Current LOC interest rates in Vancouver

[J____]

Hi guys, looking to leverage my property for a personal bank loan of 300k. ATM I fully own my home and RBC is giving me 2.7% for a 300K loan. I do all my banking with RBC and had my initial mortgage with them as well. Not sure what the other banks can offer, anyone have insight with their banks in a similar situation? thanks!

[Z3guy]

^ 2.7% is an awesome rate. I would take it. RBC for most good clients get prime +0.5%...which is 3.2%.

[J____]

Originally Posted by Z3guy

^ 2.7% is an awesome rate. I would take it. RBC for most good clients get prime +0.5%...which is 3.2%.

sorry, bit of a mistake here, so the 2.7% on the 300K is a homeline credit, which is interest payments only. I can pretty much decide what to pay every month on top of the interest as principle, or just pay the interest for as long or as short a loan as I want. Haven't talked to a mortgage specialist yet but the rate might be lower or higher, probably slightly higher like you said.

Never done this type of credit loan nor am I that great with calculating mortgages. Anyone have experience in using this method rather than taking on another mortgage? My understanding is if you can manage paying off the principle well, then it's much more flexible than a mortgage? If I take the homeline credit method how much would the monthly payments be if lets say I want to take the 300k and pay off principle+interest in a 20 year period, and how much would if be if i want to pay just interest? Do I use the same mortgage calculators or is it different? thnx

[Z3guy]

^ homeline is pretty much a LOC, a secured LOC. I used to have a 2.7% LOC but RBC jacked it up on me 6 months ago to 3.2%. Don't know anyone getting a LOC below prime....

[J____]

Originally Posted by Z3guy

^ homeline is pretty much a LOC, a secured LOC. I used to have a 2.7% LOC but RBC jacked it up on me 6 months ago to 3.2%. Don't know anyone getting a LOC below prime....

so the LOC is cannot be a fixed rate like a mortgage? Good thing about LOC is there's no limitations in how soon you can pay it off vs a mortgage right?

[Z3guy]

It can, but it is normally a higher interest rate, same as a variable Vs fixed mortgage. Yes to your second question.

[J____]

Originally Posted by Z3guy

It can, but it is normally a higher interest rate, same as a variable Vs fixed mortgage. Yes to your second question.

Is there a "balloon payment" with homelines? Been reading up on this and that kept popping up. Never recall having that in my previous mortgage. Pretty much I'm looking to buy a property overseas but the mortgage rates here are much higher than 2.7% or whatever the fixed rate equivalent will be in Canada.

[Z3guy]

Not 100% sure, but for my RBC homeline plan you can pay it off anytime you want. Gives you more flexibility than a traditional mortgage

[v_tec]

2.7% is probably one of the best one you can get right now
https://www.ratespy.com/best-heloc-rates

[ssjGoku69]

RBC calls it HomeLine.
TD calls it FlexLine.
CIBC calls it Home Power Plan.
BMO calls it Readiline.

It doesn't matter what it's called since the underlying structure of the credit is the same. I'll be calling it a Home Equity Line of Credit (HELOC) as the generic term.
As everyone else has said it before, getting the HELOC at Prime Rate (2.70%) is pretty good. Most financial institutions would be offering it at Prime + 0.50% (3.20%).

RBC Interest Rate vs ???:
Since you wanted to know how the RBC offer compares with other financial institutions, at where I work, there are pre-selected clients who can get a limited promotion of Prime minus 0.50% (2.20%) for a few months + legal and appraisal fees waived, but then it'll go back to Prime rate. But for everyone else, it would be Prime + 0.50%.
Prime rate is pretty good, but double check to see if RBC is offering that rate as a promotional rate for a limited time or if that is the permanent ongoing rate.
Also, try and get your RBC Advisor to waive appraisal and legal fees if you can. They would cost $250 appraisal and ~$350 legal with my experience.

Flexibility
You would be able to payout the full amount of the HELOC without any penalty. The only thing is that if you wish to cancel the HELOC, then there is a small discharge fee of $75 in British Columbia.
If the HELOC interest rate of 2.70% is lower than a Mortgage interest rate overseas, then I think you would be better off using the HELOC for that property purchase if the payment amounts are the same.
e.g. a $1500 monthly payment would be better off with the lower interest rate since a larger portion of that $1500 payment goes towards the principle.
The hard part is ensuring you're paying enough off of the principle each month. If you do choose to use the RBC HELOC and make interest only payments, or very small payments towards the principle, then it could get more expensive than the foreign mortgage at the higher interest rate.

[dapperfied]

I just got pre-approved from my bank (RBC) with a rate of 7.49% unsecured. Should I accept it?

[lowside67]

Originally Posted by dapperfied

I just got pre-approved from my bank (RBC) with a rate of 7.49% unsecured. Should I accept it?

Cool story. Without knowing your credit score, debt servicing calculations, and how valuable you are to the bank, it's useless to speculate.

My $20k unsecured LOC is Prime + 1.25% (currently 4.20% total). From what I see, this is a very good rate and is not typical - the default rate at my bank if you are not an employee is Prime + 3.50% I believe, or 6.45% currently.

-Mark

[Energy]

Originally Posted by dapperfied

I just got pre-approved from my bank (RBC) with a rate of 7.49% unsecured. Should I accept it?

That seems really high. Without knowing your circumstances no one will be able to give you useful advice.