How soon can I do a HELOC in Canada🇨🇦?

Question

Hello biggerpockets community,

So here is my scenario

We bought a house last year for 408k  after hearing they had lowered the price because it needed some TLC.

After buying this home last year , our Cul de sac is now pushing prices of 500k + all homes selling for over asking, average house on our cul de sac being listed for 479k+ and sells in 2 weeks.

Is there any money we can get out of this home this soon to move to a different market to invest into a investment  property or way too soon ?

I am new to this but investing is my long term goal

Our current mortgage owing is 389k

Educate me 😁

Thanks!

Brian Hosier · Answer

Hi @Jovan Lewis and welcome to BP, you're in a great community for REI. Others such as Account Closed have already answered your question and unfortunately you're maxed out. As already stated, the max is 80% of appraised value and this was our experience this year when we refinanced our home with a 65% HELOC and 15% traditional mortgage, for a total LTV of 80% through RBC.

I can see you're motivated and eager to start quickly. However, real estate is also a game of patience and in your current situation you likely have no choice but to wait either for mortgage pay down or for appreciation.  If I was in your shoes, I would spend the next 24 months trying to accelerate your mortgage pay down and then see if there's been any appreciation. If you are able to pay down an additional $20-40k and your home has appreciated 5-10%, that might just give you enough equity to get started as an RE investor in a more affordable market.

Account Closed · Answer

@Jovan Lewis  here is a good explanation:  https://www.ratehub.ca/home-eq...

In Canada, you can access up to 65% of the value of your home through a 
home equity line of credit. However, it's also important to remember 
that your outstanding mortgage loan balance + your HELOC cannot equal 
more than 80% of the value of your home.

To determine how much equity is at your disposal, start by taking your 
home’s current market value and multiplying it by 80%. Next, subtract 
the balance of your mortgage. The remaining figure is how much you can 
access through a HELOC - so long as the amount is not worth more than 
65% of the value of your home. To be sure, simply divide the HELOC 
amount by your home's market value.

So... you have no availabl equity to borrow against and likely won't for some time, unfortunately.

Jovan Lewis · Answer

@Yu Liu

Thanks for your response Yu

When you say 80% would that be to  the appraised  value?

And the 65% revoling credit would be of what can out of the refinance?

Correct me if I'm mistaken.

Yu Liu · Answer

YEs, as long as you have equity over 20% you will be eligible for a refinance. And whenever you would like to apply those, banks usually send appraiser to evaluate.

Yu Liu · Answer

Yes, it's always the appraised value. We always use independent appraiser to do the evaluation.

Account Closed · Answer

@Jovan Lewis  you would have to appraise at $486k to start seeing untapped equity. Likely nothing there for you...

Account Closed · Answer

@Jovan Lewis most traditional lenders will allow you to refinance up to 75% LTV on  your principal residence.  You owe $389k on a property worth $480k and are already leveraged at 81%... you have no additional equity to borrow against.

Jovan Lewis · Answer

@Brian Hosier much appreciated  for the greetings !

I will definitely  have to play the patience game.

It will be some time before getting an additional  20k on the mortgage.

But who knows what the year can bring haha

Hopefully in a few more years I can tap into some equity if this market continues in the direction it is,  to start the RE investing journey.

Great info btw !

Jovan Lewis · Answer

@Chris Baxter

Looks like I'll be looking for OPM to start my investing journey.

Jovan Lewis · Answer

@Yu Liu

Great info !

So even though I bought a house only a year ago this would still be possible after receiving  a appraisal?

How soon can I do a HELOC in Canada🇨🇦?

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