Real Estate

HELOC vs mortgage

  • Last Updated:
  • Jun 30th, 2020 6:55 pm
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[OP]
Deal Fanatic
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Oct 16, 2008
9335 posts
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Maple

HELOC vs mortgage

Say I will need $80,000 for my closing. I will pay cash the rest. What are the PROs and the CONs, getting the fund from my HELOC or 5-years closed variable mortgage.

Edit: it’s for rental unit.
Last edited by teoconca on Jun 30th, 2020 7:05 pm, edited 1 time in total.
I hate to speculate. I hate to forecast. I am just proactive.
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Deal Addict
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Dec 19, 2007
1689 posts
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Toronto
We've been looking at this recently as we'll have a small remaining mortgage at end of year (term ending as well). It'll be around $80k, but we'd be willing to move closer to $50k (using a lump sum toward the end) if it mattered.

Options for us are either 1 year term and then pay off whatever remains following OR pay it fully off with a HELOC and then pay off the HELOC.

I'm not sure how much smaller mortgage amounts factor into this decision. Beyond the overall math (interest rate between the two and the limits of the mortgage terms vs relative flexibility of the HELOC), it seems that the discipline of paying off the HELOC the same way you'd pay off a mortgage is a significant consideration.

Either way, interested in opinions.

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