I know cash is king but given the drop in interest rates we are experiencing, would it be wise to put some of the "savings" into paying down some principle?
Interest only
- Thread starter gshembroff
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QUOTE (gshembroff @ Jan 29 2009, 12:11 PM) I know cash is king but given the drop in interest rates we are experiencing, would it be wise to put some of the "savings" into paying down some principle?
Yes, Cash is King - Cash-flow is Queen ™
it depends on your long term goals .. but USUALLY it is better to keep some cash in reserve as it is liquid as opposed to paying down a mortgage which is not liquid !
In most cases a LOC is preferred over a mortgage as it is both liquid and acts like a mortgage !
read this post here re LOC vs. mortgage: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html
Yes, Cash is King - Cash-flow is Queen ™
it depends on your long term goals .. but USUALLY it is better to keep some cash in reserve as it is liquid as opposed to paying down a mortgage which is not liquid !
In most cases a LOC is preferred over a mortgage as it is both liquid and acts like a mortgage !
read this post here re LOC vs. mortgage: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-2302-What_is_better_a_mortgage_or_a_line-of-credit_.html
QUOTE (gshembroff @ Jan 29 2009, 01:11 PM) I know cash is king but given the drop in interest rates we are experiencing, would it be wise to put some of the "savings" into paying down some principle?
If you have a readvanceable mortgage - absolutly, it will save you thousands in interest. If you don`t have a readvanceable mortgage, the challenge is that once you put it in, its tougher to get it out.......
If you have a readvanceable mortgage - absolutly, it will save you thousands in interest. If you don`t have a readvanceable mortgage, the challenge is that once you put it in, its tougher to get it out.......
[quote name=`CanadianMortgageTeam` date=`Jan 29 2009, 01:45 PM` post=`49496`]If you have a readvanceable mortgage - ...
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Peter:
please elaborate on this topic of re-advancable mortgage vs. LOC .. which banks offer it, what LTV, what interest rate etc. ...
[/quote}
Peter:
please elaborate on this topic of re-advancable mortgage vs. LOC .. which banks offer it, what LTV, what interest rate etc. ...
gshembroff,
The more money you use to "paying down some principal", the less you will have available for down payment for your next purchase.
So it depends on your purchasing plan. I guess if we had a `Total Mortgage Balance (Principal) to Property Value Ratio Target` it would help us decide whether to purchase more or pay down the principal first, and how much.
In today`s situation should we target this ratio to be 90%, 75%?
Thoughts?
Neil
The more money you use to "paying down some principal", the less you will have available for down payment for your next purchase.
So it depends on your purchasing plan. I guess if we had a `Total Mortgage Balance (Principal) to Property Value Ratio Target` it would help us decide whether to purchase more or pay down the principal first, and how much.
In today`s situation should we target this ratio to be 90%, 75%?
Thoughts?
Neil
Hi Thomas,
Firstline and Scotiabank have the best products in the industry that are available to brokers. The readvancable mortgage is a mortgage and LOC combination. As you pay down your principal, the amount you originally borrowed remains as the readvancable mortgage amount. So any time in the future, your can ask to `reborrow` the principal you`re paid down. Most lenders will allow you to readvance without qualification.
So if you`re got a low VRM, then you`re in a better position than having a LOC. You can reduce the principal quicker by keeping the payments the same as today. If you run into a problem, you can then advance any amount, up to the original limit on the LOC. The LOC would be interest only payments, and will be at Prime + 1 to Prime + 1.5 depending on the lender.
If available, I always recommend a readvancable mortgage to my clients. Not all these products are created equally. Some lenders will require requalification, or a title search. Some may charge a fee for the service. So you will need to do your research.
More lenders had HELOC products available in the past, but we`ve seen a few taken off the table due to the liquidity crisis. We hope to see some return.
Firstline and Scotiabank have the best products in the industry that are available to brokers. The readvancable mortgage is a mortgage and LOC combination. As you pay down your principal, the amount you originally borrowed remains as the readvancable mortgage amount. So any time in the future, your can ask to `reborrow` the principal you`re paid down. Most lenders will allow you to readvance without qualification.
So if you`re got a low VRM, then you`re in a better position than having a LOC. You can reduce the principal quicker by keeping the payments the same as today. If you run into a problem, you can then advance any amount, up to the original limit on the LOC. The LOC would be interest only payments, and will be at Prime + 1 to Prime + 1.5 depending on the lender.
If available, I always recommend a readvancable mortgage to my clients. Not all these products are created equally. Some lenders will require requalification, or a title search. Some may charge a fee for the service. So you will need to do your research.
More lenders had HELOC products available in the past, but we`ve seen a few taken off the table due to the liquidity crisis. We hope to see some return.
Hi all,
How many re-advanceable mtgs (aka: Smith Manouevre`s) can one obtain for investment ppty`s? My understanding is that Firstline will allow only one. Is this true? If so, could you have one for your personal residence and one for an investment ppty? And to take this further, can you then obtain a re-advanceable mtg from a different lender on another rental ppty? ...and so on? What is the limit (if any) and are there pros and cons to this?
Lastly, do these re-advanceable mtg`s have to be a fixed term mtg? I was told they had to be, but perhaps I misunderstood. Can they be VRM? ...converted later on?
Thx in advance!
Norm...
QUOTE (RobMacdonaldCMT @ Jan 31 2009, 07:39 AM) Hi Thomas,
Firstline and Scotiabank have the best products in the industry that are available to brokers. The readvancable mortgage is a mortgage and LOC combination. As you pay down your principal, the amount you originally borrowed remains as the readvancable mortgage amount. So any time in the future, your can ask to `reborrow` the principal you`re paid down. Most lenders will allow you to readvance without qualification.
So if you`re got a low VRM, then you`re in a better position than having a LOC. You can reduce the principal quicker by keeping the payments the same as today. If you run into a problem, you can then advance any amount, up to the original limit on the LOC. The LOC would be interest only payments, and will be at Prime + 1 to Prime + 1.5 depending on the lender.
If available, I always recommend a readvancable mortgage to my clients. Not all these products are created equally. Some lenders will require requalification, or a title search. Some may charge a fee for the service. So you will need to do your research.
More lenders had HELOC products available in the past, but we`ve seen a few taken off the table due to the liquidity crisis. We hope to see some return.
How many re-advanceable mtgs (aka: Smith Manouevre`s) can one obtain for investment ppty`s? My understanding is that Firstline will allow only one. Is this true? If so, could you have one for your personal residence and one for an investment ppty? And to take this further, can you then obtain a re-advanceable mtg from a different lender on another rental ppty? ...and so on? What is the limit (if any) and are there pros and cons to this?
Lastly, do these re-advanceable mtg`s have to be a fixed term mtg? I was told they had to be, but perhaps I misunderstood. Can they be VRM? ...converted later on?
Thx in advance!
Norm...
QUOTE (RobMacdonaldCMT @ Jan 31 2009, 07:39 AM) Hi Thomas,
Firstline and Scotiabank have the best products in the industry that are available to brokers. The readvancable mortgage is a mortgage and LOC combination. As you pay down your principal, the amount you originally borrowed remains as the readvancable mortgage amount. So any time in the future, your can ask to `reborrow` the principal you`re paid down. Most lenders will allow you to readvance without qualification.
So if you`re got a low VRM, then you`re in a better position than having a LOC. You can reduce the principal quicker by keeping the payments the same as today. If you run into a problem, you can then advance any amount, up to the original limit on the LOC. The LOC would be interest only payments, and will be at Prime + 1 to Prime + 1.5 depending on the lender.
If available, I always recommend a readvancable mortgage to my clients. Not all these products are created equally. Some lenders will require requalification, or a title search. Some may charge a fee for the service. So you will need to do your research.
More lenders had HELOC products available in the past, but we`ve seen a few taken off the table due to the liquidity crisis. We hope to see some return.
Firstline will allow you to have one, but that does not stop you from having other readancable mortgages from other lenders. Scotiabank does not have a limit on the number you can have, but is adhering to an old policy now. The STEP mortgage is only allowed when the mortgage is in a single name, or a husband and wife situation.
We used to get an exception to allow JV partners, but recently they started to decline our request. Many other lenders have similar products with different policies and features.
We used to get an exception to allow JV partners, but recently they started to decline our request. Many other lenders have similar products with different policies and features.
QUOTE (NJang @ Jan 31 2009, 11:42 AM) How many re-advanceable mtgs (aka: Smith Manouevre`s) can one obtain for investment ppty`s?
We currently have 4 readvancable mortgages, including one on our primary residence. Three from RBC, one from Scotia. All are variable rate 5 yr term conventional (not high ratio) MTG w/ LOC segments @ prime. We have never been successful at negotiating better than prime on the LOC segments. It would seem reasonable for lenders to have a limit of one readvancable loan per property, but there doesn`t appear to be a limit per individual.
We currently have 4 readvancable mortgages, including one on our primary residence. Three from RBC, one from Scotia. All are variable rate 5 yr term conventional (not high ratio) MTG w/ LOC segments @ prime. We have never been successful at negotiating better than prime on the LOC segments. It would seem reasonable for lenders to have a limit of one readvancable loan per property, but there doesn`t appear to be a limit per individual.