Home Equity Loan

[Spidey]

Well after lots of research, etc. Have decided to streamline our finances.

Heres the small story.

Our mortgae is coming due May 1, 2007. Started getting rates around the city since January. Also asked questions about Home Equity Loans since we have paid off a lot of our house in the last 5 years, as well as our house is worth $100,000 more than when we purchased it.

I always a Home Equity loan was like a second mortage which i was never fond of.

Anyways I got it through the TD as we stayed with them for our mortage as they gave me the same rate as 5 years ago (.75 below prime).

I got the equity loan for prime. I know I will get a lot of comments how they got one for less, but I dont care. I still think I did a good job getting the rate plus the better rate for my mortgage.

So with that have paid off our old line of credit from BOM that was at 8.25%. Also paid off a Roayl Bank loan from a tent trailer we bough last summer at 8.44%. and my truck I paid of that was at 6.25%.


We decided last year to treat our selves to a few nice-ities. We were making some more money, and increased payments on things, made sure the kids had money for school, etc. We may of gone a bit overboard (my truck ;-) but we definitly use that and the tent trailer a lot.

Saved my self 2.5% a month and can make extra payments easier. We used to make extra payments, but it was always a pain to do. The truck I had to mail payments to Nissan of canada, the Royal you had to physcially go in (hard to do when you work). The BOM I could do online.

So now we will be increasing the payments per month from what the three were combines, save myself some time since I can do it online, and save 2.5% per month.

Plus the interest I can use on my business taxes, because two of the things are things I use for my business.

also made some stimpulations on the account. Only cheques (they wanted to give us an ATM card - that would be a disaster) We are also keeping the cheques at the in-laws so we dont have access to them.

The last year we have said we are going to get out of debt, although we dont have much I think. My wife barely uses the mastercard unlike the old days, and we both signed a contract we wouldnt make any major purchases this year unless an absolute emergency (say broken furnace) and we saving up for things now instead of just buying them (house windows)

Thats my long story. Im not sure how much interest we will save each month, but at 2.5% Im sure enough to save for a nice trip now.

We had friends that did this as well a few years ago when their mortgage became due. But instead of paying bills (which they had lots of ), they went and bought a lot of stuff (motorcycle, appliances, etc)

[Bullseye]

Always a good idea to reduce interest costs wherever possible. You already seem aware of the potential pitfall, which is having vast sums of money available at the click of a button. As long as you can resist temptation, you'll be ahead in the end.

Careful about the interest for business expenses, if you are mixing it in with personal usage, you will need to calculate the portion related to business. CRA frowns on such mixing, as it's too open to interpretation. Better to keep business expenses separate.

[Spidey]

Always a good idea to reduce interest costs wherever possible. You already seem aware of the potential pitfall, which is having vast sums of money available at the click of a button. As long as you can resist temptation, you'll be ahead in the end.

Careful about the interest for business expenses, if you are mixing it in with personal usage, you will need to calculate the portion related to business. CRA frowns on such mixing, as it's too open to interpretation. Better to keep business expenses separate.

Ill just keep track of it in my books and let them deal with it. I know before the LOC of truck I could because I use my house for my business and my truck as well. Will see next year.

Ya, when they asked do you just want a debit card to access this I almost laughed. That would be a great way to max it out.

[Bullseye]

Ill just keep track of it in my books and let them deal with it. I know before the LOC of truck I could because I use my house for my business and my truck as well. Will see next year.

Ya, when they asked do you just want a debit card to access this I almost laughed. That would be a great way to max it out.

If the truck is personal and business it's easier, then, as you're just pro-rating it for the business usage portion. Still, how do you arrive at the interest for the truck portion of the LOC? Would you just use the previous payment amount in your amortization schedule and carry it forward?

[sunnybono]

Always a good idea to reduce interest costs wherever possible. You already seem aware of the potential pitfall, which is having vast sums of money available at the click of a button. As long as you can resist temptation, you'll be ahead in the end.

Careful about the interest for business expenses, if you are mixing it in with personal usage, you will need to calculate the portion related to business. CRA frowns on such mixing, as it's too open to interpretation. Better to keep business expenses separate.

Bullseye has a good point. You may want to go back to TD and ask if they can split the Heloc into 2 parts that way you can use one for business purposes and the other for personal. BTW good for you to stay with TD. It's not always about rates. Their service and mortgage features have a price tag too!!!! I too solely bank with TD!!!!

sk

[Spidey]

If the truck is personal and business it's easier, then, as you're just pro-rating it for the business usage portion. Still, how do you arrive at the interest for the truck portion of the LOC? Would you just use the previous payment amount in your amortization schedule and carry it forward?

Well the truck is personal and business. although my 93 golf is 100% business, I do use my truck for my business occasionly.

My old LOC was all my house and was allowed.

If they are all combined I might lose that deduction. Ill let the accountants decide

[TrevorK]

I got the equity loan for prime. I know I will get a lot of comments how they got one for less, but I dont care. I still think I did a good job getting the rate plus the better rate for my mortgage.


Don't be disappointed in getting the LOC for prime.

I have yet to encounter a bank that offers a secured line of credit (HELOC, whatever you call it) for under prime that is not a promotional (typically 1 year) rate.

I've had to search on two sepereate occasions, and this year will be my third.

[Spidey]

Don't be disappointed in getting the LOC for prime.

I have yet to encounter a bank that offers a secured line of credit (HELOC, whatever you call it) for under prime that is not a promotional (typically 1 year) rate.

I've had to search on two sepereate occasions, and this year will be my third.

then I dont feel so bad :)

[Spidey]

Worked out the interest savings, etc.

Be saving about $400 - $500 a year in interest. Plus we increased the payments but about $100 a month.

Plus its nice that we dont have 3 different bills to pay and keep track off.

And if we want to increase payments, I can just do that through online banking. The old way I had to mail in extra payments. Basically a big pain in the ass in my opinion

So thats my home equity story

[gei]

The LOC rate is decent... but you could have done better than prime - 0.75 on your mortgage. I've seen as low as prime - 0.95 on these boards.

[Spidey]

The LOC rate is decent... but you could have done better than prime - 0.75 on your mortgage. I've seen as low as prime - 0.95 on these boards.

I suppose you get better gas milage than me too :lol:

I know I maybe could of done better, but I got a better rate than most TD customers do, plus i didnt have the hassle of switcing banks, paperwork, etc. And she waived about a million fees on the home equity

.75 is pretty decent I think

[gei]

I suppose you get better gas milage than me too :lol:

I know I maybe could of done better, but I got a better rate than most TD customers do, plus i didnt have the hassle of switcing banks, paperwork, etc. And she waived about a million fees on the home equity

.75 is pretty decent I think

No offense, but that's hardly justification for the extra thousands of dollars you are literally throwing away in interest charges.

I am of the mentality that people should fight for the lowest rate possible. This isn't a situation where paying extra gets you better service or quality or something... it's just money that is thrown away.

Most banks are extra accomodating when you are switching from a competitor, and they make the process easy when switching your mortgage over. I'm sure they would have waived any fees too.

[Spidey]

No offense, but that's hardly justification for the extra thousands of dollars you are literally throwing away in interest charges.

I am of the mentality that people should fight for the lowest rate possible. This isn't a situation where paying extra gets you better service or quality or something... it's just money that is thrown away.

Most banks are extra accomodating when you are switching from a competitor, and they make the process easy when switching your mortgage over. I'm sure they would have waived any fees too.

She showed me the diffence. My mortgaes isnt in the 300K range, its arounf 90K now. She showed what the extra .2 percent would save me in time and money.

Plus with the way I have it set up, I was able to increase my payments to bi-weekly. A few banks that were offering .95% below prime when doing the variable wouldnt allow bi-weekly, only monthly.

So now Im allowed 2 extra payments a year

So no, its not money thrown away. i researched for 3-4 months before my mortgae was up for renewal in April.

its always funny that these deals always come up after the fact. it happens on here all the time. A persons looking for a deal, finally get a one that he/she thinks is good. Then after the fact everyone comes out of the woodwork saying how better their deal was.

Plus my home equity loan rate is better than what the other backs were offering even though they offered my .95% below prime. Their home equity loans were whatever percent above prime. While mines at prime.

Im sure between the 2 they even out, but saying that Im throwing away thousands of dollars is a pretty bad thing to say

[gei]

Not sure which banks don't offer bi-weekly payments...

But anyone could walk in off the street into a BMO for example and get prime - 0.85, LOC at prime or slightly less, and 20/20 pre-payment options. It's not really much to ask.

Although perhaps things are different in Calgary... and you're right - on 90k it won't make as much of a difference. Still something though.

[GBA]

cibc offering 1.01 below prime right now, prime after oct-nov'ish for heloc. might be a bit late to tell you, but is this what you asking about/looking for?

sorry, uh, heloc = home equity line of credit, different than home equity loan, in case that wasn't clear

[Spidey]

cibc offering 1.01 below prime right now, prime after oct-nov'ish for heloc. might be a bit late to tell you, but is this what you asking about/looking for?

sorry, uh, heloc = home equity line of credit, different than home equity loan, in case that wasn't clear


Ya to late by about a month. thats a good rate. But if a person worried about this all the time, theyd have an ulcer by year end.

[Spidey]

Not sure which banks don't offer bi-weekly payments...

But anyone could walk in off the street into a BMO for example and get prime - 0.85, LOC at prime or slightly less, and 20/20 pre-payment options. It's not really much to ask.

Although perhaps things are different in Calgary... and you're right - on 90k it won't make as much of a difference. Still something though.

Really, anyone off the street. BOM offered me .75 percent above prime and wouldnt budge. And i asked a few other people that I know that deal with BOM and they said the same

Then I heard ATB offered .75 below prime.

i decided to save my sanity and go with what i got. are there better deals out there, probably. No matter how well you do, there always seems to be better deals after the fact.

As I get older, certain things dont bother me as much. Id rather save myself a headache and second guess myself a million times thinking I could of gotten a better deal somehwre else. I do what I can and thats that

Plus with what i did I saved myself $500 a year or more from my current situation. And now i can increase my payments easier paying of my home equity loan faster. Dont want to seem to focus on that, just how bad I did because of .2 percent.

I also dont wait in line when gas is cheaper somewhere for 5 cents a litre and the lineups are huge. My time and sanity is worth more than $4 saved