Interest Only Mortgages / Line of Credit Mortgages

You may or may not have heard about interest only mortgages.  What are they?  Quite frankly they are exactly as they sound…a mortgage that you pay the interest only as a minimum payment each month.  One might ask themselves why they would consider this as an option.  Isn’t the idea of carrying a mortgage the ability and capacity to PAY IT OFF?  Well, yes sometimes, but then there are the borrowers that like the idea of being able to pay off only the interest along the way….and here’s why…

Let’s say you’re an investor with a revenue property.  Chances are you’re not racing to pay off that mortgage.  You are aware that historically the value of your home will increase over time.  How much?  You don’t know, but what you DO know is that if your value keeps rising over time, your investment is working for you!  Enter the interest only payment mortgage.  You want to be able to absorb the rental market with a reasonable rate to charge your tenants, all the while your investment vehicle is zooming down the road.  Not a bad situation to be in.

OR

Perhaps your commissioned based income is volatile.  Some months are better than others, and the ability to fall back on interest only payments are attractive to you.  You DO have the option to increase your minimum payment as you go, so the option to chip away at the principle remains.

Those are a couple of examples, but I’m sure there are more scenarios’ that can be considered.  The bottom line here is that the interest only mortgage is here, and it’s available.  Some highlights include:

1. 80% loan-to-value on standard purchase or refinance situations
2. Credit score of 680 or greater
3. Maximum amortization of 35 years (.20% premium on every 5 year increment beyond the 25 year amortization)

The Line of Credit mortgage qualification appears much the same as the Interest Only Mortgage – but is designed to have the option to re-advance funds from their home.  This is attractive to many, many homeowners across Canada.  You never know what life has to throw you, and sometimes the ability to be able to cover unexpected costs without having to stress too hard about it is ALWAYS nice.  The Line of Credit mortgage is completely open, and the ability to re-advance your available equity is always there.  Great for Reno’s, new car, emergencies, cash advances, debt consolidation…it’s up to YOU!

For more information, please contact us so that we can walk you through these products, or any other mortgage program that may suit you!