TD Jacks up Secured LOC Rates

TD Bank just announced that they are increasing the Home Equity Line of Credit interest rate to Prime plus 1 %from the current Prime rate. Rob Carrick of the Globe and Mail wrote an article you can fine here about the issue.

What does this mean for your mortgage?

If you have a large balance on your Line of Credit and cannot pay it down, it may be worth looking into adding that balance to a variable rate mortgage.

There are two potential benefits to this. First of all the rise in the HELOC rates are acting in opposition to the downward trend of variable rates in the market. Just recently ResMor a broker only lender began offering a 4 year variable at Prime 2.25%. Some industry leaders suggest that we are maybe a month away from seeing a Prime minus variable product on the market.

By converting your HELOC into a variable you still get the variable product, but at a lower rate than the Prime plus 1% that was just announced.

A second consideration is that interest on mortgages is generally compounded semi-annually, whereas Lines of Credit are typically compounded monthly.

Thereforeyour savings are twofold - you get the benefit of a lower variable rate and save some added money by having your interest compounded semi-annually instead of monthly.

Something to consider.


John Shearer