And so it begins…
Effective September 4, 2012 National Bank is implementing the new Home Equity Line of Credit (HELOC) rules. Notification was sent out to brokers today and I suspect we’ll see the banks follow suit here shortly. OSFI, the bank regulatory body, has until year end, October 31, to implement the new rules.
The new rules means that the maximum loan to value for HELOC’s is 65% of the homes value, down from the current 80%. If you have a HELOC currently, you will only be able to re-advance once the balance has been bought down below the 65% LTV threshold and only to a max of 65%. This change will no doubt negatively impact responsible investors. The thought is that the change will limit the irresponsible home owners looking to use their homes as ATM’s. However, this doesn’t stop the irresponsible homeowner from securing a second position HELOC up to 80% of the homes value for the purposes of consolidation. I’m confused…
If you have a HELOC and are wondering how this may affect you, give us a shout. We are happy to help.
Before you go, leave us your thoughts on the new changes.
