Heloc Approved – 2.5 Months Later

heloc

Heloc Approved – 2.5 Months Later

It took about two and a half months but our Home Equity Line of Credit has finally been setup. I seriously don’t know why it took as long as it did but its done. What a process!

At the start of the year I mentioned how we would be refinancing our house to pull out some equity and put that cash to work. I wanted to make a solid rrsp contribution before the deadline to get a size-able tax return and Hopefully max both of our tfsa’s by year end. Also add to our private investment and let that snowball really take hold.

Process

At the start of January I called rbc to ask about refinancing our house. They told me we could refinance now with 0 fees as our mortgage comes up for renewal in June. Sweet I thought get 2 things done at once, renew the mortgage and get cash for investing. We got all our paperwork together and met with the banker. 5 minutes later we were told it would cost about 2 thousand bucks to refinance because we would need to wait until Feb 15th for it to be free. What a waste of time, I thought and lets be honest I wasn’t very happy.

Then he mentioned we could do a heloc and he would wave all the fees since its a new product for us. The rate would be slightly higher than the mortgage but would be less than half of our current line of credit interest rate. After Feb 15th we could refinance it into our mortgage if we wanted.

I mentioned how I wanted to use the money for investing and specifically for rrsp contributions before the March 1st deadline. Oh no problem! I’m actually transferring to a new role as a financial advisor Feb 1st, we should easily get this approved by then. And by the way your assets are enough that I could be your financial advisor…… I’ll pass bud, just the heloc please.

So they have all our paperwork within a couple days. Then the home appraiser comes mid January. The markets hot here, we have done very well… and then we don’t hear anything…… End of January I email him hey hows it going? Just waiting to be processed any day now.

Middle of February I email them and get forwarded to the new agent since the other guy went to a financial advisor now. Any updates? Hey Rob nothing yet but your mortgage is up for renewal wanna renew now? No lets get this done.. Will it be done by end of February? Oh yeah for sure…

End of February I email them again like 5 days before deadline.. Oh its all setup you gotta sign these papers online, Ill send them now and then you and the wife got to come in and sign titles. I’ll let you know when I get that paperwork setup. I look into the paperwork and they signed us up for life insurance on this heloc at some pretty high rates… Call her back and cancel that right away and now wait for new paperwork. Later that day everything is there, so we sign the papers for it to be all setup Feb 28th but then don’t hear anything about signing the title… (I kinda wonder if they breached the contract we signed by not setting it up in time, but who knows)

So now we are past the rrsp deadline, 2 months into this…. So I email them again – This is insane, I could of gotten a house with any other bank in faster time than this. If this is not setup by March 9th we will then move our mortgage, credit cards and all our investments to another bank and cancel our account with you guys. Its unfortunate we have to go this route but clearly that got things moving.

Oh so sorry I dunno why this is taking so long but we are really busy.. A couple days later the titles are ready for us to sign. But the paperwork says they are going to charge us 550 bucks. wtf! This was supposed to be free. The manager comes in, oh Rob so sorry I dunno why this has taken this long to setup, but don’t worry about those fees you wont need to pay them, we really want your business.

A couple days later and everything is setup. Finally! The next day I see this.

heloc

The $18,912.13 was our existing line of credit that I used to make rrsp contributions before the deadline knowing this heloc would eventually be setup. Anyways you can clearly see they charged us the $542.70.

Arg! Time to call them again.. Hey its me again, you guys charged me that 540 bucks, that we said you wouldn’t. She starts telling me you can see they refunded the $542.70 what am I talking about. OMG serenity now! I have to tell her that obviously they added it together and to get it removed. I even told her it looks like they did that just to screw people thinking they got refunded.

Then a mortgage agent comes into the call and they finally agree yeah I did get charged. Hey by the way your mortgage is up for renewal, you should renew now because rates go up daily! Arg… Bud this process has been going on for 2 and a half months now and I’m not even going to talk mortgages until you guys refund that $540 and this is finally done.

The next day the refund was there and the phone was ringing. You wanna renew? haha. I’m gonna shop around whats your best rates? We will give you a discount because of all this and it will be 3.2% 5 year fixed. I looked around and that was actually a good rate. Oh the good old days of our 2.59% mortgage rate. Anyways we signed the dotted line and that was done in a day..

What a crazy process, but at least we shouldn’t have to deal with the bank for 5 more years..

Heloc

We didn’t get approved for as much as I initially planned. They said banks are tightening up their lending at the moment and also they couldn’t include my income… I thought this was really weird. I have been landscaping for over 20 years but the winters I always do other work. I was doing renovations for someone in December but had to quit once kids had to do home schooling again in January. (This is when we applied so technically I was unemployed) I didn’t sign up for unemployment or anything so I had no income at the time.

Its all good though, we still got a tonne of cash to work with. And its kinda nice knowing we got approved for this without even including my income. =) I already put another 50k into our private family investment which will give us a 12% yearly return, this will easily cover the interest of the heloc at 3.2% if we max it out. We also added more stocks to the portfolio focusing on maxing out that tfsa.

Due to the lower than anticipated Heloc my new goal for 2022 is a forward passive income of $27,500, considering we brought in $17,009.91 in 2021 that’s a monster increase.

Conclusion

As I’ve stated, this has been a heck of a process but we are glad to have it all setup now. Really watch what your signing and what your getting charged. There is probably a lot of people out there getting charged those fees and signing up for life insurance on loans. Its way cheaper to just buy term life insurance.

As for using loans for investing, this is a risky move and definitely is not for everyone! You really need the right mindset to handle the volatility of the market, and also not to spend that money on other things. The goal for us, is to make that money work harder for us. Equity on paper really isn’t working for you. I’ll gladly pay 3.2% to get a higher rate of return but nothing is guaranteed. The market could easily drop 20% tomorrow and I would of been better off investing then. I’ve got a long term investing horizon, over a long time historically the market always go’s up.

Also for me personally, I’m hungrier when we got debt. People can get pretty laid back when they are debt free, cough cough. Spring is here, time to grind and time to get that money compounding.

Let’s Go!

 

8 Responses

  1. Norm says:

    It’s sad that so many companies continually provide poor customer experiences at an individual customer level. Glad to hear you were finally able to secure those funds!

    Two important questions….. 1) How do I sign up to invest with your family and guarantee that 12% consistent return!? 2) What stocks will you be purchasing with your leverage? I know you’ll keep us updated on this one!

    • Rob says:

      hey Norm

      It was a heck of an experience to say the least… but it’s done atleast.

      The family investment I really can’t talk to much about as that would stir things up with the security exchanges or something like that, but it’s been good to us.

      I just heard we partnered with a company and now have a oil rig in Texas. This is a trial for a couple months and we will see how things go there.. Pretty cool though.

      I have been busy this month, I’ll do a post next wk about it probably but since your always commenting I’ll give ya a heads up. (appreciate it)

      I bought a bunch more algonquin power, some more disney, timed lmt perfectly and sold some at 476 to bring it down to 5% of the portfolio. (luck) bought more apd with those proceeds.

      bought more couchetard, national bank (got that drip now) and today I restarted a solid position in Aecon group.

      Used to have that one but sold at 20$ when they were gonna get bought out by that Chinese company that got denied.

      May add a lil more tc energy to get 2 drips a quarter and that’s it for this month.. (well unless something screams at me)

      have you been buying anything?

  2. Ken says:

    Banks frustrate me to no end. We went for 2 new HELOCs for our rental properties with BMO last year. It took from the end of May till Oct 20 and only because I pushed. Lucked in and got 1.84% locked in for 5 years. I find it almost amazing that banks make so much profits providing no customer service and frustrating the heck out of customers.

    • Rob says:

      hey Ken

      wow that’s a long time as well, in a way its kinda a relief to hear that. I seriously had no clue why things took so long. That’s a fantastic rate! did you just buy more real estate with the proceeds?

      Banks definitely got it pretty good, great investments! haha kinda like telco’s.
      cheers ken!

  3. Cris says:

    A HELOC is one of the best option to use if you want to invest. If you want to use it for personal buys then you can get with big debt.
    One think to keep in mind, do not borrow money for investing and for personal expenses at the same time as you will not be able to deduct the interest to the taxes.
    You mentioned that you took 50k to invest in a private business. What I would do, I will call the bank to create a segment in HELOC for 50k and I will pay it as mortgage (variable rate at ~2%). Rate is lower then HELOC interest and in case that you have to pay it off then the penalty will be only 3 months interest.
    Good luck with your investments.

    • Rob says:

      hey Cris

      Appreciate the advice. I have thought about tracking the 50k for tax purposes, never thought of what you have said. Will look into it
      cheers

  4. Norm says:

    I really enjoy the unlimited possibilities investors have to achieve similar goals. I made a years worth of purchases in Jan/Feb and picked up more of BMO, BNS, BEPC, DGRO, ENB, FTS, GWO, MFC, POW, T, TD, ZDY, ZSP, and ZRE. Also added TRP as a new position. Wanted to add more AQN but I picked up so much late 2021 sub $18 Canadian, so has to resist.

    Your purchases were completely different than mine, and I love that because we are both achieving our goals! So many ways to succeed if one simply sticks to a plan. Mad respect for you guys continuing to own USA stocks directly. I generate $0 in RRSP room on an annual basis so thus I own US ETFs instead.

    One of these days I should add Couche Tard but whenever I look at the math it’s never a priority buy for me.

    You own a (partial) oil rig! Awesome! Heard a rumour that oil will continue to be a primary fuel source for decades 😉

    • Rob says:

      Wow nice Norm

      That’s a great list and like you said completely different from our purchases. (although a bunch overlap the portfolio) CoucheTard has really grown on me, Definitely one id like to continue to beef up.

      Like you said its all about continuing to achieve our goals, great to see us both continuing to feed the beast and increasing that income!
      cheers Norm

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