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I have a Home Equity Line of Credit (HELOC) in Canada, Quebec. I have a co-signer on it. The co-signer is not on the deed of sale or the mortgage. I would like to release the co-signer, so he does not have the obligation on his credit file.

The bank confirmed that I can support the HELOC on my own. I do not use the line of credit part, there's 0 balance on it.

In order to remove the co-signer, the bank wants me to refinance and take out $20,000 in equity. They suggest that I put the $20,000 back into the mortgage. I'm allowed to do a lump sum once a year of 15%. So technically the debt is exactly the same as before, and, I quote the bank rep "everybody wins".

I'm told it's the bank's policy, and they cannot simply remove the co-signer from the product. The refinancing solution seems like a waste of my equity.

Do I have the right to request the removal of the co-signer from HELOC ?

What other options do I have ?

I can only think of converting HELOC into a standard mortgage, but I'm told I would need to switch from variable rate to a fixed rate. Fixed rate would really be a disadvantage for me, considering how low the variable rates are today.

mhoran_psprep
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Roman Mik
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1 Answers1

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If there is a zero balance, why not shop around for a HELOC (with no co-signer) from another bank/company? Then you can compare that to the offer from your bank to remove the co-signer from your existing HELOC.

Isn't there another option -- to close the existing HELOC, with the consent of your co-signer? Maybe that should be your first move; opening a new HELOC (with your bank or another bank) could be the second move.

Orange Coast- reinstate Monica
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