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.