[问题] Mortgage or Home-equity-line-of-credit

[abc123]

原Mortgage到期，只剩几万， 又已有Home-equity-line-of-credit额度。银行
的人强烈推荐用line-of-credit付完Mortgage(这样就无Mortgage,只有从
line-of-credit借钱的债了），并保证无任何额外费用。其利率也和正常
一年fix rate Mortgage一样，付款方式也和正常Mortgage一样(可选monthly,
or bi-weekly, 有一样的prepayment).银行的也说和正常Mortgage完全一样,
并说99%的人都用line-of-credit,这样更灵活,并consolidate debt。

那位高人有这方面的经验，请不吝赐教。多谢！

 

[有去无回]

俺怎么就没看出有什么不同呢。

 

[abc123]

我就是没看出问题（不同），不懂，才在这求教。不知有无猫腻。

 

[chhuili]

最初由 abc123 发布
原Mortgage到期，只剩几万， 又已有Home-equity-line-of-credit额度。银行
的人强烈推荐用line-of-credit付完Mortgage(这样就无Mortgage,只有从
line-of-credit借钱的债了），并保证无任何额外费用。其利率也和正常
一年fix rate Mortgage一样，付款方式也和正常Mortgage一样(可选monthly,
or bi-weekly, 有一样的prepayment).银行的也说和正常Mortgage完全一样,
并说99%的人都用line-of-credit,这样更灵活,并consolidate debt。

那位高人有这方面的经验，请不吝赐教。多谢！

From my knowledge, there are some differences:
1. Interested rate for Home-equity-line-of-credit is prime rate. It may be up or down depending on prime rate. Currently, the prime rate is 4.5%, and the variable rate of mortgage is prime less 0.7%(3.8%).
2. Normally, there is no changes for the application. But when you sell the house, you may need to pay the legal fee for the termination.
3. If you need to use money in the near future, it is better to get mortgage. For any other kinds of loans, the interest is higher.
4. You may take the advantages of Home-equity-of-credit by applying it in your account. You pay the interest only when you use it. If yoy get the fixed rate mortgage and the interest rate is much higher than the prime, you can pay accelating you payment from you line of credit. You can also use it for your small business or other kinds of investment.

 

[马甲甲]

The rate of Secured Line of credit varys monthly

It is good for current situation, since it is probably going down.
But...
Normally the rate is prime +/- a little, depends on banks.
If you do not have The Line of credit now, I doubt it is "无任何额外费用", at least there is some paper work has been done and could charge you some.
Bank won't have 猫腻, since our cases are peanuts, my 2 cents.

 

[abc123]

Thank Chhuili!

1, In my case, I use one-year fixed, the rate is 3.55%, no matter I apply
for one-year fixed mortgage or use line-of-credit.

2, The legal fee of termination is new, thanks for the information. Any
inside of how much it'll cost, roughly? I'll need to check with the
bank. BTW, it's TD.

3, To me, the advantege of using line-of-credit is that I don't have
to put certain amount of money in low-interest accouts (GIC for examply)
for raining days.

 

[abc123]

One more thing, It's sort of second mortgage. I'm not quite understand,
as in my case,there is no other mortgage than this one.

 

[有去无回]

I do not understand one thing, why don't you use your line of credit for your 'raining days"?
and put your extra money into your mortgage?

 

[abc123]

最初由 丫丫 发布
I do not understand one thing, why don't you use your line of credit for your 'raining days"?
and put your extra money into your mortgage?

This is the main reason why I appied for line of credit. since I have
line of credit, I should also use it for mortgage, so I'll have only
one product insted of two, according to what TD told me, as they said
what they offer me is the same as regular mortgage. My concern is
I have never used line-of-credit/second-mortgage, I may oversee sth.
So, I asked this question here, and hope people here can share their
experiences.

Thanks and looking forward to any further advices.

 

[有去无回]

最初由 abc123 发布


This is the main reason why I appied for line of credit. since I have
line of credit, I should also use it for mortgage, so I'll have only
one product insted of two, according to what TD told me, as they said
what they offer me is the same as regular mortgage. My concern is
I have never used line-of-credit/second-mortgage, I may oversee sth.
So, I asked this question here, and hope people here can share their
experiences.

Thanks and looking forward to any further advices.

If your line of credit is high enough to cover both your mortgage and emergency need, I don't see problem in it. You may like find out the difference between home-equity-line of credit and the regular line of credit. I don't think they are the same thing.

 

[马甲甲]

second mortgage probably means the line of credit

Since it is a kind of "mortgage", although it's called line of credit.
Quite surprised that you can get line of credit in 3.55%, because the prime is 4.5%, are you sure?

最初由 abc123 发布
One more thing, It's sort of second mortgage. I'm not quite understand,
as in my case,there is no other mortgage than this one.

 

[chhuili]

最初由 abc123 发布
One more thing, It's sort of second mortgage. I'm not quite understand,
as in my case,there is no other mortgage than this one.

It is called second mortgage. Here It does not matter to you in your sitaation. If you buy the second house or other property and you use Home-equity-line-of-credit as your down payment, the second mortgage will make sence to you. It is a valuable resource for you investment.
The Home-equity-of-credit, called SECURED line of credit, is different from line of credit. Its rate is always the same as prime rate. It is your equaity. The line of credit is something like your creditor cards which can apply several times and the rate is prime plus 1-2% varying from bank to bank.
As you mentioned TD bank, you may check if it still has cash back product for variable rate at 3.95(prime less 0.55%). Normal variable rate should be 3.8%(or 3.85%). If it has, you can get $400 cash back in your case($1000 for over $125000 mortgage).