Quote:
Originally Posted by brownie
Do they blend it right in with the mortgage or is it totally seperate???
Brownie
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You can have it either way.
Teamchachi, above, has his entire balance owing as a secured line of credit.
I, on the other hand, have a blend of a traditional mortgage and secured line of credit. It is called a Matrix Mortgage, and the one I have is with FirstLine Mortgages.
The first $190K is a traditional 5 yr closed mortgage, with a fixed rate of 5.5%. As is typical, a payment comprised of interest and principle is required each month. A one time, yearly, payment can be made in addition to the monthly payments, and that amount can be up to 20% of the outstanding balance. Additionally, the monthly payments can be increased by up to 25% each year if I desire, or decreased by the same amount if I ever had increased it.
The amount from $190K to 75% of the total value of my home is a secured line of credit, that floats at prime (6% right now). Only the interest is payable each month, on the balance of the line of credit. As I pay principle on the $190K mortgage part, it becomes available to borrow with the line of credit. In practice, I can always have outstanding debt that equals 75% of my home's value, if I desire. All, or part, of the line of credit can be paid at any time.
This type of mortgage is a great product for me. It is awesome having over $150K instantly available by just writing a cheque. Very quick access to the money can allow you can take advantage of all kinds of investment opportunities that, otherwise, you may not have been able to. I could have gone with the full 75% HELoC, as Teamchachi did, but it was a little too risky for my taste - I didnt want to have to deal with a huge debt load if the prime rate shot up too far and too fast, at a time when I happened to be using the line of credit. I felt the Matrix Mortgage was a good blend for me and my situation at this point.