Laurentian Bank has an interesting product that’s been flying under the RADAR for a while. It’s called the Homeowner’s Kit.

The Homeowner’s Kit is a readvanceable mortgage and a hybrid mortgage in one.  It was launched in Quebec in 2006 and in Ontario in 2008.  (Other provinces are expected in early 2010.)

Laurentian’s Manon Stébenne says the Homeowner’s Kit encompasses both “mortgage and mortgage line of credit products under a single lending umbrella.”

Its primary benefit, like most readvanceable mortgages, is access to liquidity (i.e.,  access to the equity that’s locked in your house).  That works basically like this:  As you pay down your mortgage–or your home rises in value–your available line of credit can be increased without reapplying.  That lets you easily pull out equity for emergencies, investments, renovations, etc.

To date, Laurentian hasn’t marketed the Homeowner’s kit very much.  Despite that, Stébenne says it’s had “excellent success.”  It is now Laurentian’s top-selling product for refinancing purposes.

The Key Features:

• Maximum LTV:  80%
• Allowable Segments: Up to 3 different lines of credit and up to 3 different locked-in mortgage portions (handy for diversifying interest rate exposure)
• Allowable Debt Ratios:  30/38
• Minimum Beacon:  650
• Portable:  No (It is not portable or assumable)
• Registration:  100% of property value (this enables increases to the LOC limit as the property value rises)
• Qualifying Rate:  3-year posted
• Qualifying Amortization:  20 years

The qualification standards are rather stringent compared to Laurentian’s competitors but Stébenne says that’s on purpose.  The conservative guidelines let customers safely request more credit “without needing to repeat the qualification process.”

The biggest beef some might have with the Homeowner’s Kit is its lack of automatic readvancing.  Once equity builds up, borrowers must call Laurentian to ask them to manually readvance this equity to the LOC.  That makes it less convenient than products like the FirstLine Matrix, National Bank All-in-One, and RBC HomeLine. It also makes the Homeowner’s Kit less than ideal for strategies like the Smith Manoeuvre.

In sum, however, the Homeowner’s Kit is a fantastic extension to Laurentian’s mortgage lineup—and one that adds lots of flexibility.  The fact that it’s available below the standard prime + 1% LOC rate is a bonus.

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More About Laurentian Bank

Founded in 1846, Laurentian Bank of Canada is a Schedule I bank operating nationwide. In the Province of Quebec, Laurentian operates the third largest retail branch network. Elsewhere in Canada, it operates in specific market segments, both online and through intermediaries. Laurentian Bank of Canada has more than $21 billion in assets and more than 3,500 employees.