You hear a lot about home equity lines of credit (HELOC) these days, but those pushing them are not disclosing all the details. According to Paolo Di Petta, a broker with EQRON Mortgage, big banks are choosing to sell consumers on home equity lines of credit since they require less maintenance and require no renewal work. In other words, the banks are making more money and doing less work with HELOCs than with mortgages.
What does this mean for you?
- The banks are wising up. They’ve realized how they can save time and make money. And besides pushing HELOCs more than mortgages, they’ve also begun to raise mortgage rates slightly to see if the market is stable enough to yield even more money.
- The banks are also maximizing the HELOC’s potential. When there is equity in a HELOC, the banks are able to hide the small print, meaning you may be signing a contract that will penalize you and your equity. Delinquencies and defaults are easier to hide in this type of HELOC.
- The banks are smart. HELOC and hybrid (all-in-one) products give them more control over a client. In other words, once you are locked in to a HELOC or hybrid product, the banks have more control over your mortgage, line of credit and equity.
- Banks may begin to sacrifice volume for margins, which means you may be looking at mortgage rates increasing as mortgage volume decreases.
The bottom line is banks want to make the most amount of money for the least amount of effort. I am exactly the opposite. Getting you the best mortgage for what you need or want is my focus. And that means making sure my clients are as educated about their mortgage as possible. Transparency is crucial. It ensures my clients are happy and safe. And I sleep better at night, knowing I’ve done all I can to secure my client’s future success.
If you, or someone you know, has a bank mortgage or are looking to receive a mortgage through your bank, I’d love to meet with you. The range of mortgage options is vast; don’t let the bank control your money!