Compare Home Equity Lines of Credit – Royal Bank, TD Canada Trust, CIBC, HSBC in Canada


Home equity line of credit rates in Canada are comparable at all of the major banks, and we’re showing 4 of these banks in this post; TD Canada Trust, RBC, HSBC, and CIBC. First of all, I’ll let you know what the acronyms for the BIG 4 Canadian banks are, and explain the prime rate of Canada for you.

But first of all, just in case you don’t know what a HELOC is by definition in the Canadian banking industry, it goes as follows (excerpt from TD);

A Home Equity Line of Credit (HELOC) is a revolving line of credit that allows you to use the equity in your home to borrow money. A flexible alternative to a traditional mortgage, a HELOC lets you determine your own monthly payments — as low as interest only.

You can access up to 80% (or 90%, if you qualify) of the appraised value or purchase price of your home (whichever is lower), less any prior outstanding mortgage charges. As your mortgage balance decreases, your available credit increases.

Use your available credit to:

•Renovate your home
•Purchase a vehicle or recreational property
•Take advantage of investment opportunities

All Canadian HELOCs rise and fall with the Prime Rate of Canada, and at the time of this writing the Canadian Prime Rate as set by the Bank of Canada is/was 3%. All four of these banks do the same thing, and unless your credit rating is really in the stinker (FICO lower than 640-650, then you will be getting 1%-2% above prime. If your FICO score is under the 650 level you could be paying up to 3-4% on the HELOC – which is sort of rate because the banks know they have your home equity to feast off of if you ever plain, flat out default on your payments.

You can look at ALL of the different lending rates by the Bank of Canada by clicking here. This is a really handy page that I can’t over emphasize. You can check all of the BOC rates. Very informative. Take special note of the line in their field chart that looks like this;

Prime business (“prime rate”) V121796 V122495, or for the image version;

bankofcanada prime rate chart Compare Home Equity Lines of Credit   Royal Bank, TD Canada Trust, CIBC, HSBC in Canada
This one strip shows you what the consumer banks mentioned above are dealing with and working from. Your HELOC rate(s) will always start at the prime rate first, and you pay a percentage higher than that based on your credit score, your home equity level, and your DTI/GDS (Debt to Income Ratio and Gross Debt Servicing: respectively) calculation is.

Note of Interest: Canadian Bank Acronyms;

  • TD Canada Trust = Toronto Dominion Canada Trust (were separate banks and then merged)
  • RBC = Royal Bank of Canada
  • HSBC = Hong Kong Shanghai Banking Corporation (not what you think – this is a London based bank)
  • CIBC = Canadian Imperial Bank of Commerce

Home Equity Line of Credit Rates in Canada – Same With ALL Canadian Banks?

Yes, AND no. They’re all really close, and if you are planning on using your HELOC in for hundreds of thousands of dollars, and you plan to have the credit out working elsewhere, then that tiny difference in the HELOC rate from bank to bank will equate to a rather LARGE sum of money. However, if you plan to use your HELOC for small credit uses, like going over a bit during Christmas or on a summer holiday, and you pay it all off a month later (give or take a week), it’s no big deal in cost. SO, if you really like your choice of bank because of their customer service, mortgage lending policies, small business loan, and the fact they have a branch just down the block right beside Tim Horton’s, then maybe you don’t mind having a HELOC rate that is one point, or half a percentage higher than some other Canadian bank.

Now – basically the way it seems to play out with home equity lines of credit in Canada, is that IF your credit rating is reasonably GOOD, and you have more than 25% in equity on your appraised home, then you will get a HELOC rate that is 1% above prime, and like I said the prime rate right now is 3%. For example, I live in Calgary right now and my HELOC is $40,000 on a house which is appraised at $590,000 in value on the market, and we owe $145,000 dollars still on the mortgage. My FICO score is 720 (great) – We’re paying an even 4% on our HELOC. Not all that bad.

Keep in mind, that in my personal example, we usually pay off our HELOC completely at the end of each month after we get paid, so the Interest fees we pay each month are very small. This month our line of credit is actually carrying some debt to the tune of $2000 because our small business took a hit in recent months. (no big deal – I’ll work my tail off for about six months and we’ll get it all back and more).

So the big answer to the question, “What is the current HELOC rate with the (TD Canada Trust, RBC, HSBC, CIBC)”?

The definitive answer is 4% on average, give or take a little depending on your personal financial situation. You won’t get a dead on, straight answer just by looking on the Internet because the bank(s) will offer you your HELOC rate depending on your portfolio.

4 Case Studies of HELOC Requests Made in Vancouver, Winnipeg, Montreal, and Toronto

1.Home Equity Line of Credit in Winnipeg, Manitoba, Canada (TD Canada Trust)

TD Canada Trust calls their HELOC product a, “Home Equity Line of Credit” – fancy name eh? Were you expecting something with a little more pizazz? I do my banking with the TD, and I don’t really have any complaints with them and their HELOC product.

 

Pictured here: TD Canada Trust site showing their Line of Credit Product

td canada trust heloc offer Compare Home Equity Lines of Credit   Royal Bank, TD Canada Trust, CIBC, HSBC in Canada

Now that I’ve explained how we use our TD line of credit product, I will show here an example of an applicant who was looking for a HELOC in Winnipeg, Manitoba. The key criteria in every HELOC approval is the percentage of property value you own. Most banks require that you have at least 20% equity in the property before they will approve a HELOC, AND they allow you to have a line of credit that is a certain percentage of that equity. In the case of TD Canada Trust, it’s as follows;

  1. Minimum LOC you can have is $10,000
  2. Lowest Equity Level Allowed is $12,500 (as calculated per item #1)
  3. You can have a revolving line of credit that is 80% of your equity
  4. Their web site doesn’t mention anything about a minimum equity level based on the percentage of your real estate

Winnipeg Consumer’s HELOC Example;

  • HELOC Request for quote: $35,000
  • Canadian bank you have your accounts with: TD Canada Trust
  • Owing on Mortgage: $345,000
  • Appraised Value of Real Estate: $412,000
  • Equity in Property: $67
  • Equifax Score: FICO 520
  • Debt To Income Ratio: 0.42
  • App Location: Winnipeg, Manitoba
  • Applicant’s Country: Canada
  • Reason For HELOC: Visa Bills and Other Random Debts
  • Earning Each Month: $4,730
  • Employed How Long: 11 months
  • Urgency of Loan: Before Christmas
  • All Visa Card Debt: $12,000
  • Car Loan Balance: $18,000
  • Total Debt Load: Over $30,000

This HELOC was approved for the full 35K, and here is the math showing why it was approved;

$35,000 (loc request) ÷ $67,000 (equity) = 52%

The maximum percentage that TD allows for a HELOC is 80% (as shown above), so no problem. Of course the problem is if the person goes off and blows his total LOC on travelling (fun, but a total toilet flush for cash).

2. HELOC Request in Toronto, Ontario, Canada (Royal Bank – RBC)

The Royal Bank calls their home equity line of credit product a, “Royal Credit Line“, which sounds like loyalty, but it’s not. Same old deal – moves with prime rate.

Pictured here: RBC web site showing their Line of Credit Product

royal bank heloc offer Compare Home Equity Lines of Credit   Royal Bank, TD Canada Trust, CIBC, HSBC in Canada

For this case study we head east to Toronto, where Ben was looking for get a HELOC with RBC set up. (we get requests for all kinds of credit here at BucksForCanucks.com, including home equity loans – of course, we’re not a bank so we can’t provide a direct HELOC)

  1. Minimum LOC at RBC is $5,000 and no limit, all dependant on your equity level (fill your boots)
  2. Lowest Equity Level Allowed is $6,251 (as per item #1)
  3. RBC allows LOCs up to 80% of your equity (same as TD)
  4. Their web site doesn’t mention anything about a minimum equity level based on the percentage of your real estate

Toronto Consumer’s Line of Credit Application with the Royal Bank

  • Total HELOC Request: $50,000
  • Canadian bank you have your accounts with: Royal Bank
  • Owing on Mortgage: $367,000
  • Appraised Value of Home: $532,000
  • Equity in Home: $165
  • Credit Score: FICO 620
  • Debt To Income Ratio: 0.62
  • App Location: Toronto, Ontario
  • Applicant’s Country: Canada
  • Reason For Loan: Visa Bills and Other Random Debts
  • Earning Each Month: $4,140 (gross)
  • Employed How Long: 17 months
  • Urgency of Loan: Next week please
  • All Visa Card Debt: $4,300
  • Car Loan Balance: n/a (used car paid off)
  • Total Debt Load: Over $41,122
  • Existing Personal Debt With TD Canada Trust: $36,822

HELOC approved for 50K, math below;

$50,000 (loc request) ÷ $165,000 (equity) = 30%

Well within the max limit of 80% set forth by the RBC.

3. Home Equity Line of Credit  (HELOC) in Montreal, Quebec, Canada (CIBC)

CIBC does have a in-house created name for their HELOC product. It’s called their, “CIBC Home Power Line of Credit“. Little twist their with their product because it’s like saying you will be given the POWER of credit, when in fact they have the power to let you loose using your house as a virtual ATM.

Pictured here: CIBC Heloc Offer Page cibc heloc offer Compare Home Equity Lines of Credit   Royal Bank, TD Canada Trust, CIBC, HSBC in Canada

We got this note on an LOC application by a single mother living in Montreal, Quebec. She really needed to use some of her home equity to clear off some nagging debt. CIBC has a very cool little HELOC calculator too. Enter appraised value, what you owe on the mortgage, and the type of LOC you want (one-time amount, or revolving)

  1. Minimum LOC = $10,000
  2. Low-end equity limit = $12,500
  3. Allowing LOC up to 80% of the value of your home after subtracting your equity
  4. Must have 20% of equity in your home

HELOC Request from Consumer in Montreal, Canada with CIBC

  • HELOC Request: $75,000
  • Canadian bank you have your accounts with: CIBC
  • Owing on Mortgage: $500,000
  • Appraised Value of Home: $587,000
  • Equity in Home: $87,000
  • Credit Score: FICO 731
  • Debt To Income Ratio: 0.22
  • App Location: Montreal, Quebec
  • Applicant’s Country: Canada
  • Reason For Loan: Home Improvement
  • Earning Each Month: $6,140 (gross)
  • Employed How Long: 18 years
  • Urgency of Loan: In two months at latest
  • All Visa Card Debt: n/a
  • Car Loan Balance: n/a

This customer with the CIBC was only approved for a line of credit of $69,600, so they were reaching a little bit, but not too wild.

HELOC approved for 75 thousands, math below;

$75,000 (loc request) ÷ $87,000 (equity) = 86%

Above the limit of 80% at CIBC.

4.Home Equity Line of Credit (HELOC) in Vancouver, British Columbia (B.C.), Canada (HSBC)

HSBC doesn’t get too carried away with calling the HELOC something thrilling either. They call their HELOC product a “Home Equity Line of Choice“.

 

Picture below is of the HSBC HELOC offer (screenshot);
hsbc heloc offer Compare Home Equity Lines of Credit   Royal Bank, TD Canada Trust, CIBC, HSBC in Canada

This case study is for a Vancouver resident that wanted a HELOC of $750,000. This applicant lives in Kitsilano which is an area of Vancouver on English Bay. She wanted to start a small business on Davie Street in the West End, and she needed the line of credit for the initial capital.

  1. HSBC HELOC Policy: $10,000 – $350,000, up to $500,000 if you are a “premium client”
  2. Allowing HELOC up to 80% of equity, and 85% for premium clients (whatever)

HELOC Request from Vancouver with HSBC

  • Total Loan Request: $750,000
  • Canadian bank you have your accounts with: HSBC
  • Equifax Score: FICO 673
  • Debt To Income Ratio: 0.83
  • App Location: Vancouver, British Columbia
  • Applicant’s Country: Canada
  • Reason For Loan: Small Business Start-up
  • Period of Credit (fixed sum/on-time or revolving): revolving
  • Earning Each Month: $9,000
  • Employed How Long: Self Employed (franchise restaurant)
  • All Visa Card Debt: $74,000
  • Total Debt Load: Over $123,000
  • Car/Truck Model: Mercedes Sedan (2010)

In this case the consumer wants a line of credit that is $250,000 more than their limit for personal HELOCs. She will have to find an different avenue. You can see in the above customer’s information that they are going to have some trouble with getting any kind of credit, regardless of her current FICO score. She has DTI that is very high, so in other words she is spending too much on a monthly basis as compared to her monthly income. She will likely have to find a private loan from an investor. Same old thing – begging and pleading for start-up capital.

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2 Loan Requests

  1. Matt applied for the following loan:

    Loan: 130000

    Speed: June 2012

    Credit: 649

    Location: Paris, Ontario, Canada

    Income: i gross 5900 per month, I also have company vehicle and take approx. 10 000+ in bonuses per year. i have work at same company for 7 years and am part of management

    Reason:

    i am doing an addition to my house and would like an interest only loan for full amount as i am too busy to deal with an installment construction loan and the holdbacks. After completion i will be at 80%ltv after paying back loan.

  2. georgette applied for the following loan:

    Loan: 17,000

    Speed: asap

    Credit: 498

    Location: edmonton,alberta,canada

    Income: $1701 net every 2 weeks 4years 10 months at job

    Reason:

    consolidate and lower my monthly payment amount.
    $3500royal bank- this is in dispute and killed my 640 credit rating. i would like to pay off the settled lower amount. originally was$4500.
    $3,000 td vis
    $3500 scotia bank card
    $5800 easy financial- had surgery and was on short term disability getting 2/3 of pay. fridge and hot water tank went at same time. needed loan
    $1200 toward car repairs
    I would like to get ahead for a change. tired of paycheque to paycheque. my husband of 20 years left me and my young daughters in 2009. he worked. i was at home with our special needs daughter. i used the house to get some money. i got a job, credit cards, etc. i was climbing back up. then i had a bad accident. i had mobility issues so i needed to find a new job. i drained savings and maxed cards. i got the job i am in now. i am climbing up again but i find i am still playing catchup. i am asking for a chance to combine it all and pay it off at the same time freeing up cash for savings/emergencies. other than the royal bank issue where it was stolen and they refuse to cover charges, my credit is good. considering i had none after my husband left in 2009 because everything had been in his name. thank you for your time.

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