Personal Finance

Looking for HELOC - can anybody beat this deal?

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[OP]
Jr. Member
Apr 19, 2007
152 posts
5 upvotes

Looking for HELOC - can anybody beat this deal?

I am applying for a fully secured line of credit for $250K which I want to have available to invest from time to time.

TD Canada Trust prepared to offer the following:

- waive all fees (appraisal and legal)
- must have $50,000 drawn down for 3 consecutive months
- revolving interest rate of prime +.50% (prime is currently 2.84%)

Anybody know where I can better deal? e.g. revolving interest rate at prime?

Many thanks for all advice.
22 replies
Deal Addict
Jul 29, 2001
2003 posts
611 upvotes
Calgary
cdencore wrote: I am applying for a fully secured line of credit for $250K which I want to have available to invest from time to time.

TD Canada Trust prepared to offer the following:

- waive all fees (appraisal and legal)
- must have $50,000 drawn down for 3 consecutive months
- revolving interest rate of prime +.50% (prime is currently 2.84%)

Anybody know where I can better deal? e.g. revolving interest rate at prime?

Many thanks for all advice.
I am no expert, but looks pretty standard to me. I don;t think there is any less than +0.5%, otherwise no money to be made.

I am curious what this means though...

- must have $50,000 drawn down for 3 consecutive months

You have to withdraw and pay interest on $50,000 for 3 consecutive months? Interest on $50k is about $200 a month I think.
Deal Fanatic
Jun 29, 2007
5432 posts
1976 upvotes
cdencore wrote: I am applying for a fully secured line of credit for $250K which I want to have available to invest from time to time.

TD Canada Trust prepared to offer the following:

- waive all fees (appraisal and legal)
- must have $50,000 drawn down for 3 consecutive months
- revolving interest rate of prime +.50% (prime is currently 2.84%)

Anybody know where I can better deal? e.g. revolving interest rate at prime?

Many thanks for all advice.
"- must have $50,000 drawn down for 3 consecutive months"

What kind of rule is that?

If you are a good customer with good equity in your property, you should be able to do bank prime.

I have had bank prime HELOC with RBC for at least 5 yrs now. National Bank was offering bank prime on unsecured LOC about 16 months ago to certain professionals (like designated accoutants).

No legal and appraisal fees is good but not exceptional.
Deal Addict
Dec 27, 2013
3586 posts
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Woodbridge
MafiaHitman wrote: I don;t think there is any less than +0.5%, otherwise no money to be made.
They still make prime.
Member
Aug 20, 2014
223 posts
89 upvotes
Toronto, ON
cdencore wrote: - must have $50,000 drawn down for 3 consecutive months
If you were planning to borrow that much anyways, then this condition is not a big deal.
Otherwise this is a peculiarly odd condition. $50k for 3 months at prime+0.5% you are looking at a little over $400 in interest owed. You could put that $50k in a high interest savings account (e.g. people's trust) and offset approx half of that interest owed... but do you really want to get into managing these money movements. :)
Deal Expert
Aug 22, 2011
37045 posts
23019 upvotes
Center of Universe
I'm with everyone else here also..."must drawn down 50K for 3mths"; WTH kind of stipulation is that?
Sr. Member
User avatar
Sep 10, 2004
687 posts
36 upvotes
vkizzle wrote: I'm with everyone else here also..."must drawn down 50K for 3mths"; WTH kind of stipulation is that?
They probably don't want to go to the expense (and hassle) of setting up a "rainy day" LOC which will sit there unused.

Don't forget, it will cost the banks appraisal and legal fees. They are counting on you to use it atleast a little bit so they can recoup the initial outlay.

Plus, AFAIK, banks shouldn't just set up high-dollar value LOCs willy-nilly. They are supposed to allocate capital against those LOCs, and if you're not using it, there is lost opportunity cost as well. Not sure how the capital requirements for HELOCs affect this though.
Deal Expert
Aug 22, 2011
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Center of Universe
G-Yo wrote: They probably don't want to go to the expense (and hassle) of setting up a "rainy day" LOC which will sit there unused.

Don't forget, it will cost the banks appraisal and legal fees. They are counting on you to use it atleast a little bit so they can recoup the initial outlay.

Plus, AFAIK, banks shouldn't just set up high-dollar value LOCs willy-nilly. They are supposed to allocate capital against those LOCs, and if you're not using it, there is lost opportunity cost as well. Not sure how the capital requirements for HELOCs affect this though.
I thought that was the whole point of a LOC and HELOC, for "rainy days".
Member
Aug 20, 2014
223 posts
89 upvotes
Toronto, ON
G-Yo wrote: Plus, AFAIK, banks shouldn't just set up high-dollar value LOCs willy-nilly. They are supposed to allocate capital against those LOCs, and if you're not using it, there is lost opportunity cost as well.
You seem to be quite sympathetic towards these banks. :)
They do not have to allocate any capital per se; LOCs will sit on their books as a contingent liability. For secured LOCs (as the name suggests) the liability is much lower for banks. It's a security for the bank, not for the client!
Sr. Member
Dec 14, 2004
897 posts
176 upvotes
Waterloo
Speedy1 wrote: "- must have $50,000 drawn down for 3 consecutive months"

What kind of rule is that?

If you are a good customer with good equity in your property, you should be able to do bank prime.

I have had bank prime HELOC with RBC for at least 5 yrs now. National Bank was offering bank prime on unsecured LOC about 16 months ago to certain professionals (like designated accoutants).

No legal and appraisal fees is good but not exceptional.
Speedy1, can you tell me more about your situation? I had prime at RBC for many years until about a year ago where they bumped it to prime+0.5%. Since then I've tried to get them to lower it to prime but have been unsuccessful. It would be helpful if I had a sense for what type of client they're willing to give prime to.
Deal Addict
Dec 27, 2013
3586 posts
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Woodbridge
mre wrote: Speedy1, can you tell me more about your situation? I had prime at RBC for many years until about a year ago where they bumped it to prime+0.5%. Since then I've tried to get them to lower it to prime but have been unsuccessful. It would be helpful if I had a sense for what type of client they're willing to give prime to.
Have you tried threatening to leave? Or, approaching other banks and telling them that RBC bumped you and you're willing to switch if they beat it, or at least match it but give you some extra incentive?
Sr. Member
Dec 14, 2004
897 posts
176 upvotes
Waterloo
jvnanu wrote: Have you tried threatening to leave? Or, approaching other banks and telling them that RBC bumped you and you're willing to switch if they beat it, or at least match it but give you some extra incentive?

I have but nothing palatable has come of it. Frankly, I don't want to leave RBC for various reasons, but I would like to get back to prime. What other banks have been willing to give prime?
Deal Expert
Aug 22, 2011
37045 posts
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Center of Universe
mre wrote: I have but nothing palatable has come of it. Frankly, I don't want to leave RBC for various reasons, but I would like to get back to prime. What other banks have been willing to give prime?
Why are you so fixated on prime rate?
Do you plan to borrow more than what you can pay back for investing, for a car or a trip etc...?
Sr. Member
Dec 14, 2004
897 posts
176 upvotes
Waterloo
vkizzle wrote: Why are you so fixated on prime rate?
Do you plan to borrow more than what you can pay back for investing, for a car or a trip etc...?
Because I want to minimize the amount of interest that I pay. In my case, 0.5% means about $500-1000 back in my pocket over the course of a year.
Deal Fanatic
Jun 29, 2007
5432 posts
1976 upvotes
mre wrote: Speedy1, can you tell me more about your situation? I had prime at RBC for many years until about a year ago where they bumped it to prime+0.5%. Since then I've tried to get them to lower it to prime but have been unsuccessful. It would be helpful if I had a sense for what type of client they're willing to give prime to.
I am sure people will understand that I prefer not to get into specifics about my finances here.
jvnanu's suggestion is one you should consider.
I think the most important factor is the person or your contact at RBC. That makes all the difference in most cases. Also some may not know that it is dependent on the branch manager as well. How aggressive is that person in looking for business. His bonus/promotion prospect and likely your RBC branch rep as well depend on the branch's bottom line. That's one reason why one branch mgr is willing to offer free legal and appraisal vs another branch mgr at a different location but from the same bank will not.

Before RBC, we used to do a ton of business with BMO. They wouldn't match or meet the mortgage rate RBC offered me so I moved most of my business over. In fact, BMO didn't believe me when I told them what RBC offered me. We also had a unsecured LOC at BMO. They jacked it from Prime + 1% to Prime +3% (or something like that) due to financial crisis. After financial crisis, they took the longest time to reduce it. I had to ask 2-3 times before they finally reduced it. Not sure but I think it's at Prime + 2% now. Still have it (over $100k limit) but haven't used it for at least 7-8 yrs.

I have had HELOC for so long I can't remember but at least 4.5 or 5 yrs. Relatively speaking, good income, good credit, good size stock portfolio (not with RBC though) and RBC mortgages/HELOCs a little over $1 million. Been with RBC for about 8-9 yrs. Good luck.
Sr. Member
Dec 14, 2004
897 posts
176 upvotes
Waterloo
Thank you, I appreciate the response.
Sr. Member
User avatar
Aug 25, 2005
539 posts
11 upvotes
Sorry for the thread highjack/revival - Quick general question --> I only recently obtained a mortgage and paid 20% down. It's only been about 6 months now and so I probably paid 1% additional principal off. My mortgage provider stated that they can't give me a HELOC since I only have about 20% equity built it and any additional debt if they were to provide would breach their 80% of the debt to house value. I can understand that. I want a HELOC of about $30K (about 10% of house value) to pay off a higher interest car debt. Is it worth it for me to call other banks or is there no point since no one is going to give me a HELOC since I have so little equity in my condo?

Thanks in advance.
Deal Fanatic
Jun 29, 2007
5432 posts
1976 upvotes
ct027 wrote: Sorry for the thread highjack/revival - Quick general question --> I only recently obtained a mortgage and paid 20% down. It's only been about 6 months now and so I probably paid 1% additional principal off. My mortgage provider stated that they can't give me a HELOC since I only have about 20% equity built it and any additional debt if they were to provide would breach their 80% of the debt to house value. I can understand that. I want a HELOC of about $30K (about 10% of house value) to pay off a higher interest car debt. Is it worth it for me to call other banks or is there no point since no one is going to give me a HELOC since I have so little equity in my condo?

Thanks in advance.
I don't think anybody is going to give you a HELOC. What you can do is maybe ask for an unsecured LOC. Rate will be higher than a HELOC but likely lower than your car debt. They may give it to you depending on your credit and your business with the bank. Good luck. I have a LOC at bank prime + 2% I think. Haven't used it for many yrs.
Deal Addict
Apr 13, 2006
1122 posts
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Mississauga
Can get it set up at no cost with no conditions on drawing on it for P+0.5 with CIBC.
Newbie
Oct 7, 2007
71 posts
2 upvotes
Winnipeg
ct027 wrote: Sorry for the thread highjack/revival - Quick general question --> I only recently obtained a mortgage and paid 20% down. It's only been about 6 months now and so I probably paid 1% additional principal off. My mortgage provider stated that they can't give me a HELOC since I only have about 20% equity built it and any additional debt if they were to provide would breach their 80% of the debt to house value. I can understand that. I want a HELOC of about $30K (about 10% of house value) to pay off a higher interest car debt. Is it worth it for me to call other banks or is there no point since no one is going to give me a HELOC since I have so little equity in my condo?

Thanks in advance.
Your chances are even lower with another bank, they will only do 65% in second position.

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