It recently came to out attention from our good friends at RateHub that n December 10th, ING Direct announced the launched of its newest mortgage product.
The new mortgage product ING has launched is none other than its very own Home Equity Line of Credit (HELOC). In case you were unaware, until Dec. 10, 2011, ING only offered close variable and fixed mortgage products to customers.
Although I missed the official launch of the product, it did not stop me from doing a bit of research into the launch of the new HELOC at ING.
What makes ING’s HELOC different from other banks?
With ING’s HELOC, you are able to earn a great low rate of 3.65% (ING Prime + 0.65%).
Outside of a great rate, ING plans to stick to helping keep your debt free; this is done with their Fixed Payback Plan.
The Fixed Payback Plan allows you to set up regular fixed payments to help pay off your account faster. Essentially, it takes away the temptation of making only minimum payments, by having you set up automated payments. You are also allows to decrease your limit online, which lets you avoid borrowing more than you need.
What other information came up when looking into the new HELOC?
I came across an article on Canadian Mortgage Trends, which revealed that ING Direct went “collateral”. What this means st that all new mortgages will be registered as collateral charges.
What are Collateral Charges?
A collateral charge differs from a standard charge as it is re-advanceable. Basically, the lender can lend you more money after closing, this is without the need to refinance and pay a lawyer. It is also non-transferable; this meas you cannot have your mortgage be switched to a new lender like a regular mortgage (there are fees attached to switch your lender).
From researching the term, I personally find that it affects more mortgage professionals than consumers, as with collateral charges it will make it harder to switch mortgage providers without having to pay legal fees.
For consumers, the biggest problem will be the fact that their negotiating leverage upon renewal is limited.
As usual there is a silver lining to things, and in the case of collateral charges, you are able to refinance your mortgage without having to incur any legal costs (of course this is with ING).
This works by ING registering all new mortgages collaterally at 100% of the property value. What this means is that if your house is worth $500,000 and you were able to get a $250,000 mortgage; ING will register the mortgage for $500,000. This means if you needed the extra funds, ING can lend it to you without refinancing with a lawyer
The new HELOC is definitely not a bad product to have for consumers, it is definitely a popular choice among homeowners. In regards to the collateral mortgages, to me there is nothing wrong with it. Consumers get to refinance at little to no cost, while ING can hold on to their business or at the very least have mortgage lenders offer to pay the fees to break the contract.
Personally, it is a pretty smart move, but then again, that is just my opinion on the topic.
What do you think of ING’s new HELOC?