With CIBC's Home Power Plan®, you can take advantage of the equity you have in your existing home to buy another property. You can combine a line of credit and a mortgage, in order to consolidate all of your personal credit under one simple, low-interest and secured borrowing solution, which can be adjusted to meet your changing needs.
You can also use this line of credit even if you don't currently own a home.
Whether you're looking at purchasing a primary or secondary residence, there are pros and cons to buying with a home equity line of credit as opposed to a traditional mortgage.
Using a home equity line of credit to buy your home
Buying a house with a home equity line of credit has several benefits that a mortgage doesn't offer.
1. No prepayment penalty: The payment schedule on a line of credit is more flexible, so you are able to pay ahead without incurring penalty fees. With a traditional mortgage, you may incur fees when you pay more than a certain percentage of the loan amount.
2. Reusable credit: As you pay down your line of credit, you'll still have access to the full limit. That's because a line of credit is reusable unlike a home loan. So, if you want to use the funds to remodel your home, help your kids pay for university tuition, buy a car, or invest in stocks, you can do that.
3. Possible tax deductions: If you choose to invest the money from your home equity line of credit in non-registered investments like stocks, bonds, securities, mutual funds or the like, you can deduct the interest cost incurred from your taxes.
Using a mortgage to buy your home
You may prefer to go the route of a traditional mortgage, as many homebuyers do, if you would rather not explore investment opportunities, or have less than a 20% down payment.
If you don't play the stock market or wish to spend time exploring investment opportunities that could result in tax deductions, that aspect of the home equity line of credit would be of little use to you. With a mortgage, your involvement doesn't have to extend beyond the monthly payments.
With a traditional mortgage, you don't need to have a 20% down payment. In the event you don't have that much or would simply prefer not to put down that much, you have the option of lower down payments.
Work with CIBC on your lending needs
To help you make the final decision, you should consult your tax and/or investment advisors. No matter which route you choose, CIBC offers competitive rates and repayment terms that can make your dream of homeownership a reality. Work with a CIBC advisor at 1-866-525-8622 to start your application for a home equity line of credit online.