Maximum Mortgage Flexibility With a FlexLine
A unique mortgage product, generally referred to as a FlexLine, combines a re-advancable HELOC home equity line of credit with a mortgage (term portion in an open or fixed rate), as a way to use your most powerful borrowing tool – your home. Because your home produces no income, home equity is useless unless you borrow against it (or sell), the saying “you can’t eat your house” comes to mind.
A FlexLine may be used to purchase a new home, refinance/transfer an existing mortgage, or take out equity on a mortgage-free home. A FlexLine is popular among those entering into retirement as well, as it allows individuals to tap into an additional stream of income by reinvesting the equity from a home. This product is also widely used by those looking to generate a wealth strategy structured to make your mortgage interest tax deductible (but speak to a knowledgeable financial planner before attempting this!).
Once set-up, a FlexLine allows immediate access to available credit without the need to reapply for additional credit. As you pay back the amount you owe, the amount of credit available to you increases until it reaches your approved credit limit. It allows:
- You to borrow up to 80% total loan to value (LTV) with a term portion or 65% at HELOC only, amounts of each fully customizable.
- One application and one registered charge on title.
- OAC.
A FlexLine is a mortgage product where your home still acts as collateral. However, here are some key differences: - With a straight mortgage, you receive a loan for a single amount. That amount plus interest must be paid back over time.
- With a FlexLine, you can have a term portion plus you gain ongoing access to credit HELOC portion. As you pay down your outstanding balance on the term portion, your available credit in the HELOC increases up to your credit limit.
Term portion: put all or a sum of your outstanding balance into a term portion and establish regular payments at a fixed or variable interest rate for an open or closed prepayment term. As you pay down your outstanding balance, your available credit increases in the HELOC up to your credit limit.
HELOC portion: get a variable interest rate that changes with the Prime Rate. As you pay down your outstanding balance, your available credit increases up to your credit limit. You can pay at your own pace without prepayment charges – pay as little as interest only or pay any or all of your outstanding balance at any time.
How much can you borrow?
You may borrow up to 80% of the value of your home. A minimum 20% down payment or equity is required.
What do you need to qualify?
You may qualify if you meet minimum acceptable credit score & ratios and can show proof of adequate income.
Which documents do you need?
Depending on your situation, you will need your most recent statements for any mortgages, loans, property taxes as well as proof of income.
Your favourite mortgage broker can assist with a FlexLine application. Ask about all options as a few lenders offer this distinct product. *BONUS* one lender has a cash-back promo right now, giving cash- back from between $500-5100 (conditions apply!)!
Candace Perko,
Mortgage Broker
