HELOC Changes Incoming

Banks across the land have been notifying customers of changes to their #readvanceable# mortgages.

Some of these notices appear written to create mass confusion. We've talked to a sampling of customers who got these letters and swore they were reading an alien dialect. Many are utterly bewildered by what's happening—and why. (All of which makes a good touch point opportunity for mortgage advisors.)

The puzzlement stems from a policy change OSFI announced 15 months ago. Its new rules limit how customers with readvanceable mortgages can reborrow paid-down principal when the total borrowing is over 65% loan-to-value.

"OSFI expects that any and all lending above the 65% LTV limit, which cannot exceed 80% LTV, will be both amortizing and non-readvanceable," the regulator says.