By Tony Wanless
The Province
Sunday, December 09, 2001

One mortgage trick some homeowners may want to apply doesn't involve a mortgage at all.

That's because many financial institutions are now offering homeowners large lines of credit (LOCs) instead.

"If you own more than 50 per cent of your home, you'll have a good chance at getting a line of credit instead of a mortgage," says Vancouver financial adviser Adrian Mastracci of KCM Wealth Management Inc.

"Some institutions are very eager to do it. I've had some clients arrange it in as little as five minutes."

Lines of credits are preferable to mortgages because they're more flexible, don't carry penalties, allow the homeowner to pay as much as he or she wants on the loan, and involve very little in the way of rules that govern most mortgage contracts.

Another trick comes into play if you want to refinance your mortgage, but you're not sure if you should lock in long term or go for a more volatile, but cheaper, variable-rate mortgage.

Why not do both?

"If you can pay the long-term rate, say six per cent, but can get a variable-rate mortgage at four per cent, take the variable rate and pay the long-term rate on it," says Mastracci.

"That way you're taking advantage of lower rates and building in a cushion to cover any interest rate rises that may come up.

"You're also knocking your mortgage down much faster."

Most mortgages have prepayment restrictions, however, so those trying this trick may want to do the numbers to ensure they're not breaking them.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.