Have you been paying off a mortgage on your home for a few years now? You may have the resources to invest in real estate without taking a penny out of your pocket.
Mortgages on real estate are much more flexible tools than you might think. As long as you have initiated a repayment beyond 20% of the value of the property at the time of purchase, lending institutions are open to many scenarios. People who have had to consolidate debts know this. So do smart real estate investors
Refinancing with or without a new notarial deed, collateral mortgage guarantee, mortgage line of credit. These are all ways to free up funds that can be used to invest wisely in real estate. But beware: these are the same tools used to consolidate debts. And they can backfire on a homeowner who uses them carelessly.
Individuals put their charge card changes on the home credit line, they renegotiate the house to manage it, and the rollover occurs without them having the decision to pay off their obligation.
It is possible to buy a property with less than 20% down payment. However, when refinancing, it is always on a maximum of 80% of the value of a property.
An example: your house was worth $300,000 at the time of purchase and you took out a $240,000 mortgage. A few years later, the balance of your mortgage is $200,000. You could refinance and get your hands on the $40,000 that you have paid back to date to invest in real estate or elsewhere.
For several years now, some major lending institutions have had mortgages notarized at 120% of the value of the property at the time of purchase
If your property is now worth more than it was at the time of purchase, you could borrow up to 80% of this increased value without having to go back to the notary and pay the fees to register a new mortgage.
If your property has been renovated, its value has increased significantly, and you want to obtain maximum funds for a new project, you will need to notarize a new mortgage. For example, by re-mortgaging a home purchased at $200,000 and worth $400,000 today, you could have over $160,000 available for an investment project.
“At $500 or less for the property value assessment and about $1,000 for the notarial deed, these refinancing costs are relatively minimal,” says Michel Lizotte, Senior Director, Financing Solutions, at National Bank Private Management 1859.
In all cases of refinancing, the client’s ability to pay its loans is evaluated. And refinancing can result in higher monthly payments on the personal mortgage