Increasing amortization to live mortgage free (sort of)

[Tootse]

I was hoping I could get your thoughts on this 'strategy'.



After 4 complete years into my 35 yr mortgage, I am considering my options for renewing next year. My inlaw suite rents for $700 per month. My current mortgage is about $800 per month ($1100 with property taxes). I am considering taking out another 35 yr mortgage upon renewal which would result in my rental paying almost all of my mortgage payment. This would free up about $3-400 which I could use to first payoff some debt and then re-invest or dump into my mortgage.



As long as I stuck to the committment to "first payoff some debt and then re-invest or dump into my mortgage" I think this is a good strategy. Or am I missing something? I plan to bounce this off my mortgage broker and financial advisor, but thought I'd hear from some experienced people hear first. I'm not sure if 35 yr mortgages are even available now.



Thanks!

Tootse

 

[Thomas Beyer]

[quote user=Tootse]Or am I missing something?
To my knowledge 35 year mortgage do not exist anymore.



Subletting is a good idea though regardless of mortgage !

 

[Sherilynn]

I don't think 35's are available, but I think it is a good strategy providing you have the discipline to either use the saved money for investments or debt repayment.



We always choose the maximum amortization in order to have the minimum required payment. This makes our numbers (debt coverage ratios) look even better to the banks. Then we take all the extra money and use it for mortgage paydown on our personal residence, which then increases our business line of credit for investment purposes. So we are using the extra cash to pay our personal mortgage AND invest in real estate, and the better DCR helps us to do it.

 

[bizaro86]

[quote user=Sherilynn]I don't think 35's are available, but I think it is a good strategy providing you have the discipline to either use the saved money for investments or debt repayment.



We always choose the maximum amortization in order to have the minimum required payment. This makes our numbers (debt coverage ratios) look even better to the banks. Then we take all the extra money and use it for mortgage paydown on our personal residence, which then increases our business line of credit for investment purposes. So we are using the extra cash to pay our personal mortgage AND invest in real estate, and the better DCR helps us to do it.




I think this is a great strategy, and this is what I do as well. Another benefit is that the mortgages on investment properties are tax deductible, but the mortgage on a personal residence isn't. So it makes sense to pay off the debt that's not tax deductible first.



Regards,



Michael

 

[Aneta]

There are a few 35yr amortization lenders left, for 80%LTV conventional, but you would need to see if you can qualify under their other criteria.