Negotiation script · HELOC
Script for negotiating a HELOC rate
HELOC rates are variable and are usually quoted as prime plus a spread. Prime moves with the Bank of Canada's policy rate, but the spread is set by your lender, and that is the part you can ask about. A HELOC can be up to 65% of your home's value, and combined with a mortgage, borrowing can usually reach up to 80%. Grade your rate first in the HELOC checker, which compares it with the Bank of Canada's average rate on new secured lines of credit, then use this script.
Score the offer first
The conversation
Adapt the wording to your situation. Be accurate about any competing quote you mention.
- You
Hi, I have a home equity line of credit with you and I'd like to talk about the rate.
- Lender
Sure. Your HELOC is currently at 6.45%, which is prime plus a spread.
- You
Thanks. I carry a balance of about $100,000, so the spread matters. I compared my rate with the Bank of Canada's average on new secured lines of credit, and I have a written quote from another lender at 5.95%.
Tip: Only mention a quote you actually have, and check that it's also a HELOC rather than an unsecured line.
- Lender
HELOC pricing depends on the overall relationship and the equity in the home.
- You
That makes sense. On my balance the difference works out to about $500 a year in interest. Is there room to reduce the spread over prime?
Tip: Ask about the spread specifically. A prime change affects every borrower; the spread is between you and the lender.
- Lender
I'd need to have it reviewed. Are there other products you hold with us?
- You
Yes, my mortgage and chequing account are here. I'd like to keep everything in one place if the rate is competitive.
Tip: Mentioning the relationship is fair as long as it's accurate.
- Lender
I can submit a request for a lower spread and let you know the result.
- You
Thank you. If it's approved, could you send the new rate in writing, showing the spread over prime and any fees?
- Lender
Yes, the confirmation will show the new terms.
- Balance
- $100,000
- Rate A
- 6.45%
- Rate B
- 5.95%
- Interest A
- $6,450
- Interest B
- $5,950
- Interest difference
- $500
- Monthly interest A
- $537.50
- Monthly interest B
- $495.83
If they say no
“"HELOC rates are all tied to prime, so there's nothing to change."”
"I understand prime is set by the bank. I'm asking about the spread over prime, which I believe can be reviewed. Could you check?"
“"Moving a HELOC is expensive."”
"That's worth knowing. I'm comparing the switching costs with the interest difference, which is about $500 a year on my balance. Can you tell me what a reduction would take?"
“"Your rate is already competitive."”
"Thanks. I have a written quote at 5.95% for a secured line. Could you look at whether you can come closer to that?"
“"We can only lower the rate if you increase the limit."”
"I'd prefer not to borrow more. Could you tell me what's possible on my current limit?"
After the call
- Get the new spread over prime in writing, and check that it appears on your next statement.
- Recalculate your interest-only cost with the HELOC interest calculator.
- If you're comparing lenders, total up legal, appraisal and discharge costs before deciding.
- Remember that HELOC rates are variable: a change in prime changes your rate, whatever the spread.
- If a large balance is likely to stay for years, the HELOC vs refinance guide compares the options.
Questions people ask
Can you negotiate a HELOC rate?
You can ask. The prime rate itself isn't negotiable, but the spread your lender adds to prime is set by the lender and can sometimes be reviewed, especially with a competing written quote.
How much can I borrow with a HELOC?
A HELOC can be up to 65% of your home's value. Combined with a mortgage, borrowing against your home can usually reach up to 80% of its value.
Why does my HELOC rate change?
HELOC rates are variable. When your lender's prime rate changes, usually after a Bank of Canada policy rate move, your rate changes by the same amount unless your spread changes too. See how the Bank of Canada rate affects you.