgage or are you breaking your mortgage with RMG?
Yes one option is break with rmg and refinance with pcf. . At this point we are thinking if just going with a heloc. I may or may not need 100k for the Renos so no point in paying interest for something we don't need.
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Aggy wrote: Yes one option is break with rmg and refinance with pcf. . At this point we are thinking if just going with a heloc. I may or may not need 100k for the Renos so no point in paying interest for something we don't need.
if the mortgage terms have enough pre-payment option, then you can just pay back whatever amount you don't need right away.
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Aggy wrote: Yes one option is break with rmg and refinance with pcf. . At this point we are thinking if just going with a heloc. I may or may not need 100k for the Renos so no point in paying interest for something we don't need.
What are the pre-payment penalties like with RMG?
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Aggy wrote: Just came back from PCF. I got the answers I wanted, but came home with more questions ;)

I should have no problem getting a HELOC, but they gave me another option. Since I was looking for 100k, I could refinance our mortgage at 100k more and have immediate access to the funds. Our goal is to pay off the 100k in 10 years. He gave a 5 year variable at 2.3 (possiblly 2.2). I have a current rate with RMG at 1.95 with 3 years left so I'd have to do some math and see which is better - refinance or just get a HELOC.

They also said I could refinance and apply for a HELOC and avoid the $150 appraisal charge. That way I could always have the HELOC for emergency after paying off the 100k.

Grrr...I'm more confused now.
PCF is just trying to sell you a mortgage over a HELOC. Plus their 2.30% 5-year variable isn't that great of a rate.

If you have the Low Rate Basic Mortgage with RMG, the penalty is going to be 3% of the outstanding balance. I would call RMG and find out the penalty and then to the math to see what option is the best.
Kevin Somnauth, CFA
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For the CIBC HELOC, is it a matter of just of setting an appointment at any CIBC location to discuss and apply?

https://www.cibc.com/en/personal-bankin ... redit.html


I just called the number provided and was told the interest was Prime + 1% if I don't have the mortgage with CIBC but the website says I don't need to have one to get that promotional Prime - 1/2%. I was told the offer is likely going to be honored at the branch level.

I'll just bring the property tax assessment and two ID's just in case.


====
Edit:

I called the closest branch and set up an appointment for Saturday. Hopefully the advisor will give me a call before then to let me know what documents my wife and I need to bring..
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alanbrenton wrote: For the CIBC HELOC, is it a matter of just of setting an appointment at any CIBC location to discuss and apply?

https://www.cibc.com/en/personal-bankin ... redit.html


I just called the number provided and was told the interest was Prime + 1% if I don't have the mortgage with CIBC but the website says I don't need to have one to get that promotional Prime - 1/2%. I was told the offer is likely going to be honored at the branch level.

I'll just bring the property tax assessment and two ID's just in case.


====
Edit:

I called the closest branch and set up an appointment for Saturday. Hopefully the advisor will give me a call before then to let me know what documents my wife and I need to bring..
This what they emailed me to bring should I wish to apply:

I will need the following from you:
· 2 pieces of ID for you and your wife (e.g: Driver’s License and SIN card, OR Driver’s license and a credit card)
· Master of Business License OR Article Incorporation (Bring your HST # if you have one)
· Investments and bank account statements
· Mortgage statement
· Last 2 year’s Notice Of Assessment
· Last 2 year’s T1 general

The fee for appraisal fee is $360.00 and legal fee is $510.00

I think we will go with just a HELOC with PCF. I thought about the refi, but doesn't make sense to pay higher interest for the next 3 years on the balance of our mortgage even though the 100k will be at a lower rate than the HELOC. Also, the legal fees may be higher they said if there's issues so safer to go with PCF and we know it will be $150 flat rate.
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Cibc prime - 1/2 is only good until November then it goes back to + 1/2 or 1 depending on the credit limit.

I will ask the advisor tomorrow because if it is going to be +1 after November, I might just go with RBC for + 1/2 and not waste his or our time.
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Just FYI I recently opened a HELOC with CIBC for the promotional rate and they waived the legal fees and the appraisal fees. When the representative first told me about those costs I said 'I've already looked into it with other banks who are willing to waive those fees, so I guess I won't be opening a HELOC with CIBC'

The CIBC bank manager quickly said he could waive the fees ( I do have mortgage with them though currently)
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alanbrenton wrote: Cibc prime - 1/2 is only good until November then it goes back to + 1/2 or 1 depending on the credit limit.

I will ask the advisor tomorrow because if it is going to be +1 after November, I might just go with RBC for + 1/2 and not waste his or our time.
Saving 1% interest during the cibc promo works out like this:

10k = $8.33/month
50k = $41.67/month
100k = 83.33/month

So if CIBC doesnt waive the fees (320+510), it will take 10 months to break even on 100k HELOC compared to P+0.5. So if you're not taking out more than 100k, it doesn't make sense to go with CIBC.

I'm personally leaning towards PCF as they have a flat fee of 150 and offer P+0.5 for 2nd position HELOC. CIBC was telling me P+1.5! That being said I only called one CIBC branch.
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^Thanks.

Yeah, I just left a message with the advisor. I asked what the criterion is for the P + 1% because I'm definitely not interested in a HELOC with that rate after November.

I did note that I'll save $1k at most for $100k and I probably don't need to draw that much anyway so it's not really a big savings especially if it will be P + 1%.


I might just go with RBC where we mainly bank with if it will be P + 1/2% anyway.
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alanbrenton wrote: ^Thanks.
Yeah, I just left a message with the advisor. I asked what the criterion is for the P + 1% because I'm definitely not interested in a HELOC with that rate after November.
I did note that I'll save $1k at most for $100k and I probably don't need to draw that much anyway so it's not really a big savings especially if it will be P + 1%.
No doubt - if CIBC want p+1% after the promo period then it's probably not worth it (even if you leave it undrawn, p+1% is a relatively expensive "rainy day fund").
alanbrenton wrote: I might just go with RBC where we mainly bank with if it will be P + 1/2% anyway.
According to the various reps I spoke to at RBC, they will only provide a HELOC if they have the mortgage loan as well. Pain in the butt to be sure.
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ahlaker wrote: No doubt - if CIBC want p+1% after the promo period then it's probably not worth it (even if you leave it undrawn, p+1% is a relatively expensive "rainy day fund").



According to the various reps I spoke to at RBC, they will only provide a HELOC if they have the mortgage loan as well. Pain in the butt to be sure.
If that's the case of RBC, then I will shop elsewhere. I'll still give the local branch a call to confirm.

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