Refinancing question

[mrembecki]

Hello,



My girlfriend and I purchased a new build semi in Burlington for approx 275, it is now worth approx $380-$395 depending on upgrades, etc, etc.



The question is, can we lease out this property while pulling out the equity from it?? Only 5% has been put down on the property, but my understanding is that there is new value to the property or equity due to its appreciation.



Bottom line, is it possible to pull out the appreciation from this home and reinvest it elsewhere?



Thanks Kindly,



Marty.

 

[Nir]

When was the property purchased and what is the current mortgage balance?

assuming balance is around 0.95 * 275K = ~261K.



Depending on your situation, if you rent it out and have employment income, you might be able to re-fi it up to 80% = ~380K * 0.8 = around 304K.



so equity take out of only around 43K BEFORE penalty and fees which might be high especially if you are on a fixed rate mortgage.



However, if you still live there you may be able to re-fi up to 95% which will result in a fatter wallet.



Good luck,

N.

 

[bizaro86]

After the CMHC changes next month, you'll only be able to refi a personal residence up to 90%, not 95% as was formerly the case.

 

[kboughen]

If the property is now a rental, you can refinance to 80% LTV.
Owner occupied can refinance to 90% LTV today, but will soon change to 85% LTV.

 

[bizaro86]

[quote user=kboughen]Owner occupied can refinance to 90% LTV today, but will soon change to 85% LTV.




Hmmm... I defer to your experience and profession, but I had thought employed (as opposed to self-employed) could get a 90% LTV refinance with CMHC under the new rules. I relied on the following sources:



http://www.premieremortgage.ca/news/413-summary-of-cmhc-changes.html



http://housing-analysis.blogspot.com/2010/03/upcoming-cmhc-rule-changes.html



but didn't check it that closely since I have no intention of refinancing my personal residence with any product other than a heloc to 80%. I apologize if I am mistaken, and apologize doubly if I am spreading misinformation, which I certainly do not intend to do.



Regards,



Michael

 

[Thomas Beyer]

[quote user=mrembecki] ... $380-$395 .. Bottom line, is it possible to pull out the appreciation from this home and reinvest it elsewhere?


You can re-finance up to 90% of appraised value until mid March then 85%, if owner occupied and income supports it. So you can add a mortgage of roughly $350,000 now or about $330,000 after mid March .. minus existing mortgage .. and pull out some cash.



Or 80% if rented.

 

[kboughen]

On March 18, 2011, the max refinance for owner occupied changes to 85%, here is a direct link to CMHC;
http://www.cmhc.ca/en/corp/faq/faq_008.cfm

 

[bizaro86]

[quote user=kboughen]On March 18, 2011, the max refinance for owner occupied changes to 85%, here is a direct link to CMHC; http://www.cmhc.ca/en/corp/faq/faq_008.cfm


Thanks! Sorry for the error.



Michael