Do you have a HELOC (Home Equity Line of Credit) against your home in Spruce Grove, Stony Plain, Parkland County, the Edmonton region or elsewhere?  This valuable lending tool has many practical uses:

• Investment borrowing
• Borrowing for education
• Rental property investment
• Home improvements
• Debt consolidation
• Alternative to higher-rate loans
• Down payment source for a second property
• Emergency backup fund

At the moment a HELOC can allow homeowners to borrow up to 80% of their home’s appraised value at very reasonable interest rates.  But that is about to change within as short a time period as 3 weeks.

Fran Jenkins, Mortgage Specialist at ATB Financial in Spruce Grove, advises that the OSFI (Office of the Superintendent of Financial Institutions in Canada) has set out new lending guidelines for all federally regulated lenders to limit new HELOCs to 65% Loan-to-Value.  Banks have until the end of their fiscal years to comply, and for most banks in Canada, that means October 31, 2012 (up to March 31, 2013 for other institutions such as credit unions).  Expect to see most banks moving on this well before the official deadline.

While OSFI says that existing HELOC holders will be grandfathered, you may want to check with your bank to ensure that your HELOC is set up the way you want it, especially if you need a HELOC equaling 66% to 80% of your home’s value.

The new rules also affect readvanceable mortgages.

For more details on the new mortgage rules, read the article “OSFI Toughens Mortgage Underwriting” from Canadian Mortgage Trends.com.

Comments or questions about this article?  Call or text me at 780-910-9669, email me at barry@barryt.ca, or contact me here.