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Archive for the ‘Line of Credit’ Category

Line of Credit At Renewal – As Explained by Vancouver Mortgage Broker Rowan Smith

Thursday, October 13th, 2011

Transcript of Video Blog:

Hi, everybody. It’s Rowan Smith from the Mortgage Center. I want to talk today specifically about lines of credit. More importantly I want to talk about lines of credit that you want to keep but you maybe want to renegotiate maybe the mortgage in front of it. This is something that comes up from time to time. Read the rest of this entry »

Lines of Credit – An Update On A Specialized Product

Friday, October 15th, 2010

Transcript of Video Blog:

Hey everybody. Rowan Smith from The Mortgage Centre. I want to talk today about lines of credit. It’s been a while since I’ve done a post on it. I get a lot of questions on it, people not understanding when a line of credit is possible and what kind of rate they can expect. So first off, when is a line of credit possible? Well, you have to have 20% equity in the property. CMHC does not allow to have people have an interest only portion of their mortgage, so lines of credit are interest only. Typically, prime plus one is the going rate, although your institution may offer you something better if you have a very large investment portfolio or a longstanding connection with them. Prime plus one is the baseline rate by which you should be judging any particularly offers you are receiving for a line of credit. If you’ve got a $500, 000 home and you have a $350, 000 mortgage, you can only have 80% financing, that’s conventional financing, if you’re going to want a line of credit. Now, in that case, that’s $400, 000. If you’ve got 350 and the max is 400, the maximum line of credit you’re going to be able to get is 500. Now, that’s a secured line of credit and secured line of credit rates. Your institution or any other institution can offer you unsecured lines of credit all they want. How big they’ll go is generally an indication of how aggressive their policy is or how much debt they think you can service with your taxable income.

To give you an example of how this plays into it, I had somebody who was looking to qualify for a $50, 000 line of credit but they needed $80, 000 so they went to two different banks and applied for a $30, 000 line of credit and were declined at both of them because unsecured $30, 000 is very large. For secured you can have three million dollar lines of credit if you have the equity in the property, but when it comes to an unsecured line of credit the banks generally have a cap. Anything over $10, 000 and they start wanting to see a lot more net worth, a lot more fall back position, meaning vehicles, meaning cash assets, stocks, RSPs, savings, and what not.

You say, “well, if I had the savings I wouldn’t need the line of credit”, but in most cases people need a line of credit as a contingency, not as the primary source of their funding. There are secured lines of credit with your mortgage, can’t exceed 80% of the value of your home based on the appraisal, not based on list prices of other properties in your area. There are unsecured lines of credit which banks can do whatever they heck they want as long as they believe you and believe your credit rating is strong enough and that your income can service it. If you want any clarification on this, please contact me.

I’m Rowan Smith from The Mortgage Centre.

Mortgage Line of Credit – When Can You Get One?

Wednesday, May 12th, 2010

Have you ever wondered if you can get a line of credit secured with your home? Maybe you wondered if you can get a line of credit along with your mortgage?

There are several specific criteria that need to be met in order for you to get a line of credit. The most important criteria is EQUITY.

Watch this video blog for more info and and a more in depth explanation.

Transcription of Video Blog:

Hey everybody, Rowan Smith with The Mortgage Centre. I want to talk today about lines of credit. More specifically, mortgage lines of credit. A lot of times people will come to me and they’ll want to get a line of credit, along with their financing for their purchase, for renovations and whatnot.

Now, generally, if it’s going to be a mortgage, you’re going to have to have 20% down payment or 20% equity in the property before you can start getting a line of credit. Because CMHC, who governs less than 20 percent down purchases, doesn’t not allow an interest only product at this time; they do, but no lenders really support it.

So you’ve got to have 20 percent down if you want to start getting the ability to have a line of credit. Now what I mean by that is if you have 20% down and you pay it down so that you now have 30% equity in the property, you could borrow that 30% to 20%, that 10%, you could get that in the form of a line of credit assuming that your income and credit qualify for it.

So, if you’ve just bought something with five percent down and want renovation funds, a line credit with the mortgage is not part of the option. What you can do is get an unsecured line of credit through your financial institution you bank with. They can supply that to you, you can use that. Now you will not get mortgage rates on that line of credit, but it’s really the only option.

Alternatively, there’s a Purchase Plus Improvements Program if you want money for renovations. I’ve covered it in detail in the prior blogs, please do a search and you can watch it. It’s a good three or four minutes and it explains how the Purchase Plus Improvements Program works, or Refinance Plus Improvements.

If you’re applying for a line of credit increase – maybe you already own your property, you’ve got a substantial equity position at home and you simply want to increase that line of credit, come and talk to me. There’s many institutions which we can stick a line of credit behind any other mortgage.

So if you’ve a RB Royal Bank first mortgage, we can stick a line of credit behind that and get you mortgage rates on that line of credit. You don’t have to go to your bank if that’s the case. It’s only the unsecured lines of credit which you need to speak with your bank about.

If you’d like any clarification on this or need a line of credit, please give me a call. It’s Rowan Smith from The Mortgage Centre.