Daily Archives: January 21, 2011

Question: Home Equity Line of Credit

Question for my readers.

My parents recently went to the bank to open a savings account.  The associate who assisted my parents asked them if they had a mortgage, and my parents said no.  He then asked if they had a home equity line of credit, to which my parents also said no.  He then asked if they would like to open a line of credit with them, to prevent a second mortgage to be taken out under my parents’ property by someone else.

Ummm.  What?!

My parents declined, but when they told me this, it really bugged me.

These are my thoughts:

  • The bank is not making (as much) money off my parents since they don’t have debt (no mortgage, no line of credit, no vehicle financing, nada)
  • The bank is using a scare tactic to get my parents to take out money so they can make money off the interest
  • What kind of a bank allows someone other than the owners take out a mortgage on a property they do not own? Don’t they require proof of ownership?
  • Even when someone signs up for a credit card they need to provide proof of employment – how is this any different than a mortgage (or second mortgage) and proof of ownership?

Readers, does what this associate say have any merit?  Or is he just trying to make a sale by a (pathetic) scare tactic?  Have you had any experience with this?

Thanks for your help.

Update: I’ve had readers question which bank I am referring to.  I am in Canada and the bank is TD Canada Trust.





Filed under Finance, Personal