Friday, August 17, 2012

Important information surrounding the policy changes for Home Equity Line of Credit

Big changes in how Ottawa real estate is financed are coming.  This important information is surrounding the policy changes for Home Equity Line of Credit (HELOC) with TD Canada Trust.


On June 21, 2012, the Office of the Superintendent of Financial Institutions (OSFI) announced a series of changes to lending guidelines that all federally regulated financial institutions (FRFI) must adhere to as part of prudent residential mortgage underwriting. One of the key changes states that all FRFIs must ensure that revolving HELOCs are limited to a maximum loan-to-value (LTV) of 65%. Effective August 19, 2012, non-amortizing HELOCs will have a maximum LTV of 65%.


- EXISTING HELOC’s will not be affected.
- maximum lending with a HELOC is 65% LTV whether in 1st or 2nd position combined
- Re-finances must comply to the maximum lending of 65% LTV.
- Approved but not yet funded deals with LTV higher than 65% will be grandfathered.


Please note that all federally regulated Financial Institutions must comply with the new guidelines which state that a HELOC cannot exceed 65% LTV. This will not be a strictly TD policy – all other banks will be following suit.

For information on Ottawa real estate, please contact the Bennett Property Shop Realty Brokerage and for further clarification on the financing changes taking place, please contact Lilianne Eid at TD Canada Trust.


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