Insane HELOC Fees?

Question

Hi All, I'm looking for a first-lien HELOC as my rental is paid off. The Value is 300k, and I'm looking to pull 15K out for renovations between tenants. TD Bank informed me, to do a HELOC on an investment property, they would need to have an appraisal done as well as closing costs, so even though I only need 15k, expect to pay 4k in closing costs???

How are you guys doing your HELOCs for rentals, for how widely they're talked about, no one really mentions the fees.

Thank you!

How are you guys doing your HELOCs for rentals, for how widely they're talked about, no one really mentions the fees.

Thank you!

Jim Johnson · Answer

Those fees aren't unusual for investment-property HELOCs. Many lenders treat them closer to a small refinance than a simple credit line, which is why you'll see appraisal, title and closing costs—even for a smaller draw.

A lot of owners run into this when the line amount is relatively small. On a $15K pull, $4K in costs obviously feels disproportionate. Some investors avoid that by either opening a larger line for future flexibility or using a cash-out refinance if they plan multiple projects.

It's also worth checking with smaller local banks or credit unions. Some portfolio lenders are more flexible with fees on investment properties than the large national banks.

HELOCs get talked about a lot but the cost structure can vary quite a bit depending on the lender and whether the property is owner-occupied or investment.

Pierre Guirguis · Answer

That actually doesn’t sound too far off for a first-lien HELOC on an investment property.

A lot of the HELOCs people talk about online are on primary residences where banks will waive appraisal and closing costs. Once it’s an investment property, lenders tend to treat it more like a small mortgage, so you end up with appraisal, title work, and standard closing costs.

The frustrating part is those costs don’t really change whether you’re pulling $15k or $100k, so on a smaller draw they feel disproportionate.

If the property is free and clear, sometimes lenders will structure it as a first-mortgage HELOC or even a small cash-out refinance instead of a traditional line, which can change the cost structure depending on the lender.

Did TD mention whether that $4k estimate included appraisal and title, or was that mostly lender fees?