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The HOMEWORKS Line of Credit

Optimum-MortgageNew HELOCs don’t come around every day. So, when we heard about Optimum Mortgage’s new HOMEWORKS product, we were anxious to “check under the hood.”

The HOMEWORKS HELOC launched in February. It comes with a lot of bells and whistles; features that Optimum’s Western Canada sales manager Bernie Budney says were developed in close consultation with brokers.

HELOCs are typically a product offered by “A” lenders, but Optimum Mortgage’s main business is non-prime lending.

“Our bread and butter is the BFS stated income borrower,” Budney says. “We’re getting into A-type mortgages to fill requests from our broker partners. We are not looking to change our focus from non-prime lending.”

However, the HOMEWORKS is certainly a prime product, in more ways than one. Here’s a quick rundown of its features and qualification criteria:

  • Minimum Beacon Score: 650
  • Application Types: Fully-qualifying owner occupied only (high-rise condos are case-by-case)
  • Maximum LTV: 80% (65% for acreages)
  • Maximum HELOC Size: There is no set maximum for the HELOC or mortgage portions
  • Maximum Amortization: 25 years on the mortgage portion
  • Qualified Using: The 5-year posted rate with a 25-year amortization
  • Payment Options: Set fixed payments, 3% of the balance monthly, or interest-only
  • Prepayments: The HELOC portion is open. Mortgage portions allow optional 20% lump-sum prepayments and optional 20% payment increases each year.
  • Convertibility: Yes. HELOC portions can be converted to a fixed- or variable-rate mortgage at any time at Optimum’s discounted broker rates.
  • Lending Areas: Major urban areas within 50 km of 100,000+ populations in AB, BC, MB, ON and SK.
  • Portability: Yes, for mortgage portions based on the new property qualifying and good repayment history (HELOC portions must be re-established).
  • Access to Funds: Available via debit card, cheque and online bill payments.
  • Online Account Info: Yes (prepayments can be made online as well, but just on the HELOC part, not the mortgage part. The client must call to make arrangements for prepayment on the mortgage.)
  • Multiple Portions: Yes (borrowers can have multiple portions, including one or more fixed mortgages, a variable mortgage, and/or multiple HELOC accounts)

The HOMEWORKS has almost every feature a HELOC borrower would want. The only glaring exception is automatic readvancing.

HELOCsMost readvanceable mortgages at banks have limits that increase instantly and automatically as you pay down principal on the mortgage.

With the HOMEWORKS, you have to call Optimum to get your limit increased. That can take up to a week (if approved) and Optimum prefers that these readvances are done no more than once a year. On a positive note, there are no fees to do so.

This product also has another useful feature. Each line of credit (LOC) is a full chequing account with its own unique account number. You can do all kinds of normal banking directly from the LOC, including bill payments, electronic transfers (in and out), and Interac email transfers. (Here’s a demo.)

The HOMEWORKS is currently available through brokers who have joined the Optimum Broker Partner Program, and also through Canadian Western Bank’s 40+ branches (albeit, with slightly different terms).

About Optimum & CWB: Optimum Mortgage is the broker-focused arm of the Canadian Western Bank Group (TSX: CWB). CWB’s origin dates back to 1984. It recently reported its 95th consecutive profitable quarter, spanning 24 years.

Robert McLister, CMT