Can you take a line of credit for a mortgage?
Yes, in Canada, you can take out a line of credit for a mortgage, commonly referred to as a Home Equity Line of Credit (HELOC). A HELOC allows you to borrow against the equity you have built up in your home. It combines the flexibility of a line of credit with the lower interest rates typically associated with mortgages.
You must have sufficient equity in your home. Typically, you can borrow up to 65-80% of your home’s appraised value minus any outstanding mortgage balance. Your credit score, income, and other financial factors will be assessed by the lender.
Home loan calculations for 20 years (example)
| Amount, $ | Rate, % | Accrued %, $ |
| 400,000 | 4.70% | 189,567 |
| 400,000 | 4.70% | 189,567 |
| 400,000 | 4.70% | 189,567 |
| 500,000 | 5.20% | 262,167 |
| 500,000 | 5.20% | 262,167 |
| 500,000 | 5.20% | 262,167 |
| 600,000 | 5.70% | 344,850 |
| 600,000 | 5.70% | 344,850 |
| 600,000 | 5.70% | 344,850 |
| 700,000 | 6.20% | 437,617 |
| 700,000 | 6.20% | 437,617 |
| 700,000 | 6.20% | 437,617 |
What are the peculiarities of homeowner lines of credit?
The main features are:
- Flexibility. A HELOC operates like a revolving credit account. You can borrow, repay, and borrow again up to your credit limit.
- Access. Funds can be accessed through checks, a dedicated credit card, or electronic transfers, depending on the lender.
- Collateral. The HELOC is secured against the equity in your home. If you default, the lender can foreclose on your property to recover the debt.
- Equity Calculation. You can typically borrow up to 65-80% of your home’s appraised value minus any outstanding mortgage balance.
- Variable Rates. HELOCs usually come with variable interest rates, which are tied to the prime rate plus a margin set by the lender.
- Rate Fluctuations. Because the rate is variable, your interest payments can fluctuate based on changes in the prime rate.
- Draw Period. The time during which you can access and borrow funds. This period is often 5 to 10 years.
- Repayment Period. The period following the draw phase during which you repay both principal and interest. This is usually 10-20 years.
You can also see the similar FAQ about:
- CIBC mortgage advisor salary
- CIBC mortgage disability insurance offer
- CIBC mortgage discharge fee
- CIBC mortgage prepayment charge
- CIBC mortgage statement payout request: how to make
Details of companies offering the financial services:
TD Bank
Head office’s address: Toronto-Dominion Centre, Po Box 1 Stn Toronto Dom, Toronto
Contact center: 866-222-3456
Web-site: https://www.td.com/about-tdbfg/our-business/index.jsp
Swift code: TDOMCATTTOR
Stock code: TD
BSB: 004
Lendtoday
Head office’s address: 179 King St E, Oshawa, ON L1H 1C2
Phone: 1-855-242-7732
Web-site: https://www.lendtoday.ca/
Meridian Credit Union
Head office’s address: 3280 Bloor Street West Centre Tower, Suite 2700 Toronto, ON, M8X 2X3
Contact center: 866-592-2226
Phone: 416-597-0165
Web-site: https://www.meridiancu.ca/
Swift code: MRCUCA21
Stock code: MRBK
BSB: 837
Bank Of Montreal
Head office’s address: 119, rue Saint-Jacques Montreal, Quebec H2Y 1L6
Contact center: 877-225-5266
Phone: 416-867-5000
Web-site: http://www.bmo.com/main/personal
Swift code: BOFMCAM2
Stock code: BMO
BSB: 001
CIBC
Head office’s address: 199 Bay St, 44th Floor Toronto
Contact center: 800-465-2422
Web-site: https://www.cibc.com/en/personal-banking.html
Swift code: CIBCCATT
Stock code: CM
BSB: 010
RBC Royal Bank
Head office’s address: 200 Bay St, 9th Floor South Tower, Toronto
Contact center: 800-769-2511
Web-site: http://www.rbc.com/canada.html
Swift code: ROYCCAT2
Stock code: RY
BSB: 003
Spring Financial
Head office’s address: 555 Burrard St #505, Vancouver, BC V7X 1M8
Web-site: https://www.springfinancial.ca/
TD Bank
Head office’s address: Toronto-Dominion Centre, Po Box 1 Stn Toronto Dom, Toronto
Contact center: 866-222-3456
Web-site: https://www.td.com/about-tdbfg/our-business/index.jsp
Swift code: TDOMCATTTOR
Stock code: TD
BSB: 004