• Transcript of Video Blog:

    Hi, everybody. It’s Rowan Smith from the Mortgage Center. I want to talk today specifically about lines of credit. More importantly I want to talk about lines of credit that you want to keep but you maybe want to renegotiate maybe the mortgage in front of it. This is something that comes up from time to time.

    Let me give you an example. Suppose you had a $100,000 mortgage on your $500,000 home. But you also had a $100,000 line of credit from a different institution. When you’re first mortgage comes up for renewal and you want to renew it, your choice is to stay with that institution or replace that mortgage amount dollar for dollar from another institution.
    Now, to do that you need the permission of the line of credit company that’s issued that line of credit. They have to grant, what’s called a grant priority or offer priority agreement allowing the new mortgagor to go in front of them on title.

    Now, this becomes problematic when someone just wants to renew but they want to move from one bank to another bank. In that case you often can’t, it’s not as simple as just a renewal. And unless you’re keeping every single feature of the mortgage the same, the amortization, the remaining amortization and what not, then it can be switched over.
    But if you want to get an extra five grand for some small renovations or you want to borrow some money to pay off a car loan or what not, in order to do that you have to get rid of that line of credit. That doesn’t mean that you can’t set up a new one with the new institution, it just means that that existing one will have to be collapsed as part of it.

    If you have any questions about this or you want to know if there’s a way to work around in your situation, because there are examples where you can do the mortgage without redoing the line of credit, please give me a call. It’s Rowan Smith from the Mortgage Center.

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