Quote:
Originally Posted by photon
I've got 2 HELoCs at prime - 0.5%, but been thinking about converting them (they're starting to become a problem when talking to banks about borrowing), it probably won't get much better than this eh?
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Instead of having a chequing account, savings account and a mortgage, I just have an All in One account with NBC. I use it basically as a bank account with a huge overdraft function that is secured by my house. The credit limit is the amount advanced to me to finance my house and is 75% of the original purchase price. It works for me because my pay cheques and deposits go directly against the balance outstanding and I minimize the total interest.
Where I've run into problems with the banks is when I bought a rental condo. I wrote a cheque from the account for $75,000. TD didn't like it because they said I was borrowing the down payment. I sort of was, and for tax purposes I definitely am so I can write off the interest, but I didn't see it as truly borrowing. I had paid off $200,000 of the principal over the last three years and was using some of this money to buy the rental condo. They wanted to see me take that money out of the All in One account and move to to a true bank/savings account. I said that was dumb as it would cost me $6.16 ($75,000 * prime / 365) in daily interest to have it in a separate account. After explaining it to the mortgage rep for about half an hour he finally understood what I was doing. It took a while, but he finally got that I had no obligations to pay down principal on my house (must pay interest monthly), but had paid down $200,000.
As long as they understand this in the end I'm happy, but I can't be the only one doing this. If structures are more complex and have different setups for tax purposes, I wish they'd bring in a colleague or higher up who can more readily understand what is happening.