CIBC Home Power Plan (HELOC)

What is a home equity of line of credit?

A home equity line of credit (HELOC) is a loan that leverages the equity in your home. The HELOC functions like a revolving line of credit where you can choose when and how much money to withdraw, so long as the amount does not exceed more than 65% of the value of your home. One of CIBC’s products that includes a home equity line of credit is called the CIBC Home Power Plan.

What is the CIBC Home Power Plan interest rate?

The interest rate for the CIBC Home Power Mortgage is variable attached to Prime, which is currently 6.45%. CIBC does not publish the interest rate on their website, as it is said to vary on a case-by-case basis.

Because the variable interest rate is dependent on Prime rate, if CIBC were to offer you a rate of Prime + 1.00%, your interest rate on a Home Power Mortgage would be 7.45%.

The details

Once you qualify for a home equity line of credit with CIBC, you can borrow anywhere from $10,000 up to 65% of the value of your home. It’s important to note, however, that your total home debt (mortgage + HELOC) cannot exceed 80% of the value of your home. With a CIBC Home Power Mortgage, your mortgage debt + HELOC are combined into one product and cannot add up to more than 80% of your home’s value.

Features:

• You can access your money through CIBC branches, bank machines, telephone banking, online banking, mobile banking, debit purchase or cheques.
• You’ll be offered competitive rates and an assured pay-off date.
• You don’t have to pay any monthly service fees.

Sample Calculation

The value of your home = $300,000
Your outstanding mortgage balance = $150,000

The maximum allowable total home debt would be calculated as:

$300,000 x 80% loan-to-value ratio = $240,000

Then, you must subtract the outstanding balance on your mortgage to get the total allowable line of credit amount:

$240,000 – $150,000 = $90,000

Now, you still need to make sure that $90,000 doesn’t exceed 65% of your home’s value. To be sure, simply divide the HELOC amount by the value of your home:

$90,000 / $300,000 = 30%

In this example, you could access $90,000* through a HELOC, which only amounts to 30% of your home’s value.

*Note: If your mortgage is with another lender – not CIBC – you may only be able to access a smaller portion of this amount.

The final word

The CIBC Home Power Mortgage is a mortgage product that can help you access the equity you’ve built in your home and use it to finance a renovation project or invest in something. A HELOC can also be used to pay off high interest debts. Before deciding to leverage your home, you should speak with a mortgage broker and come up with an option that will work best with your financial situation.