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The Big Story: HELOCs

The right product for the right client. This is especially true for HELOCs, which now account for almost 50 per cent of non-mortgage debt. Even as government moves to cool this market by withdrawing its backing, brokers are finding more lenders are offering them the product. Brokers caution however, that HELOCs need to be used wisely. They need to present the product properly and advise responsibly, so the best long-term interests of their clients are met. This week we spoke to, Ron Alltree, Kunaal Bhalla, Sarah Makhomet Deepak Bansal and Jonathan Tillger, of Dominion Lending Centres Mortgage Village. Find out on today’s The Big Story, on MortgageBrokerNews.ca TV, your home for industry news, opinion and analysis.

Video transcript below:

John Tenpenny, Mortgage Brokers News TV
John Tenpenny:
 Hi, I’m John Tenpenny, Editor of CMP Magazine and welcome to the Big Story on Mortgage Broker News TV.

The right product for the right client, this is especially true of HELOCS, which now account for almost 50% of non-mortgage debt.  Even as the government attempts to cool the market by withdrawing its backing, brokers are finding lots of lenders offering the product.  However, brokers caution that HELOCS need to be used wisely and they need to present the product responsibly so that the long term interest of their clients are being met.
 
Sarah Makhomet, Dominion Lending Centres, Mortgage Village
Sarah Makhomet:  Absolutely, there is a lot of opportunities for mortgage brokers with Heloc products and a lot of clients are asking for them and therefore I do think it is a great product for the right client.  Meaning that if the client is disciplined enough to pay down their mortgages soon as possible, that will be a right product.  If the client is looking to use that equity in a home on a regular basis as an ATM machine, that would not be the right product.  So a HELOC is the right product for the right client as long as it is used properly.
 
Deepak Bansal, Broker, Dominion Lending Centres, Mortgage Village
Deepak Bansal:  Absolutely, I do feel that the opportunity is there for brokers to provide a lot more Heloc options, specially with interest rates still at all time lows and a lot more lenders offering Heloc products, but it’s not always the best thing for a client.  So we really have to do what’s in the best interest of our clients and as mortgage professionals, it’s our responsibility to outweigh the pros and cons, look at our client’s short term, long term goals and see if this product really is in their best interest.
 
Ron Alltree, Mortgage Planner, Dominion Lending Centres, Mortgage Village
Ron Alltree:  Personally I think it’s a great opportunity for brokers.  I think what you are looking at is a vehicle that can be used and if it’s advised properly and presented intelligently, you’ve got a great vehicle for a borrower to be able to take advantage of creating an intelligent tax result for themselves in the borrowing side of things and also to look at how they can better facilitate their own investment strategies by using Helocs.  So these are great things to have, again they need to be properly advised where they can have a great end result for a borrower.
 
John Tenpenny:  Making sure to know everything about your client’s situation is imperative and while HELOCS give consumers more choice, brokers must safeguard their use.  
 
Jonathan Tillger, Broker Dominion Lending Centres, Mortgage Village
Jonathan Tillger:  There definitely is an opportunity here, when it comes to HELOCS though, really have to look at the client and is it the right product for the client.  I know that a lot of clients get into it and it’s being sold [heavy], it’s interest only therefore it’s a lower payment.  The problem with that is, they never actually pay down the principal, so clients can be in situations where they are carrying the debt for a long period of time without it ever going away or being reduced.
 
Kunaal Bhalla, Agent, Dominion Lending Centres, Mortgage Village
Kunaal Bhalla:  More product offerings are always a good thing for consumers, more product offerings equal greater choice.  However we as professionals have to safeguard the consumer against using HELOCS as an ATM machine.