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gabbyk

PSLOC - applying changes retroactively

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Hi - I'm currently shopping around for PSLOC and I've narrowed it down to TD and Scotiabank.  I have accounts at Tangerine, RBC, and TD so I'm not fond of the idea of opening accounts at another bank (Scotia) and rather just reconcile into one bank (looking like TD now since RBC's PSLOC was just a horrible offer). But I'm fully aware that Scotia has a much better reputation for PSLOC. 

Just a couple questions though!

1. Just like how Scotia had changes in offering this year (bump from 100k to 125k) if there are changes again in the next year or so, will Scotia allow these changes to be applied to existing PSLOC? Do any other banks do that?

2. I plan on making monthly interest payments from my own savings, so Scotia's perk of the interest payment grace period isn't so appealing to me (btw, how does paying out of LOC for interest vs. interest just being accrued automatically and calling it as "no interest payment required until..." any different?) That being said, without this option, isn't TD's PSLOC pretty much the same as Scotia's since I don't need a cosigner or TD and interest is at prime for both?  Aside from additional $10K if needed during articling year - TD wouldn't offer this. 

Any two cents on how to tackle this would be highly appreciated!  I also might transfer to the US (as part of the program offered) so I also need the flexibility to be able to have easy access to the loan... which is another reason why I'm leaning towards TD.

Thank you soo much in advance!

 

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I just signed up with Scotiabank, primarily because of the better deal I was offered compared to RBC (my current bank).  In addition, the Scotia rep is making the entire process a breeze, so I don't really have any regrets with the switch, despite them wanting me to close all my RBC accounts and consolidate everything.

 

In terms of your questions...

1.  I would imagine, since you're required to submit proof of enrollment each year in order to secure funding, that changes to the PSLOC could be applied retroactively.  I think this is where having a good contact at your bank will help, as he/she will be able to push for a better deal on your behalf.

 

2. I think Scotia's rationale behind having no interest payments required is to eliminate the hassle of having to transfer funds from your LOC to your chequing simply to "make a payment".  That being said, having that interest add to your balance will contribute to you hitting your limit, so that's definitely something to be wary of.

 

I hope this helps!  Feel free to PM me if you having any more questions about the process.

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2 hours ago, GeraltofRivia said:

I just signed up with Scotiabank, primarily because of the better deal I was offered compared to RBC (my current bank).  In addition, the Scotia rep is making the entire process a breeze, so I don't really have any regrets with the switch, despite them wanting me to close all my RBC accounts and consolidate everything.

 

In terms of your questions...

1.  I would imagine, since you're required to submit proof of enrollment each year in order to secure funding, that changes to the PSLOC could be applied retroactively.  I think this is where having a good contact at your bank will help, as he/she will be able to push for a better deal on your behalf.

 

2. I think Scotia's rationale behind having no interest payments required is to eliminate the hassle of having to transfer funds from your LOC to your chequing simply to "make a payment".  That being said, having that interest add to your balance will contribute to you hitting your limit, so that's definitely something to be wary of.

 

I hope this helps!  Feel free to PM me if you having any more questions about the process.

Thank you so much!  And agreed with your comment on RBC - their deal isn't so sweet :(

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On 6/6/2018 at 11:18 AM, gabbyk said:

Hi - I'm currently shopping around for PSLOC and I've narrowed it down to TD and Scotiabank.  I have accounts at Tangerine, RBC, and TD so I'm not fond of the idea of opening accounts at another bank (Scotia) and rather just reconcile into one bank (looking like TD now since RBC's PSLOC was just a horrible offer). But I'm fully aware that Scotia has a much better reputation for PSLOC. 

Just a couple questions though!

1. Just like how Scotia had changes in offering this year (bump from 100k to 125k) if there are changes again in the next year or so, will Scotia allow these changes to be applied to existing PSLOC? Do any other banks do that?

2. I plan on making monthly interest payments from my own savings, so Scotia's perk of the interest payment grace period isn't so appealing to me (btw, how does paying out of LOC for interest vs. interest just being accrued automatically and calling it as "no interest payment required until..." any different?) That being said, without this option, isn't TD's PSLOC pretty much the same as Scotia's since I don't need a cosigner or TD and interest is at prime for both?  Aside from additional $10K if needed during articling year - TD wouldn't offer this. 

Any two cents on how to tackle this would be highly appreciated!  I also might transfer to the US (as part of the program offered) so I also need the flexibility to be able to have easy access to the loan... which is another reason why I'm leaning towards TD.

Thank you soo much in advance!

 

Just out of curiosity why would you borrow money if you have savings you can use.

I would be using the money you have set aside in your savings before borrowing any money, unless that money was tied up in some fashion. At the end of the day that will be more cost effective for you. I'll use some fictitious numbers below to illustrate my point.

Scenario 1:

Savings balance $5,000

LOC Balance $10,000 @ 3.45%

Interest cost each month: $28.75

 

Scenario 2:

Savings balance $0

LOC Balance $5,000 @ 3.45%

Interest cost each month: $14.38

 

Ideally you'll want to use any savings you have prior to borrowing any money, it will save you from paying interest. The only scenarios where it wouldn't make sense to do so would be if the return you are getting on your savings was higher than the cost of borrowing, or if it was locked in somehow. If you have your savings set aside as a just in case/emergency type fund, just remember that you can easily access the funds from your LOC for that purpose too.

 

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2 hours ago, ScotiabankLawAdvisor said:

The only scenarios where it wouldn't make sense to do so would be if the return you are getting on your savings was higher than the cost of borrowing, or if it was locked in somehow.

exactly this. locked in investments but can liquidate next year so a portion will go towards interest.

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