Friday, December 12, 2008

Stuck with two properties: Investor mortgage may be the solution to your problem

It’s a fairly common scenario nowadays. You bought a new property and arranged financing that was conditional on the sale of your old property. And now with the market having fallen off, you’re under pressure to reduce the price of your original property but you hesitate to do so because you don’t want to realize a major loss.

Enter the investor mortgage, available with as little as 5% down. What is an investor mortgage? It’s a mortgage that allows you to offset the rental income you will receive from either one of the properties against the carrying cost the property. With a lender that allows rental offset, the total amount of mortgage (or mortgages) you are allowed to carry will be significantly higher than they would be with a mortgage on an owner occupied property. In other words, if you prefer not to realize the loss on your original property, it may be possible for you to keep both properties. The insurance premium on the investor mortgage is higher than the premium on a regular mortgage – insurance premiums apply when your down payment is less than 20% -- but this may be the solution for you if you want to hang on to the original property and wait for a better market to sell.

Call me direct at 416 876 2031 if you would like more information about the investor mortgage.