Personal Finance

HELOC from a different bank than where the mortgage is?

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  • Nov 29th, 2014 5:27 pm
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[OP]
Deal Addict
Feb 27, 2008
1331 posts
499 upvotes

HELOC from a different bank than where the mortgage is?

All,

I'm in the market for an investment property to purchase using the equity in my home. However, since I'm with Merix for my mortgage, they do not offer HELOC, they only offer refinancing or second mortgages. How does it work from here? Do I simply walk up to my favorite bank or a mortgage broker and ask for a HELOC or would I be expecting a much higher rate had I have initially gone with a regular bank for my mortgage that would have offered me a HELOC right away?
8 replies
Sr. Member
Feb 18, 2004
752 posts
195 upvotes
Just do what you said. Like most things in life, you gotta shop around to find the best deal/rate.
Newbie
Nov 25, 2014
13 posts
1 upvote
Ottawa, ON
This will depend upon how the lender registers the HELOC against your home's title. Most banks will want a collateral charge which will require a refinance of your current mortgage. There are mortgage lenders who will register a HELOC behind a first mortgage. A heads up - you will most likely need an appraisal on your home.
Deal Addict
Jul 4, 2004
4779 posts
896 upvotes
Ottawa
From my experience, it's not possible to get a HELOC from someone other than the 1st mortgage holder. Reason being is that the first mortgage holder is first in line if the property goes in default. If the 1st mortgage holder forecloses or sells at power of sale, a secondary mortgage (e.g. HELOC) could end up getting screwed.

That said, OTTMortgAgent, knows more about it than me so maybe it's possible (although maybe the rates aren't nearly as appealing).
Deal Fanatic
Feb 1, 2006
9525 posts
670 upvotes
Muskoka
I have a HELOC with a different lender than my mortgage lender, have for 10 years. Wasn't a problem when setting up, I only did it because it was a deal at the time where the lender paid all the fees. Gives me peace of mind, but only ever used it to load up on stocks after 2009 crash, then sold and paid it off a year later.
Deal Addict
Apr 13, 2006
1014 posts
79 upvotes
Mississauga
Should be able to get Prime + 0.5% pretty much at any bank without issue these days.
The tougher part is finding someone to waive the legals and appraisal. I'm happy to do so, though realize I'm out of the area.
My views represent solely my views, and not the company in which I work for.
[OP]
Deal Addict
Feb 27, 2008
1331 posts
499 upvotes
PM sent back.

Isn't the appraisal a must to see how much HELO you qualify for?
Deal Addict
Apr 13, 2006
1014 posts
79 upvotes
Mississauga
240sxer wrote:
Nov 29th, 2014 11:18 am
PM sent back.

Isn't the appraisal a must to see how much HELO you qualify for?
The appraisal will still likely be done. However, rather than actually charging you for it, I'd have it waived (~$200-250).
My views represent solely my views, and not the company in which I work for.
Deal Fanatic
User avatar
Feb 2, 2014
6626 posts
1625 upvotes
Toronto
No disrespect to Kiz5, but keep in mind, that the LTV for a HELOC from banks is capped at 65% as per B20 guidelines (including the Merix first mortgage). If you need more, you will have to go to a credit union who can go up to 80%.
240sxer wrote:
Nov 29th, 2014 12:11 am
All,

I'm in the market for an investment property to purchase using the equity in my home. However, since I'm with Merix for my mortgage, they do not offer HELOC, they only offer refinancing or second mortgages. How does it work from here? Do I simply walk up to my favorite bank or a mortgage broker and ask for a HELOC or would I be expecting a much higher rate had I have initially gone with a regular bank for my mortgage that would have offered me a HELOC right away?
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects

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