TD Bank HELOC review: An option to lock in your rate

A couple reviews plans for home improvements they're making using a TD Bank HELOC.Image: A couple reviews plans for home improvements they're making using a TD Bank HELOC.
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TD Bank HELOCs at a glance

  • Fixed or variable rate: Variable
  • How to withdraw funds: Checks, Visa card, transfers to personal checking or savings account
  • Origination fee: Yes — $99
  • Loan-to-value ratio: Varies
  • Time to fund: Unclear

TD Bank offers home equity lines of credit, or HELOCs, with no minimum draw requirement and the ability to borrow only what you need, up to your credit limit.

Pros

  • Option to lock in a fixed rate
  • Rate discount opportunity for TD Bank checking and savings customers
  • No minimum draw required

Cons

  • Multiple fees
  • An appraisal may be required
  • In-person closing required

4 things to know about a TD Bank HELOC

Let’s take a look at some of the key features of a TD Bank HELOC.

1. Ability to lock in rates while continuing to draw from your HELOC

You can choose to lock in a fixed interest rate on all or a portion of your outstanding HELOC balance at any time during the draw period or the repayment period. If you do this during the draw period, you can continue using your HELOC to access your home equity, up to your credit limit.

There are no setup fees with this option, either. This can be a benefit for borrowers looking for interest-rate and payment stability, particularly in a rising-rate environment.

TD Bank allows you to lock in a fixed rate on a minimum of $5,000 at a time, and you can have up to three fixed-rate options outstanding at once. The maximum term of your fixed rate cannot extend beyond your repayment period.

2. Multiple fees can increase total borrowing costs

A TD Bank HELOC has multiple fees.

  • $50 annual fee for amounts starting at $50,000
  • Early termination fee of 2% of the outstanding principal balance, up to a maximum of $450, if you pay off your HELOC and close your account within 24 months from the date you opened it
  • A $99 origination fee when you initially take out your HELOC
  • Closing costs for HELOCs with credit lines greater than $500,000 as well as for HELOCs on co-ops and investment properties
  • A mortgage discharge fee may apply if you use your HELOC to refinance a home equity loan, line of credit or mortgage

3. There’s no minimum draw, but a minimum credit line is required

TD Bank offers HELOCs starting at a minimum of $25,000. But it doesn’t require a minimum draw if you only want to access a little bit of that at once. This may save you on interest charges by allowing you to borrow only what you need, when you need it, up to your credit limit.

4. Overdraft protection and rate discounts available

TD Bank also offers a product called TD EquityAccess PLUS, which provides all the same features and interest rates as its HELOC as well as an option to add overdraft protection during the application process. Some borrowers may appreciate having access to this additional protection.

It’s also worth noting that TD Bank offers rate discounts to its existing banking customers. It currently advertises a 0.25% rate discount if you set up (or already have) a TD Bank checking account.

Who is a TD Bank HELOC good for?

The flexibility to draw funds when you need them makes TD Bank’s HELOC attractive to borrowers who have equity in their homes and want to access money for projects without having to take out separate home improvement loans. The low origination fee can also make this HELOC an attractive option for those who want to access their home equity with more flexible terms than the fixed terms in a cash-out refinance.

How do I get a TD Bank HELOC?

Although there are several steps involved in the application process, TD Bank is clear about what to expect. You can start the application process online but will need to visit a TD Bank branch to close on your loan.

TD Bank HELOCs are available on one- to four-family primary and secondary residences. Exclusions include RVs, boats, mobile homes as well as homes that are for sale, under construction or located on leased land.

Lines of credit greater than $500,000, co-ops and properties with values greater than $2.5 million may be subject to additional terms and conditions.

As you prepare to apply for a TD Bank HELOC, it may be helpful to have the following documents on hand:

  • Paystubs from the past 30 days
  • W-2 forms from the past two years
  • Tax returns from the past two years (if you’re self-employed)
  • Photo ID
  • Proof of homeowners insurance (and flood insurance, if needed)

Not sure if TD Bank is right for you? Consider these alternatives.

  • Bank of America HELOC: This national bank offers a HELOC with no application fee, no closing costs, no annual fees and no fee to convert to a fixed-rate option. 
  • Figure: This online lender can help you skip an in-person appraisal.

About the author: Beth Deyo is a personal finance freelance writer with a bachelor's degree in Finance from the University of South Florida. She is also a Certified Financial Planner™ with 14 years of wealth management experience. She … Read more.