Personal LOC / Mtg Question
 

I know there are a few personal lenders here. Question....

I am looking to buy a place (with about 20 - 25% down payment) next year, and I was looking to get a personal line of credit in case of emergency. With zero debt, strong credit history, applying for a LOC (around 10 to 20k) now, would that hurt my DSC or in any other way when I apply for my mortgage?

My personal banker told me to get one now cause it'd be harder after I get my mortgage...

Thanks all in advance!

the credit would likly effect your max mortgage amount you could borrow. but I'm no banker.

this may or may not be an issue, depending on what you can currently borrow vs what you plan on spending.

Since you have no debts, getting approved for 10k personal line of credit should not affect your ability in obtaining a mortage. When i bought my place, i already had 10k or so used up in my LOC and was still approved for a $380k mortage with an excellent rate.

If you aren't approved for a PLOC, once you are approved for your mortage, you can always secure your LOC then against your place since your putting up a significant portion of down payment.

1. personal lending is based on a calculation of current commitments to your income, thus getting a line of credit approved now with your obligations of housing possibly at 0 if living at home as opposed to having a mortgage payment, utilities and property taxes is in fact easier
2. if will not affect your mortgage application, the worse thing that could happen is that your mortgage provider will request for you to close the line of credit/ consolidate any balance into the advance of the mortgage
3. if you put anything over 20% down you have a conventional mortgage as opposed to a high ratio, twofold benefit A- u will save on CMHC fees which is an insurance cost your lender will require to protect against default as there is limited equity, and B - you can likely go into a home equity mortgage

to elaborate - say purchase price of $300,000 20% downpayment ($60,000)

you will have a home equity mortgage limit of $240,000,
as you pay down your mortgage to say $220,000 you will have a $20,000 line of credit against the property as the $240,000 is your approved limit. The allocation does not matter as long as you are within your limit. so eventually you would have a $240,000 secured credit line.