Verico Nova Financial wants to eliminate the hassle involved in securing your mortgage. As a licensed sub-mortgage broker, Scott Harriman can help novice investors (or anyone else) avoid the financial pitfalls and penalties that can sabotage one’s best-laid plans. The following Q&A provides some great insights into the world of mortgages, real estate, and related matters. If you would like to speak in person, get in touch with Scott today.
Does Verico Nova Financial perform credit checks?
Is owning your own home the best path to financial independence?
Residential real estate is one of the many ways that homeowners grow their asset base and over time provide for their retirement. Is this the best way to do this? Well, yes and no.
Buying a home to live in, is a form of forced savings, whereby the asset grows in value over time through inflation, the decrease in principal amount borrowed and the lowering amount of interest costs. Additional costs incurred are property taxes, maintenance and upgrades. Comparing this investment with rental accommodation, which requires minimum upfront money, the client can start saving and investing the money that would have been directed at mortgage interest and the down payment much earlier and leave it to grow for a longer period. The client could be much further ahead by paying rent and investing the difference as opposed to paying principal, interest, property taxes, and maintenance on his owner occupied property. The main challenge to this position is that the client may not have the discipline to invest the money that would have been saved by only paying the property rent.
Acquiring and holding real estate over the long term is a time-proven path to wealth, but unless there is no additional income generated from the real estate purchase, there is very little advantage in living in a single family home over renting and investing in other investment vehicles.
In this current flat real estate market, uncertain equity markets and low interest on savings, how does one grow wealth? One solution is to utilize the built up home equity to acquire additional real estate interests that provide a steady income through rental of the property. One way to do this is by upgrading the current home and adding a secondary suite or by taking the equity from the home and using it to leverage the purchase of another property for rental income.
I work with several realtors, in different regions who specialize in single family homes with secondary suites, or stand alone properties suitable for rental. I also work closely with a number of lenders who will provide mortgages for one or more additional rental properties and many will also lend additional funds for property improvement to upgrades prior to rental. My appraisal contacts are also able to provide economic rent letters for income verification on many properties.
How do you measure the best mortgage for you?
* This article and checklist was published in the Globe and Mail in October 2013 and was authored by Rob McLister. Many thanks to Rob for this important information.
The lowest possible rate is how many define a good mortgage. But that’s like judging the “best car” by the one with the lowest monthly payment.
Anyone who’s had to cough up a mortgage penalty or deal with refinance limitations can vouch for one thing: Mortgage restrictions can easily outweigh small (e.g., 0.10 to 0.15 percentage point) differences in interest rates.
It’s tough to predict your refinance needs three or four years out. Statistics show that well over half of Canadians with a mortgage renegotiate before their term is up. And the average five-year borrower changes their mortgage every three-and-a-half years.
That’s why it often pays to trade a slightly lower rate for more flexibility, unless you know you won’t change your mortgage during its term. A cheap rate can certainly save hundreds of dollars up front. Just be sure it doesn’t cost thousands after closing.
On that note, here’s a list of questions to ask your mortgage expert of choice. Check the boxes one by one as you talk with your adviser. With a little effort, this list will help you snare the most feature-rich mortgage possible, at a rate that’s better than average.”
Click here to access The Ultimate Mortgage Checklist.
Note: This checklist assumes you’re a qualified borrower who’s getting a mortgage on his/her primary residence, with provable income and decent credit. If this doesn’t reflect your scenario, other important questions will apply.
Tired of reading? Contact Verico Nova Financial today for a comprehensive explanation of all your mortgage and financing options.