TD Bank is one of the 10 largest banks in the United States and provides retail, small business, and commercial banking products to more than 9 million customers throughout 1,250 locations.
TD Bank offers two popular home equity financing options — home equity lines of credit and home equity loans. Both can be used to renovate and improve your home, consolidate debt, fund your child’s education, or even help you buy your next home (if you’re willing to get creative).
TD Bank’s low-interest rates and flexibility in loan terms stack up well against the competition. The bank’s offerings allow you to tailor your loan based on your financial objectives.
Let’s dive into the specifics on the two financing options offered by TD Bank.
What is a Home Equity Line of Credit?
Home equity lines of credit (HELOCs) are lines of credit taken out on an existing home based on the amount of equity you have built up. To determine the equity you have acquired in your home, simply take its current assessed value minus any amount you still owe on your first mortgage. This is the amount of equity you may be able to borrow against in a home equity loan. Keep in mind that most banks don’t lend out this full amount. 80% loan-to-value (LTV) is most common.
A HELOC has a draw period and a repayment period. A draw period is an amount of time (typically a year or more) in which you can pull money from your line of credit and pay only interest on your monthly payments. The repayment period (which is the loan term) follows the draw period and is when your full payments begin, including both principal and interest. Similar to a credit card, you only have to make a payment if you have an existing balance.
TD Bank Home Equity Lines of Credit
Rates and Requirements
TD Bank offers interest rates for HELOCs as low as 4.59% annual percentage rate (APR), as of April 2019. However, to get this rate you have to have a line of credit of $200,000 which can be a high amount for which to qualify. The minimum line you can apply for is $25,000 but there is no minimum draw.
Interest rates can vary based on your credit score, your state, the length of the loan, and your loan amount. Interest rates on a HELOC are also variable throughout the life of the loan and are based on Prime (currently 5.50). APR is capped at 18%. You do have the option to fix the interest rate on a portion of your line, but it must be a minimum of $5,000.
TD Bank offers a 0.25% rate discount by setting up auto-payments from a TD Bank personal checking account. Interest on a HELOC may be tax-deductible, so check with your accountant when completing your taxes.
TD Bank’s HELOC includes an annual fee of $50 on any loans above $50,000, plus a $99 origination fee. You may also be charged an early termination fee of 2% of your outstanding principal balance (up to $450) if you pay it off and close your account less than 2 years after you originally opened it, so be sure to read the fine print.
What is a Home Equity Loan?
With a home equity loan, a bank uses the equity in your home to approve you for a set amount of money in a lump sum. Similar to a traditional mortgage, but unlike a HELOC, the interest rate on a home equity loan is fixed and doesn’t change throughout the life of the loan. Loan terms typically range from 5 to 15 years. The borrower makes monthly payments of the same amount to pay off the principal amount of the loan plus interest by the pay-off date.
TD Bank Home Equity Loans
Rates and Requirements
TD currently offers fixed interest rates on 10-year home equity loans for as low as 4.79% APR. This rate is for a loan amount between $100,000 and $499,000 so your rate may not be this low depending on your specific terms. TD Bank also offers an auto-pay discount of 0.25%. The minimum loan amount they will offer for a home equity loan is $25,000, and the loan term can range from five to 30 years.
Like a HELOC, TD Bank’s home equity loan charges an origination fee of $99. While no early termination fee is listed on their website, it’s best to check your specific loan terms if you’re thinking of paying off early to make sure you won’t incur a penalty for doing so.
Using Home Equity Financing to Buy a Home
Both HELOCs and home equity loans can be used as a down payment to purchase an investment property or a second home. If you get creative, you could even use these funds for a down payment on a new home while trying to sell your current one, though this can be a bit risky and you’ll need to have the loan in place prior to putting your home on the market.
If you’re considering any of these scenarios, reach out to an experienced, local real estate agent for guidance and support throughout the process. As a buyer using a Clever Partner Agent, you may be able to get up to $1000 back on the price of your home. Home buyer rebates (or commission rebates) are when a real estate agent who’s helping their clients buy a home gives a portion of the commission they receive from the seller back to their client.