26 Feb

What is a Collateral Mortgage?

General

Posted by: Kimberly Walker

A collateral mortgage is a way of registering your mortgage on title. This type of registration is sometimes used by banks and credit unions. Monoline lenders, on the other hand, rarely register your mortgage as a collateral charge – which is an all-indebtedness charge that allows you to access the equity in the home over and above your mortgage, up to the total charge registered.

What this means is that you may be able to get a home equity line of credit and/or a readvanceable mortgage, or increase your mortgage without having to re-register a mortgage. This is a real benefit to you in some cases because re-registering your mortgage can cost up to a thousand dollars.

However, there are some negatives to having a collateral mortgage.

  • First and most glaring – because it is an “all indebtedness” mortgage – it brings into account all other debts held by that lender into an umbrella registered against your home. This means that your credit cards, car loans, or any related debt at your mortgage’s institution can be held against your home, even if you’re up to date with your mortgage payments.
  • Secondly, if you want to switch your mortgage over to a different lender, they may not accept the transfer of your specific collateral mortgage. This means you’ll need to pay additional fees to discharge the mortgage and register a new one.
  • And lastly, collateral mortgages make it more difficult to have flexibility to get a second mortgage, obtain a home equity line of credit from a different institution, or use a different financial instrument on your home. This is because your collateral mortgage is often registered for the whole amount of your property.

To recap, collateral mortgages give you the flexibility to combine multiple mortgage products under one umbrella mortgage product while tying you up with that one lender. While this type of mortgage can be a great tool when used correctly, it does have its drawbacks. If you have any questions, a Dominion Lending Centres mortgage professional can help.

14 Feb

The role of the insurer in a mortgage

General

Posted by: Kimberly Walker

Any time a down payment for the mortgage is less than 20%, it is required that the mortgage must be insured thru an Insurer. Why does this mortgage need to be insured, who provides this type of insurance, what does this insurance mean, who is the beneficiary, how much does this insurance cost? All these questions need to be addressed when your down payment is less than 20%.
To start, we need to know certain terms.
High Ratio Mortgage – Also known as insured mortgage is any mortgage where the down payment is less than 20%, also defined where the loan to value ratio is more than 80%.
Conventional Mortgage – Any mortgage where the down payment or equity is 20% or more and in other words the loan to value ratio is less than 80%.
There are three companies in Canada that provide this type of insurance, Canada Mortgage Housing Corporation, Canada Capital and Genworth.
The insurance is needed to provide flexibility to buyers in Canada to purchase a property with as little as 5% down payment at the same time the lender is the beneficiary as it protects them in case the borrower defaults on the loan.
The insurance premium is paid once as a lump sum at the time of the purchase of the property and can be added to the mortgage. Premium amount depends upon the down payment and the insurer and can be anywhere from 1.8% to 4.5% of the borrowed amount.
Since insured mortgages are less risk to the lenders, they in turn can offer lesser and more attractive interest rates and mortgage terms.
Another thing to keep in mind is that this insurance is NOT the same as Mortgage Life Insurance. In your life insurance, the beneficiary is the person who you select to be; usually a family member so in case anything happens to you then your family is protected, and your mortgage loan is paid off. But in High Ratio Mortgage Insurance the lender is protected in case the loan defaults. If you have any questions contact a Dominion Lending Centres mortgage professional near you.

13 Feb

What’s an acceptable down payment for a house?

General

Posted by: Kimberly Walker

Ask people this question and you will get a variety of answers.  Most home owners will say 10% is what you should put down. However, if you speak with your grandparents, they are likely to suggest that 20% is what you need for a down payment.

The truth is 5% is the minimum down payment that you can make on a home in Canada. If you are planning on buying a $200,000 home then you need $10,000.

It all can be explained by the creation of the Canadian Mortgage and Housing corporation (CMHC) by the Canadian government on January 1st, 1946. Before this time, you needed to have 20% down payment to purchase a home . This made home ownership difficult for many Canadians. CMHC  was created to ease home ownership. This was done by offering mortgage default insurance. Basically what CMHC does is it guarantees that you will not default on your mortgage payments. If you do, they will reimburse the lender who gave you the mortgage up to 100% of what the homeowner borrowed. In return lenders allow you to purchase a home with a smaller down payment and a lower interest rate.

CMHC charges an insurance premium for this service to cover any losses that may occur from defaulted mortgages. This program was so successful that CMHC lowered the minimum down payment to 5% in the 1980’s.

However, if you have little credit history or some late payments in the past they may ask you to provide 10% instead of the tradition 5% if they feel there is a risk that you may default at some time.

You should also be aware that the more money you put down, the lower your monthly mortgage payments will be. You also can save thousands in mortgage default insurance premiums by putting 20% down.  At this time,  home buyers who put 5% down have to pay a fee of 4% to CMHC or one of the other mortgage default insurers to obtain home financing. On a $400,000 home this is close to $16,000.

If you can provide a 10% down payment the insurance premium falls to 3.10% and if you can provide 20% it drops to zero.  While 20% can seem like an impossible amount to save, you can use a combination of savings, a gift from family and/or a portion of your RRSP savings to achieve this figure. The best recommendation that I can make is to speak with your Dominion Lending Centres mortgage professional to discuss your options and where to start on your home buying adventure.

6 Feb

What is the Canadian Mortgage and Housing Corporation (CMHC)?

General

Posted by: Kimberly Walker

The Canadian Mortgage and Housing Corporation (CMHC) is a corporation that most are semi-familiar with, but do not know what CMHC actually does.

CMHC is Canada’s authority on housing. They contribute to the stability of the housing market and the financial system. They also provide support for Canadians in housing need and offer objective housing research and advice to Canadian Governments, Consumers and the Housing Industry.

CMHC offers a variety of different services, all pertaining to Canadian Housing. These services include:

1. Policy and Research
One of CMHC’s cornerstone services is the provision of market analysis information, housing-related data and information, and key housing sector data and information. They are one of Canada’s leading sources of reliable and objective housing market analysis and information. Their research and activities support informed business decisions, policy development for governing bodies and housing program design and delivery.

2. Affordable Housing Measures
CMHC (on behalf of the Government of Canada) also is the primary funder for affordable housing endeavors across Canada. Each year, CMHC invests approximately 2 billion on behalf of the Canadian government to help provide safe, affordable, stable housing opportunities for each province and territory. CMHC oversees approximately 80% of the existing social portfolio administered by provinces and territories, and manages the remaining 20% independently to fund federally housing units such as housing cooperatives. They also work under the IAH (Investment in Affordable Housing) Act, which allows for cost-matching the federal investment to allow for new construction, renovation, homeowner assistance, rent supplements, shelter allowances, and more.

3. Consumer Assistance
The final key services that CMHC offers to Canadians is providing relevant, timely information that can be accessed and used by the public. On their website you can access detailed information on topics such as the:

  • CMHC green building and renovation practices
  • Homeowners How-To Guides
  • Housing Related Research
  • Homeowner grants and opportunities

4. Mortgage Loan Insurance
In addition to the above, CMHC is also the #1 provider of Mortgage Loan Insurance to Canadians. Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5%* – with interest rates comparable to those with a 20% down payment. In addition to CMHC, there are also 2 other primary mortgage loan insurance providers, Genworth Canada and Canada Guaranty.

CMHC strives to promote mortgage literacy and provide home buyers with in depth knowledge and tools to help them prepare to purchase a home.

Essentially, CMHC is the Canadian Government’s organization that seeks to inform and educate Canadians on the housing and mortgage industry. It reports to the Parliament of Canada through a Minister, governed by the Board of Directors. CMHC makes recommendations based on it’s data and surveys to advise and assist the government of Canada in making decisions that directly impact the mortgage and housing industry. For instance, the date and information provided by CMHC provided information that led to:

February 2016:
Minimum down payment rules changed to:

  • Up to $500K – 5%
  • Up to $1MM – 5% for the first $500K and 10% up to $1MM
  • $1MM and greater requires 20% down (no mortgage insurance available)
    Exemption for BC Property Transfer Tax on NEW BUILDS regardless if one was a 1st time home buyer with a purchase price of 750K or less.

July 2016
Still fresh in our minds, the introduction of the foreign tax stating that an ADDITIONAL 15% Property Transfer Tax is applied for all non-residents or corporations that are not incorporated in Canada purchasing property in British Columbia.

October 17, 2016: STRESS TESTING
INSURED mortgages with less than 20% down Have to qualify at Bank of Canada 5 year posted rate.

January 1, 2018: B-20 GUIDELINE CHANGES
The new guidelines will require that all conventional mortgages (those with a down payment higher than 20%) will have to undergo stress testing. Stress testing means that the borrower would have to qualify at the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%

While CMHC does not implement or guide the mortgage/housing changes, they play an integral part in them. They provide the cornerstone of data that the provincial and federal governments use to determine updates, rules, and changes to help to regulate the industry. So, well we may not always like what the data indicates and implicates, it does serve to regulate and make the process of owning a home easier for Canadians. If you have any questions, feel free to contact your local Dominion Lending Centres mortgage professional.

5 Feb

Which Lender is Right for You?

General

Posted by: Kimberly Walker

The following is a summary of the choices available for clients when looking at the four different types of lending groups. Which one is best will all depend on who you are as a borrower, what your current situation is now, and what your situation will look like in the future.

Big Banks

Currently, mortgage brokers have access to TD Canada Trust and Scotiabank. These are especially appealing to first-time home buyers as it offers a sense of comfort knowing your mortgage is being dealt with a nationally recognized financial institution. TD offers very fast review of documents with the ability for collateral charges, multiple branch locations, and competitive privileges such as pre-payment abilities. Scotiabank is also an advantageous option for home owners as they have one of the most comprehensive and easy-to-use home equity lines of credit, referred to as their Scotia-Step. Being able to access a home equity line of credit (HELOC) and roll it into your mortgage offers simplicity and efficient methods of borrowing for home owners. The draw back with both banks is that they are in fact chartered banks. When a client decides to use them for fixed rate mortgages, specifically the 5-year terms, they can potentially be on the hook for penalties north of $10,000 due to breaking their mortgage early. Career changes, moving from different neighborhoods or cities, upgrading or downgrading home sizes, marital issues, these are all reason why someone may need to break their mortgage early and being in a long term fixed rate mortgage with a chartered bank can be unpleasant.

Credit Unions

One of the biggest benefits of Credit Unions, such as Westminster Savings, or Coast Capital to name a few, is they are not federally regulated, they are provincially regulated. They are not required to adopt federal mortgage rule changes unless they want to. This can be an extreme benefit to those considering rental properties, those with unique income/employment situations, or complex transactions that chartered banks do not or cannot work with. Some of the negative attributes are, however, a reputation for slow review times of documents and mortgage applications, as well as portability. If you work for a company or in an industry that is known for relocation and re-assignment across provinces, you will pay a penalty to a Credit Union every time. This is something that is likely not to happen when working with Charted Banks or Monoline Lenders as they will have more flexibility in allowing you to port your mortgage to a new property in other provinces.

Monoline Lenders

Monoline Lenders are supported by mortgage brokers, and in turn, mortgage brokers are supported by Monoline Lenders. You cannot access mortgage products that a Monoline Lender offers without using a broker as they typically do not have physical branches or locations. They are funded by private investors dealing only in mortgage transactions, allowing their products to be more customized based on the investors’ risk tolerance. Extremely low interest rates, very competitive privileges with pre-payment and portability, fast turnaround-times, and the best part, significantly lower penalties for breaking a mortgage. With a big bank, a $10,000 penalty for breaking mortgage early, may only cost you $3,000 with a Monoline Lender. This is highly advantageous to someone who wants the security of a long term fixed rate but isn’t 100% certain they will be carrying out their mortgage at that property for the full five years. The disadvantage is the almost blind trust a client must have. These Monoline Lenders do not have much brand recognition with the public, they have limited direct access, and usually do not have any physical locations to visit. This makes it hard for some people to feel comfortable using them as their mortgage provider.

Private Lenders

The benefit of a Private Lender is that anyone who has inconsistent income, unique properties, poor credit history or any type of severe risk in their application, can get an approval. When a Chartered Bank says no, a Credit Union says no, and a Monoline Lender says no, a Private Lender can say yes. The disadvantage- your interest rate is going to be significantly higher and the privileges such as prepayment and portability are going to be significantly less. As well, with most lenders, they will pay the mortgage brokers commission themselves. In this case, you the borrower will be paying a fee to the broker.

This information is extremely powerful to you as a home buyer and even as a current home owner. As always, please contact a Dominion Lending Centres Mortgage Professional if you wish to discuss any of these options further or how they may be of benefit to you!

2 Feb

2018 brings more of the same for Fraser Valley real estate

General

Posted by: Kimberly Walker

SURREY, BC – Fraser Valley housing market activity in January continued on the momentum seen throughout 2017 with year-over-year increases seen for both sales and pricing.

The Fraser Valley Real Estate Board processed 1,210 sales of all property types on its Multiple Listing Service® (MLS®) in January, an increase of 24 per cent compared to the 976 sales in January of last year, and a 10 per cent decrease compared to the 1,344 sales in December 2017. This was the third highest sales total for a January in the Board’s history, behind only 2016 (1,338) and 1992 (1,270).

Of the 1,210 sales processed last month 281 were townhouses and 338 were apartments, together representing 51 per cent of all transactions in January.

“This will be the third consecutive year of heightened market activity for our region, and we’re starting 2018 exactly where we left off – gradually rising prices, tight inventory, and the dominance of attached home sales,” said Gopal Sahota, Board President.

Active inventory for the Fraser Valley finished at 3,962 listings last month, increasing 3.8 per cent month-over-month, and decreasing 10 per cent when compared to January 2017. January’s sales-to-active listing ratio was 31 per cent.

The Board received 2,092 new listings in January, a 63.8 per cent increase from December 2017’s 1,277 new listings, and a 3.9 per cent decrease compared to January 2017.

“Generally, pricing continues to be heavily impacted by ongoing demand and a lack of incoming inventory,” continued Sahota. “While conditions may differ depending on property type and area, it remains a complex real estate environment overall where a thorough understanding of the market and knowing what you’re looking for can make all the difference.”

For the Fraser Valley region the average number of days to sell an apartment in January was 19, and 24 for townhomes. Single family detached homes remained on the market for an average of 46 days before selling.

HPI® Benchmark Price Activity

• Single Family Detached: At $982,700, the Benchmark price for a single family detached home in the Valley increased 0.6 per cent compared to December 2017, and increased 15.1 per cent compared to January 2017.

• Townhomes: At $519,400 the Benchmark price for a townhome in the Fraser Valley increased 1.2 per cent compared to December 2017, and increased 23.4 per cent compared to January 2017.

• Apartments: At $404,100, the Benchmark price for apartments/condos in the Fraser Valley increased 4 per cent compared to December 2017, and increased 44.1 per cent compared to January 2017.

Full package:
http://www.fvreb.bc.ca/statistics/Package201801.pdf

2 Feb

Most buyers won’t delay despite rate rises

General

Posted by: Kimberly Walker

The recent increases in interest rates appears not to have dampened the intentions of most Canadian home buyers.

Just 1 in 4 surveyed for CMHC’s 2018 Prospective Home Buyer Survey said that an interest rate would make them very likely to delay purchasing a new home.

However, the tight inventory in some markets is likely to delay home purchase with more than 40% saying they would wait to find the ideal home and a similar share willing to compromise on the size and location.

All groups of prospective buyers would prefer a move-in-ready home or a newly built one.

While many are not put off, the tighter mortgage regulations and interest rate rises were not a top motivator for their purchase; most respondents cited better accessibility and investment as their top motivators.

“The Survey findings provide insights and valuable information for mortgage professionals about their future clients and their needs,” said Nathalie Fredette, Vice-President, Client Relationship Management. “It brings awareness amongst the industry and contributes to financial literacy by helping Canadians make informed and responsible home buying decisions.”

Most respondents will finance their home purchase with a mortgage – especially first-time buyers – with a downpayment saved 1 to 2 years before purchase.

1 Feb

Bank vs. Credit Union – A who is who in borrowing

General

Posted by: Kimberly Walker

Banks and Credit unions are often grouped together into one category under “financial institutions”. While they may have several similarities in terms of financial service offerings, in the world of mortgages the banks and credit unions have little in common. As mortgage professionals, we work with both of them and are well versed in the differences between the two. To start with, we will first need to look at the definition of each institution.

A BANK

A bank is a financial institution that accepts deposits, lends money and transfers funds. They are listed as public, licensed corporations and have declared earnings that are paid to stockholders. A key point: they are regulated by the federal government-Office of the Superintendent of Financial Institutions.

A CREDIT UNION

Credit unions also deposit, lend and transfer funds. However, after that, we run into some differences between the two. Credit Unions have an elected Board of Directors that consist of elected members from their community. They are local and community-based organizations and unlike the banks, they are not federally but Provincially regulated.

Now that we have to clear definitions, we are going to focus on just one of the differences between the two: Who they are regulated by. Credit Unions are not regulated by OSFI therefore, they are not always subject to the mortgage lending rules imposed by the federal government (at least not right away). Take for example the recent changes to the B-20 guidelines. Since Credit Unions are not classified as a Federally Regulated Institution, they currently do not need to comply with the implications listed in the new rule changes. What does this mean for the consumer? Let’s walk through an example.

Say you have a dual income family with a combined annual income of $85,000. The current value of their home is listed at $700,000 and they have a mortgage balance of $415,000. Lenders have agreed to refinance to a maximum amount of 80% LTV (loan to value). That gives us a total of $560,000 minus the existing mortgage and you have $145,000 available provided you qualify to borrow it.

Now let’s put the Bank and the Credit Union toe-to-toe:

Difference between Bank and Credit Union when Refinancing

That means you are able to qualify for $105,000 LESS with the bank when refinancing!

Take the same scenario listed above and let’s apply it to purchasing:

Difference between Bank and Credit Union when Purchasing a Home

Again, you have a reduced amount of $105,000 towards the purchase of your new home.

A few disadvantages to Credit Unions that you should be aware of:

  • You cannot port your mortgage out of province
  • With the introduction of the new B-20 guidelines, there has been an increased demand for Credit Unions. This increasing demand has led to higher rates and sometimes these are not the most competitive for the client. Working with a broker can ensure that you receive the best rate and product for your situation.
  • Credit Unions also have a typically lower debt qualification ratio for how much house you can afford and how much debt you can carry

With those considerations, there are limitations to what Credit Unions are able to offer you. As always, working with a Dominion Lending Centres mortgage professional is one of the best ways to ensure you are not only getting the sharpest rate, but also the best product for you and your unique situation. Give us a call today-we would love to talk to you about your options and how we can help you.

31 Jan

Are you in a Variable Rate Mortgage? Me too.

General

Posted by: Kimberly Walker

Are you in a Variable Rate Mortgage? Me too.

If you’re in a fixed rate mortgage, this news does not impact you. Mind you ‘impact’ is too strong a word to use for the subtle shift that occurred Jan 17, 2018.

Short Version

The math is as follows:

A payment increase of ~$13.10 per $100,000.00 of mortgage balance. (unless you are with TD or a specific Credit Union, in which case payments are fixed and change only at your specific request)

i.e. – A mortgage balance of $400,000.00 will see a payment increase of ~$54.40 per month

Personally, we are staying variable, for a variety of reasons…

Long Version

Qualification for variable rate mortgages has been at 4.64% or higher for some time. This required a household income of greater than $70,000.00 for said $400,000.00 mortgage .

Can 99% of said households handle a payment increase of $54.40 per month? Yes.

Will 99% of households be frustrated with this added expense? Yes.

Ability and annoyance are not the same thing.

Have these households enjoyed monthly payments up to $216.80 lower than those that chose a fixed rate mortgage originally? Yes.

Are 99% still saving money over having locked into a long term fixed from day one? Yes.

Should I lock in?

A more important question is ‘why did we choose variable to start with’? And this may lead to a critical question ‘Is there any chance I will break my mortgage before renewal’?

The penalty to prepay a variable mortgage is ~0.50% of the mortgage balance.

The penalty to prepay a 5-year fixed mortgage can increase by ~900% to ~4.5% of the mortgage balance. A massive increase in risk.

There are many considerations before locking in, many of which your lender is unlikely to discuss with you. It’s to the lenders advantage to have you locked into a fixed rate, rarely is it to your own benefit.

At the moment decisions are being made primarily out of fear. Fear of $13.10 per month per $100,000.00

What about locking into a shorter term?

Not a bad idea, although this depends on two things:

Which lender you are with as policies vary.
2. How many years into the mortgage term you are.

If your net rate is now 2.95%, and have the option of a 2-year or 3-year fixed ~3.00% – this may be a better move than full 5-year commitment.

Do not forget the difference in prepayment penalties, this is significant.

Bottom line – Know your numbers, know your product, stay cool, and ask your Dominion Lending Centres Broker.

These are small and manageable increases.

P.S.

It was a bit disappointing to see logic and fairness fail to enter the picture, after the last two Federal cuts to Prime in 2015 of 0.25% each the public received cuts of only 0.15% each time.

Every single lender moved in unison, not one dropped the full 0.25%.

Amazingly, not a single lender saw fit to increase rates by the exact same 0.15% on the way back up. Every lender has instead increased by 0.25% – a full 100% of the increase passed on to you, the borrower.

Not cool man, not cool at all.

We share all the pain of increases, and get only part of the pleasure of decreases.

I am disappointed by this, not surprised, but disappointed.

31 Jan

For Rental Properties, Cash (Flow) is King

General

Posted by: Kimberly Walker

Ask pretty much anybody about mortgages and the first, sometimes only thing they want to talk about is the interest rate. In my business as a Mortgage Professional, my job is to educate clients that while interest rate is definitely a cornerstone of your mortgage decision, it is not the only factor to consider when agreeing to sign a mortgage commitment. In many cases, the lowest interest rate does not represent an ideal fit, especially when the actual mortgage isn’t aligned with customer’s stage of life, priorities, or long-term outlook. Rental properties are a prime example of mortgage situations where basing a decision solely on the rate is often short-sighted and in some cases detrimental to the long term viability of one’s investment.

Rental properties can be a lucrative way to diversify investments, build passive income and long term net worth. They can also be costly, rigid and very problematic if you don’t choose the right property, area, tenants and MORTGAGE PRODUCT. Like any investment you are going to do your research before buying – RIGHT? And you are going to take your time and screen potential tenants vs taking the first Kijiji reply from @fraudster.com offering a cash deposit higher than you have specified – RIGHT? I’ll leave that part up to you. Where I come in is ensuring that the mortgage product you are using allows you the most flexibility on your payments and overall investment. The best way to ensure that your rental investment does not become a sucking vampire on your personal bank account is to minimize the cash outlays you are obligated to make.

Enter the Home Equity Line of Credit (HELOC).
In my 10-plus years of doing mortgages and owning investment property, the HELOC is far and away my favourite product for investment properties.

First & foremost – CASH-FLOW. HELOC’s allow you the option of making interest-only payments monthly. The monthly payments on a standard $200K mortgage using current 5 yr fixed rate of 3.39% for example are $987. Interest only payments would be about $650. That’s a cash flow difference of $340. Think of a vacancy – they happen. That’s $340 of your own money that you don’t have to pull out of personal savings to cover while your investment income is stalled.

Having the ability to scale back or minimize your cash outlays can be the difference between good and bad when it comes to an extended vacancy, renovation or unforeseen expense such as a repair or insurance claim. This very feature has allowed me to take the time needed to properly screen potential tenants when I have a vacancy and not rush into leasing to the very first interested reply. I can tell you that one of the worst mistakes that can be made with a rental is to scramble to get tenants in so they can start paying rent only to find out you picked the wrong people.

HELOC’s also offer a number of additional features:

Fully open – imagine somebody comes along offering you top dollar for your investment property. A HELOC is fully open meaning it can be paid off immediately without restriction or early payout charges. You can accept the offer and cash out immediately without seeing profits eroded by penalty charges and fees. With a standard mortgage you may have a payout penalty ranging from 3 months interest into the tens of thousands depending on mortgage type & institution (cringe if you have a fixed mortgage with one of the Big 5 Canadian banks).

Revolving – so you’re an investment property wizard and the cash you are making has allowed you to pay down the HELOC we set-up dramatically. You can use the available space on your current HELOC towards the purchase of another property. Keep your personal savings and investments in tact and don’t have to ask permission to access the equity. That’s the beauty of revolving credit.

The main (only) drawback to a HELOC over a standard, amortizing mortgage is that the interest rate tends to be slightly higher (about .50%). To me this argument rings hollow. Since your rental property is essentially a business, the interest that you pay on a mortgage is eligible to be written off for tax purposes. Given the strict criteria involved in qualifying for mortgages these days, I’m willing to bet most people with rental properties are already showing income that has them in an elevated tax bracket. That means that every extra dollar of profit reported on tax returns gets annihilated by CRA. Sometimes increasing an individual’s interest expense actually helps them bring their reported profits on rentals close to breaking even and honestly that’s why we have accountants (SIDE NOTE: please use an accountant if you are going to play in the investment game).

Finding lenders who offer HELOCs on rentals isn’t easy, especially if you are wanting only 20% downpayment (80% LTV). Most lenders these days want more meat on the bone (equity) for rental properties. There are definitely good lenders out there doing rental HELOCs at 80% LTV. That’s where a call to your trusted Dominion Lending Centres Mortgage Professional and the proper strategy can pay off in spades.