“The bank called us and offered us a $300K HELOC on the $315K leaky condo without us even asking for it.”

“Our personal experience in 2008 really shook my confidence in how mortgage and HELOC approvals are handled by banks.
We used to own a 1Bedroom 1 Bath 780 Sqft “Penthouse” in East Vancouver, one block to Commercial Drive.
It was a good location, we renovated it from the inside, great so far… However the building had major issues from the outside and needed a complete rainscreening job. The Strata members fought each other for a long time and renovations were postponed while the damage got worse. Our share when it finally got done $78K.
We had no mortgage on it at the time and were able to get a loan from CMHC for the repairs which we took because it was interest free. Anyways, we sold the place for 315K after the renovation was done and made a good profit as I had bought it very cheap, back in 2001 when everybody was afraid of leaky condos and there were no buyers for this even though the location was great and the unit was nice from the inside.
Here is the part that shows the recklessness of lending though: After we were approved for the CMHC funds one of the major 5 banks who we were banking with at the time called us and offered us a HELOC on the place without us even asking for it.
I asked them how much could they give us and the answer was that based on the location, size and age they can give us up to 300K if we wanted to.”

Mike at VREAA 23 Dec 2012 2:14pm

18 responses to ““The bank called us and offered us a $300K HELOC on the $315K leaky condo without us even asking for it.”

  1. Check the headlines of the globe and mail..Real estate is crashing

  2. Very common. CIBC called us and told us to buy more houses as rates were low. Now you know why you see so many Porsches and BMWs and Mercedes around. It’s all an illusion.

    • Good lord, I’m in “oil rich” Calgary right now. The lack of high end German automobiles is a shocking change from Vancouver. Although there are noticeably more penis-size-compensatingly large pickup trucks with all the premium packages added.

    • When CIBC starts pushing a “business/lending concept”, the trend is at its very end. CIBC always jumps in late, but jumps in with both feet and usually end up having their heads handed to them by the market.
      – Latin American lending in the 1980s.
      – Telecom lending in the late 1990s.
      – “No-collateral” Reichman loans in early 1990s.
      – Oppenheimer in the late 1990s.

      CIBC… great contrarian signal.

      • UBCghettodweller

        “Now, I am become Death, the destroyer of worlds.”
        -J. Robert Oppenheimer

        I sure as hell would lend to Oppenheimer too.

  3. outside soviet republic, anthem sings you! … http://tinyurl.com/ca459k7 … happy holidays! 😀

  4. Completely off topic. I just found out that in Russia non-residents have to pay 30% tax when they sell a RE property there, and even the Russian citizens are considered to be non-resident tax wise if they leave the country for more than 183 days in 12 consecutive months …It makes the RE speculation a very unattractive idea.

    • Real Estate Tsunami

      In HongKong it’s 15%.

      • 4SlicesofCheese

        The honestly do not care.
        Lose 15% when you sell ( at the rate of appreciation in HK these couple years who cares, not that it is guaranteed going forward ) or the possibility of losing it all back home.

  5. Real Estate Tsunami

    They care, because they are not stupid.
    A paper gain can quickly be erased when the market turns south.
    simple math. Assume your asset of $100,000 appreciates by 100%.
    So now it”s worth $200,000.
    Assume a drop in value of 100% and you have a paper loss of $ 100,000.
    Again, assuming you put 10% down, and you need to sell, you own your creditor $ 90,000 cold hard cash.

  6. First lien HELOCs are one of the safest investments around. In the U.S., homeowners with paid off homes are being denied HELOC’s even when the HELOC is for only 25% value of the home and there is no mortgage and the homeowner has a 725 score.

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