Changing Mortgage on Rental Unit

[KimReedSmith]

Hi,



My wife and I are moving to Nova Scotia and we are renting out our townhouse.



My current mortgage is a 25 year amortization at Prime minus 0.75% making 26 payments annually.



The mortgage matures in Nov 2013.



Looking at the option/pros/cons of changing my payments to 24 annually and mortgage to 30 year amortization to have the unit cash flow better.



This will be my first rental property. I know upfront the benefits are better cash flow, but what does this mean long term down the road for me if I change it?



Thanks.

 

[Thomas Beyer]

More cash now means less cash later !



With such a low mortgage I also would be in no hurry to pay it down, but rather use the cash to buy more cash-flowing assets in rising markets [note: not all markets are rising !]

 

[mortgageman]

If it were me, I'd keep the current mortgage until renewal in Nov 2013. At renewal, assuming a similar interest rate environment as now, I'd switch to a fixed rate and push the amortization back to 30 years to maximize cash flow.



Better cash flow will help you qualify for more mortgages.