The Merix HELOC Is Back

Merix There’s a new readvanceable mortgage in town.  After an 11-month hiatus, Merix Financial has re-launched its HELOC

Compared to Merix’s previous iteration, this version is somewhat unique.  For instance:

  • You can have up to a three components:  a 5-year fixed, a 5-year variable and/or a line of credit (LOC).  If you like, your mortgage can be split among these segments.
  • You can lock in $25,000 portions of the LOC to a fixed or variable rate at any time.
  • Unlike most lender’s HELOCs, this one is fully insured (so Merix can securitize it)
  • The entire mortgage–including the LOC—is portable (a nice feature not found in many readvanceables).
  • Since it’s insured, TDS can go up to 44% with a 680 Beacon

Merix’s HELOC is also unique in that it has a defined term (5-years).  Most open HELOCs don’t have terms.  Merix says it needed to make it a 5-year product because it’s easier to securitize.

The trade-off of this is the penalty.  If you break it before five years, Merix charges 3-months interest or IRD or an administration fee—whichever is greater (IRD applies only to fixed portions).  The administration fee equals .025% of the total authorized loan amount times the number of months remaining.

The penalty applies even if the entire mortgage resides in the LOC portion—which is unusual.  This is attributed to the considerable fees lenders must pay to set up HELOCs in the Canada Mortgage Bond program.

On the upside, the HELOC is fully and automatically readvanceable.  In other words, as soon as you make a mortgage payment (or pre-payment), your available line of credit increases instantly and proportionately.

Some more details…

  • Minimum Beacon:  680 (650 for secondary applicants)
  • GDS/TDS:  35%/42% (up to 44%)
  • Term:  5 years
  • Maximum LTV:  80% (0.15% higher rates apply above 75%)
  • Mortgage Types:  Owner occupied, 2nd homes, rental (1-4 units), and BFS
  • LOC Sub-accounts:  One
  • Qualification Rate:  3-year fixed rate or contract rate
  • Prepayment Options: 
  • Fees:  $5 per month
  • Maximum Amortization:  25 years
  • Pre-Approvals:  Not available
  • Down Payment:  Must be from own resources
  • Maximum Loan:  $1 million (or more if customer pays the insurance premium)

Our wish list for this product is relatively short:

  1. Multiple sub accounts (a la National Bank’s All-in-One, Scotia’s STEP, BMO’s Readiline, etc… Multiple LOC accounts are handy for segregating personal and investment borrowing.)
  2. Online account access and funds transfers (Currently, you need to fax or email LOC withdrawal requests.)
  3. No penalty for breaking if the mortgage is entirely in the LOC portion (That said, Merix notes that its HELOC is not intended for short-term financing options.)

All in all, it’s great to have Merix back in the HELOC game.  Its new HELOC has some positive traits and is definitely worth a look.

______________________________________________________

Please note:  Other details may apply. Speak with a Merix-approved mortgage planner for complete information.

  1. WOW !!!!
    A 44% TDSR with a 680 credit score……there’s no subprime here in Canada Wilma……!!!! LOL !!!
    Oh I know Betty……there’s nothing to se hee, everything will be all right. Mark Carney is such a good man.

  2. Carioca,
    I’ve been drinking but I don’t think that is why I am unable to understand you.
    Is there any logical reason you are equating 680 credit with subprime mortgages?
    I must believe there are more direct ways to illustrate your obtuseness.
    Your good friend,
    Whats YourPoint

  3. I’m pleased that Merix has reintroduced this product. They state that the HELOC is not intended for short term financing and most clients who avail themselves of this product are generally in it for the long term. Why, then, is it that a broker will only be paid 20bps on the revolving portion one year after
    funding ?

  4. this launch is not worth all the buzz its getting. As a broker, this product is the last alternative of HELOC offerings I would consider to sell to my client – (i) too many limitations/conditions/etc (ii) 20 bps after 1 year!?
    ***HELOC business continues to belong to the big banks
    nice try, MERIX.

  5. If Merix has great rates this HELOC will sell. If they keep it at prime + 1% then maybe not.
    I agree with the article writers that it is good to have more competition in the HELOC market regardless.

  6. Scotia STEP is a portable hybrid HELOC. Though most brokers wont put a customer into a multi level product since it is harder for them to pay out in 5 years and send the customer to another institution.

  7. From what I was told, the Scotia STEP line of credit is NOT portable.
    I’m pretty sure you have to pay it out or refinance if you move.
    Does anyone know for sure?

  8. Generally a STEP comprises several components, therefore, it is not considered portable. However, the mortgage component could be ported to retain the existing rate and term with the requirement that a new mortgage is registered against the new property.

  9. this is the only HELOC you continue to get paid on every year. The broker isnt paid “only 20bps one year after funding”, WF, they are paid 20 bps every year.

  10. So what would happen if a person wanted to move and had a STEP with both a line of credit with a 5 year fixed mortgage?
    Would he have to pay a penalty (since one cannot port the STEP due to the line of credit)?
    Assume that the person has $100,000 on the STEP credit line.

  11. Merix made a serious strategic error by withholding upfront compensation on the HELOC portion. IMO this product is no competition for the Matrix, STEP, All in One, and other bank products. Merix should lower the LOC rate to prime if they want any hope of success.

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